Challenges of Managing the Middle Mile
- A lack of competition among carriers, resulting in gradual rate hikes well beyond typical expectations.
- Inability to account for disruptions that arise in the precursory (first mile) or next (last mile) steps as part of the final-mile process.
- Errors that may occur within invoicing and payment processes.
- Limited scalability arising from a lack of annual, competitive bidding practices.
- Lack of end-to-end visibility makes it difficult to reduce middle-mile costs.
- Working within a single mode in the middle-mile logistics delivery and pickup, leaving money on the table that might exist with intermodal or multimodal transportation.
- Fluctuations within the middle mile and demand for capacity that accompanies disruption, whether expected like peak season or unplanned like the surge of e-commerce since early 2020.
How to Optimize Middle Mile Logistics to Reduce Costs
All freight, regardless of the channel of origin (online or brick-and-mortar), must travel through the middle mile in some form, notes Inbound Logistics, and it’s this universal need for middle-mile visibility that leads to increased opportunities for optimization. As the middle mile increases in value, “there will be pressure on railroads, trucking companies, intermodal third-parties and ports to develop a cost- and time-effective service that links the largest distribution centers in national networks. Such services are not available at this time, and no one can predict if, and when, that will happen. Should such a strategy be properly executed, however, intermodal would be in excellent shape to compete for parcel business in the distribution scheme of the next 25 years.” Remember, middle-mile logistics is all about linking different warehouses to provide that middle leg between the first and last mile, so following these five practices can help your company get more value from the middle mile:
- Know the variances in rates between lanes, including why lane rates have changed, their likely trends in the short-term future, and which lanes will be the easiest for your team to cover.
- Capture and analyze data to understand middle-mile logistics costs and opportunities for improvement with a centralized supply chain control tower, including leveraging such data insights to increase bargaining power during annual and short-term RFPs too.
- Consider the impact of wait times and changes at the distribution centers or warehouses that may affect middle mile turn times, rerouting other shipments, such as couriers in the last mile, to account for delays or changes within the middle mile as well.
- Keep drivers informed of all activities with real-time status updates and push notifications, avoiding excess idle time and the risk of higher accessorials like detention charges.
- Leverage digital document management tools to eliminate the hassle of handoff upon unloading/loading at the beginning or end of the middle mile, providing more visibility throughout all final mile legs as well.