Maersk bets vertical integration will win the Last Mile

Last-mile delivery presents the final stop before reaching the customer, offering the last chance to fulfill an order correctly. It's also the first place where blame arises when issues occur. Prashant Shah, Maersk's Head of E-commerce for North America, believes that last-mile delivery creates valuable data points that can illuminate upstream challenges.

Maersk is betting that integrating every aspect of the supply chain, from the port to the doorstep, will reduce friction and enhance visibility throughout the customer journey. Shah argues that last mile is no longer just a cost center; instead, it's a source of data intelligence that can assist upstream operations. Most companies treat last-mile delivery as an isolated function, overlooking the upstream problems it reveals.

Without proper connectivity across the supply chain, visibility can break down at every handoff, making it challenging to pinpoint where issues originate and address them before they reach the customer. Joe Johnson, Maersk's Head of Pricing for North American Ground Freight, explains that the final mile is the only part of the delivery process visible to the end customer.

They don't witness Maersk vessels or the initial pickup, but they do see the last-mile delivery. Consequently, it's crucial to comprehend whether the last mile problem is genuine or if improvements can be made to enhance the overall customer experience. Maersk's strategy involves vertical integration, encompassing more than just ground freight.

Shah describes an end-to-end customer relationship, starting in Vietnam, with Maersk handling the shipment. By consolidating these functions, Maersk aims to minimize information gaps between transportation providers, warehouses, and delivery networks. Instead of managing multiple vendors independently, customers gain a unified view of inventory, shipments, and final delivery performance, facilitating quicker issue resolution and proactive communication when disruptions occur.

Johnson highlights that end-to-end connectivity offers a competitive advantage as more consumers buy from overseas sellers and demand full visibility throughout the delivery process. For many retailers and brands, the challenge lies not only in moving products swiftly but also in delivering a consistent and predictable experience to end customers while managing the increasing complexity across sourcing, transportation, fulfillment, and delivery.

As visibility expectations rise, supply chain leaders are focusing on how connected their logistics networks are from origin to final delivery. Shah emphasizes that the more elements of a customer's supply chain that can be managed, the more proactive they can be in communicating with both customers and end consumers. Johnson stresses the goal of consistent delivery experiences regardless of geographic location.

Maersk operates two units in its North American operation: Maersk E-Commerce (MEC), led by Shah, manages last-mile delivery, while Maersk Ground Freight (MGF), headed by Johnson, oversees LTL and FTL ground freight. Despite operating separately, both units function as one integrated solution from the customer's perspective. The branding strategy is deliberate, allowing Maersk to present a unified identity regardless of the mode of transit.

Rather than establishing its own last-mile delivery fleet, Maersk manages a diverse pool of carriers on behalf of customers. Shah explains that Maersk uses a multi-carrier model with uniform API integration, single communication, and consistent customer experiences across all end customers, even if service issues arise in specific regions.

Ultimately, customers are concerned about receiving their products on time and having full visibility of the delivery process. Maersk aims to simplify and predict this experience for customers by managing every aspect of the chain seamlessly.