Last Mile Delivery Dissected Our Economic Development Officer, Andrew Taylor, breaks down the mathematics behind the last mile in product distribution

If you take a quick look around your home or office, you will likely find that you are surrounded by hundreds if not thousands of finished consumable goods; each object a singular monument to the concept of a value-added, production economy. However, we often hail the hands that work the craft and overlook the hands that move the essential materials into place and the finished goods out to market. Our wonders of production could never be if their raw materials and final products could not be brought to bear at the right time for the right price.

At face value, logistics doesn’t seem all that complex. You simply take item X, made by individual Y from point A to point B and give it to individual Z; easy right? However, when dealing with trillions of transactions a year between billions of producers and consumers across hundreds of nations, one can’t simply slow-walk every knick-knack in the market to its final user. You must use mass goods transit options such as cargo ships, planes, trains and trucks. But ultimately, you do have to get that knick-knack into the final hands of the individual who needs it. This is often referred to as Last Mile Logistics and it can be the costliest aspect of goods distribution.

The realities of Last Mile distribution can seem somewhat counterintuitive. Most finished production goods often travel over ten thousand miles to reach their end user. How can the last few miles of delivery often constitute as much as 30% of the total delivery overhead? The answer comes down to the mathematics of distribution. Most production units start at the same location: the factory. However, the ultimate destination of each unit (or quite often groups of units) go all over the world. Consider that it’s about 11,500 miles from Shanghai to Decatur, IL. A cargo ship can get a production run of a million units 90% of the way there relatively cheaply by landing the entire shipment in a Western U.S. port. This is an economy of scale dealing with one transit provider. The real cost comes into play once the shipment is divided for distribution. Every time a shipment is split, it requires more man-hours, trucks, trains, fuel, insurance, etc. all to move the exact same number of units. Additionally, often these services are carried out piecemeal by third party logistics firms, all who have their own overhead and profit margins to be maintained. By the time those one million units reach the “Last Mile” of their delivery, they might be in the hands of tens of thousands of individuals (or even hundreds of thousands) in the age of home delivery, all of whom need to be paid.

This is the core advantage of a one-stop shop, maker-to-user logistics option like the ADM intermodal ramp: an uncongested, quick turn distribution point owned and operated by one provider. While ADM is correctly known worldwide as the leader in mass food production, it is also a world class logistics company maintaining a transportation infrastructure that secures an unending river of raw materials into their production facilities and finished products out to market 365 days a year to all corners of the globe. By utilizing ADM logistics, your raw materials and finished products can ride those currents from their first mile to their last.