Target strengthens delivery capabilities! Increase capacity and use higher capacity trucks!

Target is increasing its use of larger delivery vehicles, improving capacity and creating more efficient routes in markets served by its sorting centers, Executive Vice President and Chief Operating Officer John Mulligan said on an earnings call last week.

Mulligan said that for routes previously served by sedans, SUVs and minivans, more than twice as many packages can be delivered, while the company's "high-capacity vans" can serve nearly five times as many packages. Target has been testing high-capacity van routes at sorting centers in Dallas and Minneapolis.

Mulligan said about 65% of last-mile deliveries made by Target subsidiary Shipt in the first quarter were made using larger vehicles, up from zero a year ago. “This has resulted in significant cost savings for our last-mile delivery program overall,” he added. Greater reliance on high-capacity vehicles is just one way Target’s last-mile delivery business is evolving to more closely mirror the processes of package carriers.

The retailer is also working on "a standardized, faster way to load these vans, containerize packages, and easily identify the right package at the time of delivery," Mulligan said. This would both simplify the loading process for drivers and enable the company to safely move more Shipt drivers in and out of its sorting centers, improving last-mile delivery capabilities.

The moves will help the company more cost-effectively handle the growing number of packages flowing through its sorting centers, through which it delivered 26 million packages in 2022 and plans to roughly double that volume this year.

The opening of new sorting centers should also increase numbers. In February, Target announced a $100 million investment to expand its next-day delivery capabilities by adding more sorting centers. The company currently has nine such centers and expects that number to climb to more than 15 by 2026, Mulligan said on a May 17 conference call.

Target is working to maximize next-day delivery capabilities at its sorting centers, according to the company. It opened an "expansion facility" in Smyrna, Georgia, this month, expanding the company's presence in the Atlanta market, Mulligan said.

Online orders that fall outside of Target's Atlanta sorting center can be transferred to the Smyrna facility, Mulligan said. Drivers can pick up those orders in Smryna and deliver them to other communities.

“With the opening of this expanded facility, our next-day delivery capabilities now cover more than 3 million guests in the Atlanta market,” Mulligan said.

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