Effective Strategies for Last Mile Returns in LTL Logistics

Shippers have a new list of expectations, while carriers desire greater differentiators. As digital commerce continues to explode, many final-mile and reverse logistics providers are rethinking and redefining their roles and navigating new opportunities as they start the push toward the next peak season.

In the final of four LTL 201 hybrid sessions, a panel discussion took a deep dive into reverse logistics for the last mile amid growing demand for recoveries and returns. The panel featured insight from Joel Pinsky, chief financial officer of Global Messenger and Logistics and president of the Customized Logistics and Delivery Association (CLDA), and Cathy Roberson, industry writer and research manager at the Reverse Logistics Association (RLA).

1. Increase Transparency and Accuracy

   One of the pitfalls among returns is shipper miscommunication about what specifically is to be picked up. If a driver isn’t equipped to pick up what they encounter—e.g., additional items—it could result in a wasted trip or missed pickup.

   Pinsky:

   “A shipper might tell you you’re going to pick up 90 computers, but you get there and there are 160. Or there are different things that are there that the people think are going back, but it’s not on your list to collect.”

   Roberson noted that communication isn’t where it needs to be, especially for retailers dealing with returned items. Online retailers need to know why an item is being returned. For instance, if a customer is returning a sweater because they didn’t like the color, a different color sweater could satisfy the customer.

   Roberson:

   “Understanding why something is being returned is critical, because the situation could be fixed.Plus, the shipper needs to be able to refund or provide a credit as quickly as possible.”

2. Make Insurance and Liability Key Concerns

   Insurance and liability for transporting returned items shouldn’t be ignored. The disastrous event in the Port of Baltimore clearly illustrates why. In the cargo world, you must have insurance for the value of the cargo, said Pinsky.

   Pinsky:

   “There’s a chain of custody. If I go to pick up 60 computers and I come back with 90, that’s great. But what happens if I only come back with 30?. And sometimes you’re doing a reverse logistics job and the product’s there—but nobody’s present. You need to have the right insurance.”

   He also noted insurance and liability issues that could arise if the Gig Economy infiltrates final-mile deliveries. “If you’re going to go into the gig world, you better make sure those people [drivers] are properly trained and understand their responsibilities and liabilities,” he said.

3. Don’t Dismiss Small- to Mid-Sized Final-Mile Carriers

   UPS and FedEx typically come to mind for final-mile delivery, but there is a whole world of small- to mid-sized companies that drive the pickup and delivery economy. These are the companies that often get forgotten or taken for granted. For example, master contractors who might have a couple of drivers working for them.

   “It’s part of the entrepreneurial spirit. Someone has a car and starts a business out of their garage,” said Pinsky. “They get contracts and then grow to become some of the largest companies. Some of our largest members in the CLDA started their companies just like that. There’s a lot of opportunity in this industry.”

4. Expect Tighter Return Policies, Local Warehousing

   During the pandemic, online retailers allowed consumers to return ordered items without incurring extra transportation costs, also known as Happy Returns. That led to consumers ordering multiple items, in multiple sizes or colors, with the expectation of free returns for the items they didn’t want. But that’s changing as retailers tighten return policies due to increased transportation costs on their end.

   Also, to further mitigate costs for transporting larger returned items, local warehouses are being used to keep products in the area for resale and drive down transportation costs. “Instead of sending them to a warehouse across the country to resell the item, they’re being returned more locally to help reduce some of these costs,” said Roberson.

   She added that artificial intelligence (AI) will likely come into play for retailers to analyze why they’re getting so many returns. Roberson noted she has been tasked by the RLA to start building out a benchmarking solution to help retailers compare their returns to the rest of the market. “This is something that’s coming down the pike,” she said.

5. Get Ready for Drone Deliveries, Self-Operated Vehicles

   While the specifics of drone deliveries and self-operated vehicles haven’t yet been determined, Pinsky believes it’s an inevitable part of the future of final-mile deliveries.

   “Systems are getting more robust and AI is getting into everything, so things we don’t imagine today are going to be here tomorrow—and they come quickly,” he said.

   Furthermore, the aging final-mile delivery population is colliding with increasing delivery demand. “Now, everybody wants everything delivered. So, whether it’s from a business or residential perspective, that’s going to continue to be a huge growth area,” said Pinsky.