What to Expect in the 2022 Parcel and Last Mile Market – Buckle Up!

December 23, 2021


As we wind down 2021, we find ourselves looking towards another year full of changes for the parcel and last mile market. New carriers, faster delivery times, and higher shipping costs were among the trends of this past year.

New and unexpected carriers emerged in 2021, such as Walmart and American Eagle Outfitters (AEO). Walmart announced its last mile service, GoLocal service, in August. The service offers its technology platform and white-labeled deliveries through its crowdsourced platform, Spark. Home Depot and Chico’s FAS have already signed on to the service for specific locations around the US, with plans to expand locations in 2022.

Meanwhile, AEO acquired AirTerra, a startup that began in 2020. AirTerra partners with various last mile providers such as AxleHire and CDL Last Mile for the final mile after the company consolidates parcels through its network, which includes the use of zone skipping.

We also saw the emergence of such startups as FrontDoor Collective and Erly to address the last mile and last mile network options from e-fulfillment providers and 3PLs.

Faster delivery times also continued to pop as more retailers partnered with crowdsourced platforms such as Instacart and DoorDash to provide same-day deliveries. AEO’s second purchase of the year, Quiet Logistics, is also helping it to fulfill orders and speed up deliveries.

And, of course, higher shipping costs as retailers also struggle with upstream supply chain costs.

Expect more changes in 2022

2021 trends will continue into 2022. We expect more new carriers, including the combined LaserShip and OnTrac, to participate in the parcel and the last mile market and more last mile network options from 3PLs, fulfillment providers, and others.

UPS’ strategy change, ‘better, not bigger’ is playing a role in these market changes. UPS and FedEx are both focused on more profitable deliveries, leaving many retailers and other shippers looking elsewhere for last mile partners.

Growing parcel volumes are also driving this need for more last mile services. According to FedEx, the US domestic parcel market will reach 134 million pieces a day by 2026, a 70% increase from 2020, and e-commerce is expected to drive 90% of the parcel market growth.

Indeed, retailers will continue to build out their omnichannel strategies into 2022. Parcel and last mile management will play a significant role in these strategies as retailers manage more last mile carriers and costs associated with each.

Parcel and last mile costs will rise in 2022. In fact, according to our analysis, 2022 will witness the most significant rate increases by FedEx and UPS in 20 years. Ouch!

However, here in the US, only three last mile carriers offer a third-party national network – FedEx, UPS, and the US Postal Service (USPS). Will we see Amazon jump in and provide third-party deliveries in 2022? What about the LaserShip/OnTrac combo? Will they expand their network to a national one in 2022?

Regardless, retailers and shippers are adding more last mile delivery carriers to their mix to mitigate costs and provide more delivery options.

The parcel and the last mile market is changing rapidly and will continue in 2022. We’re constantly monitoring the market and sharing our insights in various publications, blog posts, and, most importantly, with our clients. Be sure to follow us here and on social and perhaps check out our services to see how we can help you mitigate costs and ensure your parcels are delivered on time.

Until then, Happy Holidays. We’ll see you here in 2022 with a lot more news and analysis!

 


ABOUT SPEND MANAGEMENT EXPERTS

Spend Management Experts has united with Transportation Insight to become North America’s #1 provider of small parcel management and optimization services.  Our team of best-in-class analysts employs cost modeling techniques to help clients optimize their supply chain spend, reducing costs by 20% or more.  Our approach is non-invasive to daily supply chain operations as we employ unparalleled market intelligence and proprietary cost modeling technology, targeting hidden costs and identifying savings opportunities. After establishing the success criteria, SME leverages proven project plans, data warehousing, and milestone documents to ensure an optimized and implementable solution. We build strong business cases based on your data to negotiate better terms, pricing, and service for our clients. We deliver your competitive edge.

Connect with Spend Management Experts on TwitterLinkedIn, and the Spend Management Experts blog.

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What to Expect in the 2022 Parcel and Last Mile Market – Buckle Up!

December 23, 2021


As we wind down 2021, we find ourselves looking towards another year full of changes for the parcel and last mile market. New carriers, faster delivery times, and higher shipping costs were among the trends of this past year. New and unexpected carriers emerged in 2021, such as Walmart and American Eagle Outfitters (AEO). Walmart announced its last mile service, GoLocal service, in August. The service offers its technology platform and white-labeled deliveries through its crowdsourced platform, Spark. Home Depot and Chico’s FAS have already signed on to the service for specific locations around the US, with plans to expand locations in 2022. Meanwhile, AEO acquired AirTerra, a startup that began in 2020. AirTerra partners with various last mile providers such as AxleHire and CDL Last Mile for the final mile after the company consolidates parcels through its network, which includes the use of zone skipping. We also saw the emergence of such startups as FrontDoor Collective and Erly to address the last mile and last mile network options from e-fulfillment providers and 3PLs. Faster delivery times also continued to pop as more retailers partnered with crowdsourced platforms such as Instacart and DoorDash to provide same-day deliveries. AEO’s second purchase of the year, Quiet Logistics, is also helping it to fulfill orders and speed up deliveries. And, of course, higher shipping costs as retailers also struggle with upstream supply chain costs.

Expect more changes in 2022

2021 trends will continue into 2022. We expect more new carriers, including the combined LaserShip and OnTrac, to participate in the parcel and the last mile market and more last mile network options from 3PLs, fulfillment providers, and others. UPS’ strategy change, ‘better, not bigger’ is playing a role in these market changes. UPS and FedEx are both focused on more profitable deliveries, leaving many retailers and other shippers looking elsewhere for last mile partners. Growing parcel volumes are also driving this need for more last mile services. According to FedEx, the US domestic parcel market will reach 134 million pieces a day by 2026, a 70% increase from 2020, and e-commerce is expected to drive 90% of the parcel market growth. Indeed, retailers will continue to build out their omnichannel strategies into 2022. Parcel and last mile management will play a significant role in these strategies as retailers manage more last mile carriers and costs associated with each. Parcel and last mile costs will rise in 2022. In fact, according to our analysis, 2022 will witness the most significant rate increases by FedEx and UPS in 20 years. Ouch! However, here in the US, only three last mile carriers offer a third-party national network – FedEx, UPS, and the US Postal Service (USPS). Will we see Amazon jump in and provide third-party deliveries in 2022? What about the LaserShip/OnTrac combo? Will they expand their network to a national one in 2022? Regardless, retailers and shippers are adding more last mile delivery carriers to their mix to mitigate costs and provide more delivery options. The parcel and the last mile market is changing rapidly and will continue in 2022. We’re constantly monitoring the market and sharing our insights in various publications, blog posts, and, most importantly, with our clients. Be sure to follow us here and on social and perhaps check out our services to see how we can help you mitigate costs and ensure your parcels are delivered on time. Until then, Happy Holidays. We’ll see you here in 2022 with a lot more news and analysis!  

ABOUT SPEND MANAGEMENT EXPERTS

Spend Management Experts has united with Transportation Insight to become North America’s #1 provider of small parcel management and optimization services.  Our team of best-in-class analysts employs cost modeling techniques to help clients optimize their supply chain spend, reducing costs by 20% or more.  Our approach is non-invasive to daily supply chain operations as we employ unparalleled market intelligence and proprietary cost modeling technology, targeting hidden costs and identifying savings opportunities. After establishing the success criteria, SME leverages proven project plans, data warehousing, and milestone documents to ensure an optimized and implementable solution. We build strong business cases based on your data to negotiate better terms, pricing, and service for our clients. We deliver your competitive edge. Connect with Spend Management Experts on TwitterLinkedIn, and the Spend Management Experts blog.

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