Five Ways to Reduce Costs in Middle Mile Logistics

Five Ways to Reduce Costs in Middle Mile Logistics
Middle-mile logistics can be confusing when compared to last mile and first mile. Middle mile is the literal middle stage of final-mile transportation, and it may involve a degree of long-haul moves within the final mile before transfer to a last-mile delivery carrier.
For example, a common example of middle-mile logistics meaning is the movement of goods from a port to an inland warehouse or from a portside warehouse to a distribution center. Technically, the first example is a form of drayage, but as the movement from the origin to the next warehouse or distribution center grows longer, it takes on more middle-mile characteristics, meaning it takes longer and is more reliable. As a result, the middle-mile stage is often consistent in terms of volume commitments and demands. However, it still comes with several challenges that shippers need to remember.

Challenges of Managing the Middle Mile

The challenges of managing middle-mile logistics delivery or pickup derive from its highly repetitive nature. Like all things in shipping, repetition can often lead to inefficiency, but why?
It comes down to the perception of relative ease associated with the middle mile. The same carriers and processes are typically active within the middle mile, but that opens the door to extensive risks, including:
  • 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:

  1. 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.
  2. 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.
  3. 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.
  4. 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.
  5. 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.

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Derive More Value From Middle Mile Logistics

The middle mile is the most consistent and reliable phase of final mile logistics, making it almost synonymous with long-haul transportation. However, the middle mile is actually ripe for automation and the use of technology to continuously drive improvements that help ensure your team is getting the right rate, for the right service level, at the right time.

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