Over Half of Australian Carriers Say Last Mile is Their Biggest Challenge, Here’s How They’re Responding

By Rob Hango-Zada, Co-Founder and Joint CEO of Shippit

It’s no surprise that Australia’s supply chain landscape is under immense pressure. A mix of global economic uncertainty, rising tariffs—which could cost the Australian economy more than $15 billion according to early modelling by Fair Supply—sustained eCommerce growth and soaring customer expectations are pushing the system to its limits. Accurately predicting what might happen next week, let alone next month, can feel futile.

As consumers demand more from the delivery experience, retailers are seeking more flexibility, capacity, transparency, and control from their carrier network than ever before. Shippit and Jarden research shows that nearly two in three shoppers (64%) would be unlikely to return to a brand after a poor delivery experience. This puts carriers under growing scrutiny, as the performance of their network directly impacts their own loyalty and revenue, not just a retailer’s.

So, how are carriers approaching 2025 and beyond? How is the influence of shoppers affecting them? What tactics are they deploying during peak season? And how many of them are prioritising sustainability in their strategy?

Understanding Shopper Expectations

It’s important for carriers to understand what shoppers want, because those expectations directly shape what retailers demand from their delivery partners. For 71.4% of Australian carriers, the most noticeable shift in customer expectations has been the rising demand for same-day delivery. Many also pointed to growing pressure around delivery time precision, real-time tracking, and sustainable shipping options.

To meet these demands, carriers are investing in technologies that increase speed, accuracy, and transparency. More than half (57.1%) are focusing on AI-powered route optimisation software which plays a key role in enabling quick, efficient and scalable same-day delivery, reflecting the growing focus on local commerce. It also mirrors strategies used by retail giants like Amazon and Walmart, who rely on smart logistics, automation and AI to turn rapid delivery into a competitive advantage and new era of shopper expectations.

Carriers that optimise their infrastructure are not only meeting today’s expectations, but laying the groundwork for what’s next, both in the long-term and as pressure ramps up during peak season.

Preparing for Peak Season Pressure

Meeting day-to-day expectations is one thing, but how reliable is your network during peak season, when the stakes are higher? Two in three (65%) consumers now plan to do their Christmas shopping exclusively during sales periods, demonstrating that shoppers are increasingly conditioned to buy earlier and focus on “deals” before the traditional gift-giving season. With order volumes surging around major sales events and holidays, carriers play a vital role in helping retailers uphold service levels when it matters most.

All carriers surveyed in our research have increased capacity over the past 12 months to get ahead of both the peak season spikes in demand and the continued proliferation of eCommerce. Most (57.1%) carriers increased their capacity modestly, boosting their capacity by up to 10%, while the remaining 42.9% increased theirs in excess of 20%. Many carriers are expanding their workforces, extending operating hours, forming partnerships with third-party carriers and embracing more advanced forecasting and planning tools, to improve their service on behalf of retailers.

However, labour shortages remain a persistent challenge when scaling operations quickly, particularly during peak periods. In many cases, carriers must increase their workforce by 20–40% for a month to service demand that may only last a week. Balancing this surge in labour costs with the need for speed and capacity is becoming increasingly difficult and may require more innovative solutions to remain sustainable in the long term.

Last Mile Delivery, Reverse Logistics

Over half (57.1%) of Australia's carriers say last mile delivery, from depot to doorstep, will be their biggest challenge over the next year. Whether it’s rising labour and fuel costs, congestion in cities, the need to improve delivery density, or maintaining standards as volume and expectations increase, there are a myriad of factors contributing to this. These carriers are making targeted investments in last-mile delivery technology, real-time tracking solutions and fleet management systems to improve the unit economics of their delivery.

 As local commerce strategies continue to grow, the increased volume of local deliveries will make final mile delivery more cost-competitive, which presents a significant opportunity to bring costs under control. However, it is critical that carriers address this challenge now by adopting smarter technologies and processes. Leveraging gig fleets, “milk run” delivery models, and intelligent logistics platforms will be essential in optimising operations, especially during high-demand periods, and ensuring long-term sustainability.

Returns are especially critical today, not just as their volume increases, but as more retailers seek to turn a potential friction point into a driver of loyalty. A strong reverse logistics strategy is critical, with 71.4% of carriers already looking into areas like new tech platforms, third-party processors and updated pricing models.

Is Sustainability a Make-or-Break Factor?

While over half of Australian carriers (57.1%) have seen rising demand for eco-friendly shipping, all described the influence as minor or insignificant. This is evident operationally: over half say less than 10% of their fleet use electric or alternative fuels, and none offer carbon-neutral or offset delivery.

In the absence of widespread green fleet adoption, which may take a decade or more to significantly impact emissions, carriers are deploying strategies that reduce unnecessary kilometres on the road. Tactics like route optimisation, parcel lockers, consolidated delivery runs, and reverse logistics efficiencies are emerging as the most immediate levers to cut emissions and operational costs. These changes not only support sustainability goals but also improve last mile efficiency.

While sustainability isn’t currently a decisive factor for retailers when choosing carriers right, that could change. For now, high costs, infrastructure gaps and retailer reluctance to pay green premiums remain key barriers, but the tides could turn quickly. As regulations such as mandatory climate-related reporting tighten and shopper sentiment shifts, supply chains that invest early will be better positioned to adjust.

Carriers: The Connectors

Amidst the uncertainty of a volatile supply chain landscape, carriers must focus on understanding and aligning their services with what retailers value most: meeting the rising expectations of shoppers. That means focusing on faster and smarter delivery, scaling effectively for peak periods and laying the groundwork for more sustainable operations.

Retailers want carrier partners who not only deliver parcels but also help them deliver on customer expectations. They are seeking carriers who understand the needs of both retailers and consumers, and tailor their strategy accordingly. Those who embed flexibility, technology, and customer-centric thinking into their operations will be best-positioned to grow alongside their retail partners.

To find out more about Shippit, visit https://shippit.com/