A practical guide to cross-border logistics insurance in the EU
14.01.2026
B2B and B2C Fulfilment One Warehouse Playbook
15.01.2026
FLEX. Logistics
We provide logistics services to online retailers in Europe: Amazon FBA prep, processing FBA removal orders, forwarding to Fulfillment Centers - both FBA and Vendor shipments.
Last mile costs are one of the hardest expenses for DTC operators to control. They rise quietly, order by order, while customers still expect fast, predictable delivery. Cutting spend without damaging delivery performance is possible, but only with the right levers.
This article explains how to reduce last mile costs while protecting transit times and customer experience. It focuses on practical actions DTC teams can apply across fulfilment, carrier strategy, and data.
Why last mile costs keep rising for DTC brands
Last mile delivery is the most complex and expensive part of ecommerce shipping. It routinely represents over half of total delivery spend in urban delivery networks, driven by fragmented drop densities and high labour costs (The future of last-mile delivery - McKinsey, 2023).
For DTC operators, the problem is structural. Orders are smaller. Destinations are dispersed. Volumes fluctuate sharply around promotions and seasonal peaks. Each of these factors increases parcel costs without improving delivery performance.
Customer expectations amplify the challenge. Next-day and two-day shipping have become standard in many EU markets, even for low-value orders. Faster transit times reduce routing flexibility and push brands toward premium shipping rates.
Cost pressure is also external. Fuel volatility, urban congestion charges, and sustainability requirements affect courier contracts and pricing, particularly in city centres. These pressures are unlikely to reverse.
Understanding these drivers matters because cost reduction starts with design, not negotiation.
The hidden trade-off between cost and delivery speed
Many DTC teams assume that lower costs always mean slower delivery. That assumption often leads to defensive decisions, such as locking in premium services across all orders.
In reality, the trade-off is uneven. Some shipments are genuinely time-critical. Others are not. Treating them the same inflates ecommerce shipping spend without improving customer experience.
Delivery performance should be measured remember by promised speed and reliability, not by maximum speed. A two-day delivery that arrives consistently often outperforms next-day delivery that fails during peaks.
The goal is not to slow everything down. It is to align service level with customer expectation and order value, then design the network around that reality.
Break down last mile costs before trying to cut them
Before making changes, DTC operators need visibility. Last mile costs are often reported as a single blended rate, hiding where money is actually lost.
A clear cost breakdown should include:
- Base shipping rates by carrier and service
- Fuel and remote area surcharges
- Failed delivery and reattempt costs
- Returns and reverse logistics expenses
- Handling costs at the fulfilment node
This level of detail allows teams to see which parcels are profitable and which are not. It also reveals whether costs are driven by carrier pricing, routing inefficiency, or fulfilment location.
Without this view, delivery optimization efforts risk focusing on the wrong problem.
Delivery optimization starts before the parcel ships
Delivery optimization is often treated as a carrier problem. In practice, many cost drivers are decided earlier in the order journey.
Product assortment matters. Bulky, low-margin SKUs inflate parcel costs quickly. Packaging design matters too. Dimensional weight pricing means oversized boxes can double shipping rates without adding value.
Order cut-off times influence cost as well. Later cut-offs compress warehouse processing windows, increasing reliance on express services to meet promised transit times.
Simple operational adjustments can unlock savings without affecting the final mile itself. These are internal levers that do not depend on courier contracts.
Carrier selection should be dynamic, not fixed
Many DTC brands rely on one or two primary carriers for simplicity. While this reduces operational complexity, it often increases last mile costs over time.
Carrier selection works best as a dynamic process. Different couriers perform better in different regions, densities, and delivery windows. Urban delivery routes, for example, may favour local carriers with dense networks, while rural routes may suit national providers.
Multi-carrier setups enable parcel-level routing decisions based on price, transit times, and historical delivery performance. This approach supports cost reduction without sacrificing reliability.
According to industry research, companies using data-driven carrier selection can reduce shipping rates by high single digits while improving on-time delivery (Fast delivery, slow returns - Capgemini Research Institute (2023)). Results vary, but the direction is consistent.
Renegotiating courier contracts without losing leverage
Courier contracts are often renegotiated annually. Too often, the conversation focuses on headline rates rather than total cost.
Effective negotiations start with data. Carriers price risk. When DTC operators can demonstrate predictable volumes, clean manifests, and low exception rates, they improve their position.
Key levers include:
- Volume commitments by zone or region
- Service-level differentiation rather than flat rates
- Caps on fuel and peak surcharges
- Performance-based incentives tied to delivery performance
It is also important to benchmark shipping rates across comparable profiles. Without market context, it is hard to know whether a discount is meaningful or cosmetic.
