Long-haul transport moves thousands of parcels at once. The last mile moves them one at a time, to individual doors, with a person who may or may not be home. That’s why it’s so often described as the most expensive part of delivery — frequently cited as 40% or more of total shipping cost.
Here are the challenges delivery businesses run into most often, what they really cost, and what operators do about them.
First, measure what a delivery costs you
Almost every challenge below either reduces deliveries per route or adds stops that earn nothing.
1. Failed deliveries
The biggest single cost in the last mile. A parcel that isn’t delivered costs the attempt, the re-attempt, customer service calls and sometimes a return.
What works:
- Notify receivers before the driver arrives — the day before and when the driver is a few stops away — with an option to reschedule or leave instructions.
- Make drivers record a reason and a photo for every failed attempt, so “not home” can be checked against the GPS position and time.
- Set a maximum number of attempts, after which the parcel goes to a pickup point or back to the sender automatically.
- Review failure reasons weekly by driver, area and merchant. Patterns appear quickly.
2. Poor address quality
Missing apartment numbers, informal addresses, landmarks instead of street names. Drivers lose minutes on every unclear stop, and some never find it.
- Require a phone number on every booking so the driver can call.
- Store delivery notes and corrected locations on the customer record, so the next driver benefits.
- Validate postcodes and zones at booking, not at the van door.
- For merchants who upload orders, flag incomplete addresses before the parcel is accepted.
3. Low route density
- Plan routes by zone so each driver covers a compact area.
- Put stops in a sensible order before the driver leaves — route planning doesn’t need to be perfect, it needs to be better than the driver guessing.
- Avoid sending one van across the city for a single urgent parcel; price express deliveries to cover it.
4. Time windows and customer expectations
Customers want narrow windows; narrow windows make dense routes harder. The compromise is to promise windows you can plan for — morning or afternoon, or a two-hour slot announced on the day — and to keep the customer updated if it slips.
5. Proof of delivery disputes
“I never received it” is expensive when you can’t prove otherwise. Paper signatures get lost; a tick in an app proves nothing.
- Capture the receiver’s name, a photo of the parcel at the door or in hand, a signature where required, and the GPS position and time.
- Make proof visible to the merchant and customer on the tracking page, so most disputes end without a phone call.
- For high-value parcels, use a one-time code sent to the receiver.
We’ve covered live tracking before; digital proof of delivery is its natural partner.
6. Cash on delivery
In many markets, COD is how most online orders are paid. It adds cash handling to every driver’s day, delays at the door while change is found, and a reconciliation job every evening. The essentials: COD amounts printed on the label from the merchant’s order (never re-typed), cash recorded on each delivery, and a daily driver hand-over that compares expected and counted cash.
7. Returns and reverse logistics
Returns come from refused parcels, failed deliveries after maximum attempts and customer returns to online shops. Each one needs a return job, a route and a hand-over to the merchant — and each should be charged for. Keep returns on the same system as deliveries so they’re planned into routes instead of handled as exceptions.
8. Peak season
| Lever | What it means | Lead time |
|---|---|---|
| Forecast with merchants | Ask your top merchants for their expected volumes and campaign dates | 6–8 weeks |
| Flexible capacity | Pre-agree extra drivers, contractors or partner couriers | 4–6 weeks |
| Cut-off times | Publish and enforce booking cut-offs for next-day service | 2 weeks |
| Extra shifts at the hub | Evening sorting so vans leave fully loaded in the morning | 2 weeks |
| Customer communication | Tell receivers realistic delivery dates at checkout and in updates | Ongoing |
9. Driver productivity and retention
Drivers leave when routes are chaotic, pay is unpredictable and every day involves arguments about what they did or didn’t deliver. They stay when the day is organised.
- Give drivers their full run in a phone app before they leave, in stop order, with navigation and one-tap calling.
- Make proof capture fast — a photo and a tap, not a form.
- Show drivers their own numbers: stops completed, success rate, cash in hand.
- Pay fairly for difficult areas instead of letting them become “failed” deliveries.
10. Visibility for everyone
When dispatchers can’t see where drivers are, merchants can’t see where parcels are and receivers can’t see when they’ll arrive, the phones ring all day. One shared record of every parcel — what was planned, what happened, with proof — removes most of the questions before they’re asked.
A weekly last-mile scorecard
| Metric | Formula | Good target |
|---|---|---|
| First-attempt delivery rate | Delivered first attempt ÷ out for delivery | 90%+ |
| Stops per driver hour | Stops ÷ productive hours | 12+ urban |
| Cost per successful delivery | Route costs ÷ successful deliveries | Falling |
| On-time rate | Delivered within promised window ÷ delivered | 95%+ |
| Proof completeness | Deliveries with photo/signature ÷ delivered | 99%+ |
| COD variance | (Counted − expected cash) ÷ expected cash | 0% |
| “Where is my parcel?” contacts | Contacts ÷ parcels delivered | Falling |
Where to start
Don’t try to fix everything at once. Start by recording failure reasons and stops per hour for a month — those two numbers will tell you where your money goes. Then fix the biggest cause, measure again and move on. Teams that do this with proper last-mile delivery software get the measurements for free, because every attempt, reason and proof is already recorded.