The Last Shall Be First: South American e-commerce’s last-mile boom

Service, Not Science

But is this focus on technology the best use of last-mile resources? Lee of Modern Logistics remains skeptical. In some remote places, he said, last-mile offers little security. “You may be saving minutes with your delivery,” he said, “but what about the 25 days of delays when the wi-fi cuts out?”

For Lee, the better answer is to focus not on making money through shipping high-value goods but on creating solid infrastructure and the most efficient, customized offerings for clients. “We have visited thousands of companies and have established 120 trading partners,” Lee said. “We have 14,000 trucks at hand and can choose the right trucking company to get the job done. From Manaus, we can dirt-bike goods through South America. We can do it better.”

“We know that it’s not about high-value goods, it’s the service that has value,” Lee added. “We’re following a strategy that’s needed whether the economy is booming or it is in crisis. There’s a certain level of service we have to offer.”

In the first quarter of this year, Frota said Azul Cargo revenues grew by 41%, year-over-year, thanks to the efficiencies the carrier is offering for retailers. The carrier is also seeing an uptick in B2B operations by shipping freight from factories in Manaus in northern Brazil, and then distributing the products to stores on the weekdays.

For Pacheco of Connect Cargo, the goal at the start of his business model two years ago was “to change the mind-set of the market about last-mile,” he said. “We don’t re-create the wheel, we just get all good things we have in the United States and Asia from the past 10 years and combine them.”

Connect Cargo then “started understanding the pain our customers were suffering every single day in order to set up an internal service level agreement and avoid the same problems we have had in the past.”

For more on last-mile logistics, see “Last-mile? There’s an app for that“