Last‑mile costs ballooning
- New social posts flagged last‑mile delivery costs now exceed the rest of the supply chain. - AI route‑optimization was cited as reducing driver counts, changing cost structure in last‑mile logistics. - That shift concentrates cost pressure and raises automation tradeoffs for retailers and carriers (x.com).
Last-mile delivery now takes the biggest slice of shipping spend, with its share rising from 41% in 2018 to 53% in 2023. (statista.com) “Last mile” is the final handoff from a local hub to a shopper’s door, and Capgemini said that step accounts for 41% of total logistics supply-chain costs. FarEye said retail and logistics executives put the share at 53% of overall shipping costs. (capgemini.com) (fareye.com) FarEye said the biggest cost drivers in its survey were fuel at 59%, address location at 39%, labor at 36%, and first-delivery failure at 34%. Capgemini said retailers often absorb much of that bill by offering free delivery to consumers. (fareye.com) (capgemini.com) Route-optimization software is changing the mix of those costs rather than erasing them. Amazon Web Services said routing systems now calculate many-to-many vehicle plans, and Onfleet said its system re-optimizes continuously as traffic shifts, drivers call out, and new orders arrive. (aws.amazon.com) (onfleet.com) Vendors say those tools can let each driver cover more stops. Onfleet says customers using its route optimization have posted a 55% increase in driver capacity, while Amazon Freight said optimization and machine learning help it find efficiency gains across trailer handoffs. (onfleet.com) (amazon.com) That leaves retailers and carriers with a narrower problem: fewer wasted miles, but a larger share of total cost concentrated in the doorstep leg they still cannot fully automate. EY said AI can cut operating costs and fuel use, while automation is narrowing the distance to full autonomy rather than replacing the job overnight. (ey.com 1) (ey.com 2) The pressure is rising with e-commerce speed promises. McKinsey projected same-day and instant delivery could reach a combined 20% to 25% share of the market by 2025, a mix that pushes more parcels into expensive, low-density local routes. (mckinsey.com) The urban side effects are also getting harder to ignore. A 2024 World Economic Forum paper said delivery vehicles could add as much as five minutes to average urban commutes by 2030 and account for 13% of total carbon emissions in cities. (weforum.org) Consultants and carriers are pitching different fixes: microhubs, pickup points, denser fulfillment networks, electric vans, and better routing software. The World Economic Forum said coordinated changes across the ecosystem could cut last-mile delivery costs by 25% versus a do-nothing scenario. (weforum.org) The result is a supply chain where the hardest leg is now the most expensive one. Software can trim miles and raise driver productivity, but the doorstep remains where retailers and carriers are still paying the most. (statista.com) (onfleet.com)