Negotiation alone will not solve structural inefficiencies, but it can prevent unnecessary cost creep.
Zone skipping and line-haul optimisation
Zone skipping is one of the most effective ways to reduce last mile costs without slowing delivery. It involves moving parcels in bulk closer to the final destination before injecting them into local carrier networks.
By reducing the number of carrier zones crossed, DTC brands lower per-parcel shipping rates and improve transit time predictability. This approach is particularly effective for cross-border ecommerce shipping within the EU.
Zone skipping requires coordination between line-haul transport, fulfilment centres, and local couriers. It also depends on sufficient volume density. Not every brand can apply it everywhere.
When used selectively, zone skipping improves logistics efficiency and reduces exposure to long-haul surcharges.
Local fulfilment as a cost control lever
Local fulfilment is often discussed in terms of speed. Its impact on cost is just as important.
Shipping from a fulfilment centre closer to the customer reduces distance, zones, and transit times simultaneously. This directly lowers parcel costs while improving delivery performance.
For DTC operators, local fulfilment does not necessarily mean owning more warehouses. It can involve distributed inventory through third-party networks or shared facilities.
The key is inventory placement. Fast-moving SKUs should be positioned close to demand. Slow movers can remain centralised. This balance avoids overstocking while still capturing last mile savings.
According to the European Commission, improved network design is one of the most effective levers for reducing logistics emissions and costs in parallel.
Urban delivery challenges and realistic solutions
Urban delivery is expensive by nature. Congestion, access restrictions, and failed first attempts drive up costs.
Some solutions promise dramatic savings but fail operationally. Others are incremental but reliable.
Practical urban strategies include:
- Using carriers with high drop density in specific cities
- Offering delivery windows aligned with building access rules
- Leveraging parcel lockers or pickup points where appropriate
Remember that customer experience is contextual. In dense urban areas, many consumers prefer predictable pickup over missed home deliveries. This flexibility can reduce costs without harming satisfaction.
Urban delivery optimisation is less about technology and more about understanding local behaviour.
Managing parcel costs through smarter returns handling
Returns are part of the last mile cost equation. In some sectors, reverse logistics can account for a significant share of total shipping spend.
Reducing return rates through better product information is the first step. However, operational handling matters too.
Local return consolidation, rather than shipping each return individually to a central hub, can reduce parcel costs significantly. Some DTC brands also use regional grading centres to decide whether items should be restocked locally or moved centrally.
Returns should be measured with the same rigour as outbound delivery performance. Hidden costs here undermine otherwise effective cost reduction strategies.
Balancing cost reduction with customer experience
Customer experience should not be reduced to delivery speed alone. Communication, reliability, and flexibility matter just as much.
Clear delivery promises reduce support tickets and failed deliveries. Proactive tracking reduces “where is my order” enquiries, which carry their own cost.
Offering tiered delivery options allows customers to self-select. Some will choose faster delivery. Others will accept longer transit times in exchange for lower prices or sustainability benefits.
The goal is alignment. When delivery options match customer expectations, cost reduction does not feel like compromise.
Measuring what actually improves delivery performance
What gets measured gets managed. Yet many DTC teams focus on average transit times while ignoring variability.
Key metrics to track include:
- On-time delivery against promise
- First-attempt delivery success rate
- Cost per delivered parcel, not per shipped parcel
- Regional performance by carrier
These metrics reveal whether changes truly improve delivery performance or simply shift cost elsewhere.
Data should guide decisions, not anecdotes. Over time, this approach supports continuous improvement rather than one-off fixes.
A practical checklist for reducing last mile costs
To bring these ideas together, DTC operators can start with a structured review.
Checklist:
- Map true last mile costs by parcel and region
- Segment orders by required service level
- Introduce multi-carrier routing where volumes allow
- Review courier contracts with total cost in mind
- Evaluate zone skipping for high-volume lanes
- Adjust inventory placement to support local fulfilment
- Optimise urban delivery options and communication
- Track performance metrics consistently
None of these steps require sacrificing delivery speed by default. They require alignment.
Lower costs, smarter delivery
Reducing last mile costs does not require slower delivery. It requires better decisions earlier in the process.
By combining delivery optimization, thoughtful carrier selection, and local fulfilment strategies, DTC operators can control parcel costs while protecting transit times and customer experience. The final mile will always be complex, but it does not have to be inefficient.
A disciplined, data-led approach turns last mile delivery from a cost burden into a competitive advantage.
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