May 23, 2023

The Health of Your Delivery Business, Time for a Checkup?

Transportation

3 min read

Brian Jungeberg, Vice President, Transportation

The Health of Your Delivery Business, Time for a Checkup?

Same Day Delivery is rolling and industry growth projections are pointing up. But the rapid growth of the delivery industry has attracted inexperienced players to the market. This rapid development leaves positions of power and management in the hands of people who do not have enough experience in the field, opening the door to critical mistakes and missed red flags.

Identifying Red Flags

Neglecting the basics in safety regulations creates future harm potential. By becoming more stringent in these 3 key areas, businesses can keep pace with growth while mitigating potential losses and risks:

Hiring Practices: Businesses should hire only the best and most experienced candidates. Allowing unexperienced drivers or those with spotty records through can do more harm than good.
Following Up-to-Date Safety Protocols: Performing regular safety checks and vehicle maintenance and following industry guidelines are requisite for longevity and success.
Implementing the Latest Technology: Beyond improving efficiency and optimizing routes, using monitoring software and GPS tracking ensures drivers are staying on task and operating safely.

A Fleet Fix?

This is further complicated by the short lifespans of businesses in the industry. A fleet of commercial vehicles generally has a lifespan of 2-4 years before mechanical issues begin taking their toll. Businesses not consistently performing preventative maintenance will eventually experience unwelcome financial hardships.

Dodging Safety for Profit

Many companies that enter the last-mile space find profits tough to come by and leave the industry as quickly as they charged in. This is creating a tumultuous period for partners and customers. Additionally, nuclear verdicts and businesses allowing serious improprieties such as reckless driving are plaguing the industry, pushing premiums higher, and making the hard insurance market more unaffordable.

Lawsuit verdicts that used to go in favor of businesses are now frequently resulting in enormous payouts for claimants. If companies continue to dodge safety regulations in favor of higher profits, it will negatively affect businesses, the insurance market, and commercial transportation.

Changing Delivery Models

The current, in-demand two-day home delivery model seems unsustainable. It forces increased fuel consumption and unsafe driving that skirts regulations. With FedEx and UPS adding surcharges for residential deliveries due to the inconvenience of delivering a single package to one location, others will likely follow suit. These additional costs will affect how the structure transforms over time.

More centralized delivery points will likely become more commonplace as last-mile continues to grow, similar to the Amazon locker model. Having multiple fleets with their own drivers hitting the same geographical locations is not viable long-term, as businesses do not share the same flat rate and muddy the competitive waters.

Prevent Risk Now for Success Later

To ensure a sustainable last-mile future, last-mile delivery businesses must do everything they can to mitigate risks. While we wait for better fuel efficiency, capable electric vehicles, or other solutions, responding proactively to the known variables can make this growth transition a smoother ride.

Want to learn more?

Find me on LinkedIn, here.

Connect with the Risk Strategies Transportation team at transportation@risk‐strategies.com.

Email me directly at bjungeberg@risk‐strategies.com.

The contents of this article are for general informational purposes only and Risk Strategies Company makes no representation or warranty of any kind, express or implied, regarding the accuracy or completeness of any information contained herein. Any recommendations contained herein are intended to provide insight based on currently available information for consideration and should be vetted against applicable legal and business needs before application to a specific client.

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