What Does Last-Mile Cost Include?

What does the tail-end logistics cost include?

In the field of modern logistics, the tail-end refers to the last leg of the transportation process from the distribution center or collection point to the end consumer. Although this step may seem simple, its cost structure is very complex and involves multiple aspects. The level of tail-end costs directly affects logistics efficiency and user experience, and understanding the specific composition of tail-end costs is of great significance for enterprises to optimize supply chain management.

The main components of tail-end costs include the following

Firstly, there is transportation cost. This is the most obvious part of tail-end costs. With the increasing complexity of urban traffic conditions, especially in large cities, the passage time and fuel costs for logistics vehicles are increasing. For example, due to the existence of traffic restrictions in megacities like Beijing and Shanghai, logistics companies often need to adjust delivery times, which undoubtedly increases operational difficulty and costs. Fluctuations in fuel prices also have a direct impact on transportation costs. According to a certain e-commerce platform, to cope with the pressure brought by rising oil prices, they are trying to promote new energy logistics vehicles and cooperate with multiple oil companies to launch discounted fuel programs to reduce overall transportation costs.

Secondly, there are warehousing and sorting costs. Although the tail-end emphasizes the last mile, in many cases, goods still need to go through brief storage and precise sorting operations before they can be smoothly delivered to consumers. Especially during e-commerce promotional festivals, the surge in order volumes requires temporary increases in manpower in warehouses for rapid processing, which not only raises labor costs but may also lead to additional expenses due to negligence, such as misdelivery issues. Data shows that during the Singles' Day shopping festival, some courier companies' sorting centers can handle tens of thousands of packages per hour, posing extremely high demands on human resource allocation.

Thirdly, there are wages and related welfare expenditures for end delivery personnel. With the growing awareness of protecting workers' rights in society, the basic wage levels for couriers continue to rise, and companies must also provide social insurance contributions and accommodation subsidies. Statistics show that the monthly income of ordinary couriers in first-tier cities is approximately 8,000 to 12,000 yuan, while it is relatively lower in remote areas. However, even so, the courier industry still faces recruitment difficulties, particularly during summer heat waves or winter cold periods, when many young people are unwilling to take on this job. This prompts companies to raise salaries to attract talent.

Finally, there are loss and insurance costs. In actual operations, there will inevitably be incidents of damaged or lost goods, which will result in economic losses for merchants. Most merchants choose to purchase commercial insurance as one of the risk prevention measures. It should be noted that different types of insurance products have significant pricing differences, depending specifically on the insured value of the goods and the transport distance. Additionally, to reduce the probability of losses, some companies strengthen packaging design, such as using more robust materials for outer boxes or adopting vacuum compression technology to reduce volume occupancy, among other methods.

In summary, tail-end costs cover multiple dimensions including transportation costs, warehousing and sorting costs, wages and related welfare expenditures for end delivery personnel, and loss and insurance costs. Faced with increasingly fierce market competition, how to effectively control these costs has become an important issue for every practitioner. In the future, with the development of artificial intelligence technology, solutions such as unmanned delivery robots are expected to gradually become popularized, thereby helping to alleviate manpower burdens and improve operational efficiency. At the same time, relevant departments are actively introducing policies to support green and low-carbon development models, encouraging companies to adopt environmentally friendly transportation tools in market competition. It is believed that over time, the operating costs of the entire industry will be effectively alleviated.