Free two-day shipping has reshaped customer expectations for delivery and put pressure on last-mile budgets that retailers are still trying to manage.

FarEye, an AI-powered Delivery Management System (DMS), has launched an agentic AI dispatcher called PILOT to plan, execute and monitor final-mile deliveries with minimal human oversight. Gaurav Srivastava, the company’s co-founder and chief product and technology officer, told FreightWaves that two forces made the launch possible: persistent consumer demand for free, fast delivery and the advances in AI that followed the debut of Large Language Models (LLMs).

“The two big drivers of AI: first is what we call the Amazon Prime effect,” Srivastava said. “Every consumer wants things to be delivered free and fast, and that poses a big challenge for retailers and carriers across the world.”

That pressure is felt most acutely in the last mile, the final stretch between a warehouse or store and a customer’s door. It is also the most expensive part of the network, which helps explain why automation is moving from simple tracking tools toward systems that can make operational decisions.

The Amazon Prime effect meets a cost problem

Srivastava said last-mile delivery accounts for 40% of total supply chain cost, more than any other segment of the network. It is also highly fragmented, with daily decision-making concentrated in a single overworked role.

“The dispatcher is the person sitting there locally in the city, managing your drivers, managing that chaos of a driver not showing up, a truck running into an accident, a shipment running late, a customer’s urgent call,” Srivastava said. “All of that is absorbed by this one persona, that one human. His entire day goes by firefighting.”

FarEye has worked with dispatchers for more than 10 years, Srivastava said. Agentic AI, he added, created a new option: an agent that works alongside the dispatcher rather than simply adding another screen to manage.

Inside FarEye’s agentic AI dispatcher

PILOT is designed to handle what a dispatcher typically manages over a 10-hour shift: cleaning order data, planning routes, sourcing carriers and drivers, handing off shipments and monitoring operations as issues arise. The system can run autonomously or with a human reviewing its decisions.

“This agent can proactively plan, execute, and also monitor your last-mile operations,” Srivastava said. He said the system is modular and sits on top of an enterprise’s existing route optimization, compliance and track-and-trace tools, whether those are FarEye’s or another provider’s, all within a single decision layer. In a Human-In-The-Loop (HITL) model, the system preserves required human oversight while reserving intervention for critical exceptions.

For carriers and shippers, that means fewer decisions flowing through one overworked person’s judgment and more decisions handled by a system that is continuously monitoring operations. Srivastava said that approach can enable dispatchers to make sharper decisions with up to five times higher productivity.

Right truck, right price, right time

Srivastava pointed to Tractor Supply as an example of the orchestration challenge AI is meant to address. The company operates more than 2,400 stores nationwide and ships products ranging from hammers to livestock feed. It uses its own trucks as well as FedEx, UPS and regional providers.

“There are days their trucks would sit idle at the store with just under 50% capacity while the store ships out products with FedEx and UPS,” Srivastava said. “And then there are days where their trucks aren’t able to fulfill all orders.”

The agent decides, order by order, where capacity should go.

“Even if it’s very close to your store, you might still want to give it away to a FedEx or UPS because it’s more cost-effective,” Srivastava said. “Your cost of driving that big truck just to deliver one small hammer might not be a great use of your assets.”

He said that decision depends on live, dynamic cost data rather than a fixed rulebook, which matters as retailers manage a mix of private fleets, national carriers and gig-style delivery options.

“Should it be loaded on your truck? Should it be loaded on a small van? Should it be given to a FedEx or a Roadie or an Uber?” Srivastava said. “Or should it just be deferred to tomorrow because there’s no SLA breach?”

Srivastava said the problem is more complex in last-mile delivery than in middle-mile trucking, where networks move between fixed nodes.

“In last-mile you don’t have nodes. You don’t know where you’ll be delivering,” he said. “You can get a delivery from a very remote suburban ZIP code you have never serviced before, and now you’ve got to create a plan for it. That problem [is] vastly more complex.”

Omnichannel growth outpaces the store

The shift is also reflected in retailers’ broader strategies. Srivastava said companies such as Tractor Supply spent years trying to drive customers into physical stores, but that approach has changed.

“Until about two years ago, Enterprises had this strategy that they wanted to drive customers to their offline store,” he said. “That strategy has evolved now. They want to be present wherever the customer would find it most convenient, whether in store or to order online and get it delivered.”

He said one of the largest global furniture retailers shows the same pattern at a larger scale, noting that its e-commerce business has grown substantially faster than its retail business.

Across FarEye’s retail customers, Srivastava said online ordering is growing three to five times faster than in-store sales, increasing last-mile volume faster than most networks were designed to handle.

Looking ahead, Srivastava said the same orchestration logic could extend to future delivery modes, including drones and autonomous vehicles, as those technologies become viable alongside human drivers. For now, he said, the agent stops short of replacing the people on the ground.

“It can’t replace a driver and a floor supervisor. People actually delivering the product can’t be replaced,” Srivastava said. “But the whole planning and orchestration of the last mile can be done by this agent.”

FarEye is hosting its Last Mile Leaders in America event in Chicago on Aug. 26-28.