Moving Through the Middle Mile
To truly understand e-commerce’s impact on supply chains, follow the movement of goods through the middle mile, e.g. from port to warehouse/DC, between warehouse and from warehouse to e-commerce storage areas.
Last mile delivery is often the focus of discussions about e-commerce’s impact on supply chains. But movement of goods through the middle mile—from port to warehouse or distribution center (DC), between DCs/warehouses, and from warehouse to in-store, e-commerce storage areas—has been equally impacted.
“Middle mile transport is just like the last mile, in that it’s feeling all of the same cost pressure reductions and all of the same service level increases because of these e-commerce platforms,” said Brock Oswald, senior manager, Deloitte Consulting.
The demands on both last mile and middle mile transportation stem from customers’ expectations about speedy delivery for both consumer and B2B products. Millennials and Gen Zs, accustomed to placing small orders for personal goods with just-in-time delivery, want that same flexibility when it comes to business purchases.
Transparency about a product’s movement through the supply chain, including middle mile, is also very important. “That’s where we’ve seen the biggest change and the biggest impact from technology, bringing visibility to the entire life cycle of that shipment versus just at the beginning or the end of it,” said Brock Johns, principal analyst for supply chain technology, Gartner.
Changing the footprint
In 2018, shippers saw some of the highest rates on record for truckload movement due to a booming economy, the impact of ELD (electronic logging device) regulations and a continuing driver shortage. In 2019, however, the market flipped and those rates have reached record lows. These fluctuations have made it difficult to figure transportation costs for product pricing.
“I think the reason that middle mile is coming to the forefront is because that’s where you’re seeing a lot of costing in the transportation model; we’ve had a lot of inconsistencies with the market from a transportation perspective over the last few years,” said Maggie Turner, national account executive for logistics/freight management company GlobalTranz.