Rising demand for faster fulfillment is colliding with volatile delivery costs and tighter carrier pricing. A new report by FarEye shows how AI adoption and network redesign are becoming critical tools to keep the last mile fast without losing margin discipline.
Rising Expectations for Speed
FarEye’s Eye on the Last Mile report, released alongside its Last Mile Leaders conference in Chicago, finds same-day delivery poised to grow from 27% of U.S. deliveries today to 35% by 2027. This reflects a deeper structural change in network design: retailers are building denser fulfillment footprints, forward-positioning inventory, and leveraging micro-fulfillment nodes closer to urban demand centers. Carriers, in turn, are rebalancing route density and capacity to support tighter delivery windows without eroding profitability.
The report also highlights operational challenges tied to this acceleration. Cost-to-serve pressures remain intense as fleets absorb higher fuel costs, driver wages, and insurance premiums, while routing inefficiencies continue to inflate unit economics. Logistics operators are increasingly turning to AI-driven route planning and predictive capacity allocation to offset these costs. Electrification is also being pursued as a lever for long-term cost stability, though its pace remains tied to regional charging infrastructure and delivery range requirements.
Pricing Volatility and AI Uptake
Delivery costs have climbed sharply. Average rates climbed 12% from 2024 to 2025, with some lanes spiking as much as 74% due to rural premiums and surcharges. The clustering of hikes around 0%, 10% and 25% suggests carriers are shifting toward standardized pricing bands, reducing room for one-off negotiation. For logistics operators, this reinforces the need for rigorous contract strategies, broader carrier diversification, and stronger forecasting models to shield networks from sudden cost shocks.
Technology is emerging as the counterweight. AI-driven routing and carrier management tools are enabling tighter control over cost-to-serve while real-time visibility platforms are becoming critical for both planning and exception handling. Outsourcing, too, is expanding as companies seek flexible capacity. Still, gaps persist: more than half of businesses lack delivery slot selection, despite clear consumer willingness to pay for precision.
Looking Beyond Speed
The report frames speed as the headline battle, but the deeper challenge may be balancing it against sustainability, resilience, and profitability. While consumers reward faster service today, research shows rising interest in “green delivery” options, such as consolidated shipments or slower, lower-emission modes, that could soon reshape preferences again. Companies that calibrate not just for speed but for flexibility in service design will be better positioned when the pendulum swings toward cost and sustainability trade-offs.
