Business man pushing large rock represented the challenges and consequences

Last mile challenges and consequences

  • 25 October 2021
  • 10 min

In our latest blog about the last-mile delivery we zoomed in on the trends and developments. Now we will take a look on the challenges and consequences within the last mile distribution. 

The ‘last mile’ distribution involves a variety of challenges and related consequences. This can be considered from the perspective of the sender and the recipient. Below you will see the main wishes and challenges for the sender and the recipient respectively.

Apart from the issues mentioned above, recipients may sometimes be dissatisfied with the current state of the ‘last-mile’ service delivery. On average, parcel services are given a Net Promoter Score (NPS) of -9. The main causes for this are high prices, unavailability of same-day delivery, delivery errors, and late deliveries.

In addition, recipients often do not have insight into the status of the shipment. The status changes shown are limited and sometimes do not match the current situation. This results in frustration and unnecessary burdening of the customer service. And in some cases, customer services also lack the right means to share the current shipment status information.

Oh no... No one is home

The biggest challenge for home delivery is that frequently nobody is at home to receive the shipment. For a significant percentage of shipments the first delivery attempt is unsuccessful. The shipments then need to be temporarily stored elsewhere, because of lack of storage space. The challenge is how to deliver the ordered products to the recipient at the first attempt in a cost efficient way. Many recipients prefer shipments to be delivered to their home address, but the problem is that to an increasing extent, there are no fixed times when recipients will be at home.

The overview below shows the challenges and related consequences, divided into three categories: i.e. challenges related to costs, service, and the process.


Cost related Service related Processrelated
  • Deliveryand pick-up errors
  • Costs for preperation, post-processing, and communication
  • Loss of shipments and packaging material
  • Customer claims
  • Lower customer satisfaction and loyalty
  • Limited differentiation in service delivery
  • Lack of up-to-date information on shipment status, incidents and ETA
  • Challenge in handling last-minute requests
  • Statutory requirements to store information


Cost related Service related Proces related
  • High recovery costs
  • Unnecessary labour costs
  • Unnecessary costs for purchase of new packaging material
  • Customer complaints
  • Costly customer disputes
  • Customers switch to other service provider 
  • Disappointed customers
  • Service lack flexibility
  • Unnecessary vehicle movements
  • Fines or claims

A guideline for testing

The case shown below is an example of the current costs related to the distribution process. This concerns a theoretical approach to a problem that occurs daily. The actual costs are subject to minor differences, and may vary.

Example case of possible costs for an organisation (wholesaler)

A wholesaler has 35 vehicles, used to drive 50 routes per day, 6 days per week. The average number of calls on a route is 15. In addition, the wholesaler uses 3-side roll containers (packaging material) for delivering the shipments. In addition, the paper route lists and packing slips are used for registering actions. The following table shows the possible costs for each step in the process, based on calculations.

Organisation-wide Back-office Drivers

Paper costs: 2000 prints per day (€0.02 per print) x 312 working days per year = € 13.000

Registration of packing material: 35 vehicles x 24 3-side roll containers per day, per vihicle x 312 working days per year x cost of 3-side roll containers (€100) x loss percentage (2%) x loss prevention (25%) = € 131.000

Preparing route list: 4 minutes per route list x €35 labour cost per hour x 35 route lists per day x 312 working days per year = € 25.000

Post-processing administration: 2 FTE x 37.5 FTE per week x €35 labour costs per hour x 52 working weeks per year = € 135.000

Unnecessary manual planning: number of planners (3) x 0.33 hours per day x €35 labour costs per hour x 312 working days per year = € 11.000

Costs for correcting errors: 2% shipment errors x 525 (35 routes x 15 stops) shipments per day x costs per error (€75.00) x 312 working days per year = € 246.000

Unnecessary vehicle movemets (depreciation): 3.329.473 km per year x percentage unnecessary km (2%) x costs per km (€0.38) = € 25.000

Unnecessary vehicle movements (wages): 35 routes x unnecessary km per day per vehicle (2%) x labour costs per km x 312 working days per year = € 35.000

Total per year € 144.00 Total per year € 170.000 Total per year € 306.00
Overall costs per year € 620.000

However, the following results can be regarded as a guideline for testing to what extent costs apply within a particular organization. An example with different scenario’s (low, medium, high) can be used for making different forecasts.

Stay tuned!

Hopefully you now have a good overview of the challenges and current situation within the last mile delivery. In the next blog we will discuss the benefits the various stakeholders are hoping to achieve. Besides that we will zoom in on the desired situations and possible solutions to achieve those goals.

Related products


Let's have a chat!

Send an email Make a connection
Patrick Nesse, Business Development Executive, OrangeNXT