AI-Powered Last-Mile Delivery - Cut Costs & Boost Satisfaction

According to preliminary industry statistics from the end of 2025, global parcel volume has reached approximately 217 billion shipments¹. Among them, the parcel volume in the US market is estimated to be 24 billion pieces for the full year¹. It all runs like clockwork on a carefully coordinated network of air, land, and sea transport. But the hardest part—and the most crucial part for businesses like yours—is the ‘last mile’.

In fact, Hong Kong's robust economic environment is highly favorable for online retail. According to the latest data from the Census and Statistics Department, online retail sales in Hong Kong reached approximately HK$27.5 billion in just the first nine months of 2025², reflecting the need for an efficient logistics network to handle this growth.

Here we explain why the last mile is so challenging, what decisions you can make to improve last-mile delivery, and what the future looks like for this vital final leg of the logistics process.

What is last-mile delivery?

Last-mile delivery, sometimes referred to as ‘final mile’, is the movement of goods from a transportation hub to their final destination—typically a customer’s home address.

But why is the last mile so challenging? Complex networks of rail, sea, road, and air transport whisk billions of parcels around the world every year. These are controlled and highly orchestrated networks, using dedicated routes and specialized vehicles over long distances. But the crucial final leg of the journey—the last mile from a local hub or distribution center to the customer’s home or office—doesn’t have anywhere near the same level of control, consistency, and scale.

Local delivery van drivers need to tackle unpredictable traffic, road closures, route planning challenges, weather conditions, and any number of other difficult-to-plan for obstacles.

From the delivery company’s point of view, it’s the least efficient part of the logistics cycle: van drivers have to make many short stops often delivering just one parcel at a time (compared to the many thousands of items a single aircraft carries). And, for most e-commerce deliveries, they need to do this while acting as the only customer-facing human in the entire supply chain.

Challenges facing last-mile delivery

• E-commerce continues to grow, meaning more packages to be delivered
• Shortage of delivery employees
• Naturally inefficient: traffic, mechanical failure, and only one drop off at a time
• Customers now expect next day, same day, or even 1- or 2-hour deliveries

Despite these challenges, even the smallest of retailers must now compete with the high standards set by global providers who have made next-day delivery the norm and same-day delivery viable.

So how can I get ahead in last-mile delivery?  

You do have choices. You can choose a delivery firm, like DHL Express, that offers services that keep your costs lower while also giving your customers the seamless service they want and expect.

How to improve last mile delivery

Here are four factors you need to consider:

1.  Take advantage of localized storage and dark stores

Many businesses are strategically distributing their stock among small regional warehouses, focusing on popular and seasonal items to reduce the distance for final delivery. 

SMEs may lack the resources for their own warehouses, but some logistics firms offer access to unused temporary storage. This enables e-commerce brands to store inventory and offer same-day delivery to local customers.

2.  Use Lockers for faster delivery

With parcel lockers, there is no need to worry about missed deliveries. Customers can pick up their parcels whenever it suits them, reducing the chances of failed delivery attempts. 

DHL Express also provides last-mile delivery services. Customers can customize their delivery services through On Demand Delivery (ODD), providing flexible receiving solutions for busy customers, or pick up directly from DHL service stations.

3.  Using AI and analytics for better routes and greener deliveries

The crowdsourcing solution is still not ideal for transporting more expensive, bulkier packages, which is when you will probably want to use a more established shipper. However, such deliveries present their own issues, with trucks having to find a suitable unloading spot or navigate smaller inner-city roads. As out-of-route miles account for 3-10% of a driver’s total mileage, inefficient route planning can add a hidden cost to already expensive services.⁵

The answer is better route planning

Some sources suggest⁷ that couriers and courier route planning staff could be spending 3-4 hours a day manually planning their routes.

As these new technologies continue to play an expanding role in improving the last mile, Mei Yee Pang, Head of Innovation, Asia Pacific DHL Customer Solutions and Innovation, reiterated that it is vital now to be taking “a data-driven approach in servicing customers.”

DHL Express has also implemented an advanced route optimization system that effectively navigates Hong Kong's complex and non-standard address system. By leveraging a multimodal transportation approach (including walker couriers, electric vehicles, and even ferries), it selects the most efficient combination for every delivery. These choices not only enhance last-mile delivery speed but also align with DHL Express Hong Kong's commitment to sustainability.

No room for humans?

In the distribution centers, AI and robotics are coming together to automate repetitive tasks, But does that mean humans are no longer needed? Tim Tetzlaff, Global Head of Accelerated Digitalization, DHL Supply Chain: “The more we can use robots to complete repetitive or distant tasks in highly predictable, structured environments, the more we free up our employees to leverage their unique human capabilities.” AI and robots are another tool to help humans—not to replace humans.

The price problem

Consumer expectations for speed have reached unprecedented heights. According to a 2025 report, as many as 80% of consumers expect same-day delivery from retailers⁶. However, this expectation is filled with contradictions:

• Cost remains king: Despite the demand for speed, up to 92% of consumers say "free shipping" influences their purchase decisions⁵, and 82% prefer "free shipping" over paying for speed¹.

• The expectation of free: Among consumers who expect same-day delivery, 30% expect the service to be free⁶

As this younger demographic becomes the dominant consumer spending group, a delay in receiving a package of just 12 hours can become an important differentiator in saturated markets—and one you’ll want to avoid. 

Businesses should make gradual adjustments when looking to cater more toward these higher expectations, balancing cost with quality considerations for the future.

The future of last-mile deliveries

While the general move is towards localized, digitized fulfillment to improve the last mile, this industry is continually developing and moving forward.

When asked to make a prediction, Lee Spratt, CEO of DHL E-commerce Americas, stressed the importance of “being more agile in adjusting to market trends, maintaining an openness towards learning and reinvention, and promoting a newfound flexibility as a baseline for the transport industry.”

Last mile delivery FAQs

How does last mile delivery work?

Last mile delivery, also known as final mile delivery, is the very last leg of your item’s journey: from local distribution center (either your own or your logistics partner’s) to the end consumer. Last mile delivery aims to deliver the packages as affordably, quickly, and accurately as possible. This is achieved via road (van, or sometimes car or bike), or at a drop-off point such as a local supermarket or parcel locker. New methods are already being trialed, such as autonomous robots and drones.

How long does last-mile delivery take?

This varies depending on the location of the distribution hub, the final delivery destination, traffic conditions, weather, and the efficiency of the delivery process. Customers are increasingly looking for rapid delivery, but reliability and traceability (last-mile tracking) are also high on the list of consumer priorities.

DHL Express, as a specialist in providing diversified "last-mile" delivery services, offers various value-added delivery services, including:

• International Time Definite 9AM/10.30AM/12PM, suitable for time-critical needs
• Worldwide Express and Express Easy, delivered within business hours of the next business day

If the pickup time is outside normal business hours, senders can browse our value-added services and choose Dedicated Pickup to improve the delivery experience.

How are customer demands reshaping last-mile delivery?

The speed, cost, and quality of last-mile delivery have become key differentiators. It’s worth remembering that the delivery part of the e-commerce process is the only point at which a consumer might interact with a human, making the delivery driver a kind of extension of your own brand. It’s important to offer multiple delivery options, including next day, same day, named day, and eco-friendly delivery options.