The big-and-bulky last-mile delivery market is cooling sharply, with the housing market serving as the primary drag on growth. According to a joint report from Armstrong & Associates and the National Home Delivery Association, the segment — which covers items such as furniture, appliances, and exercise equipment delivered by box truck with in-home installation — grew at just over 10% annually over the past eight years, a period that captured the pandemic-era surge in e-commerce home goods spending, but is now forecast to expand at roughly a 5% rate between last year and 2027.

FreightWaves analyst Eric Kulisch, appearing on the program and identifying home delivery as his area of expertise, emphasized the central role of housing in the slowdown.

"The big thing is kind of this housing market influence on the last mile delivery sector and e-commerce," Kulisch said.

Housing Market as the Primary Headwind

High mortgage rates are the principal factor suppressing demand. The Federal Reserve's series of rate hikes that began in 2022 pushed mortgage rates to levels not seen in over a decade, and homeowners who locked in low rates during the pandemic-era refinancing boom are reluctant to trade up to a new property at today's 6% to 7% range. This "lock-in effect," widely tracked by housing economists, has kept existing home sales near multi-decade lows according to National Association of Realtors data, while elevated home prices are keeping potential buyers on the sidelines. Fewer home sales translate directly into fewer furniture and appliance purchases, reducing demand for white-glove delivery services.

Kulisch noted that existing home sales have been particularly affected, as consumers who purchased homes at lower interest rates are unwilling to absorb today's higher borrowing costs. The result is reduced home turnover and fewer orders for items typically purchased when moving into or upgrading a residence.

Tariff Pressures and Discretionary Spending

Tariff-driven cost pressures on steel-heavy goods such as appliances added to last year's headwinds, though Kulisch indicated those costs have "kind of normalized." Discretionary spending remains squeezed, keeping consumers cautious about large-ticket home purchases even as some of the tariff volatility fades.

Intensifying Competition and the Role of AI

Competition within the sector has intensified following a wave of entrants over the past five to 10 years, squeezing margins and making differentiation through specialized value-added services increasingly difficult. The same period saw e-commerce platforms such as Amazon, Wayfair, and direct-to-consumer furniture brands scale their own delivery networks, raising customer expectations for speed and visibility.

The Armstrong & Associates report concluded that winning providers will focus on execution rather than novel service offerings, leaning on AI-driven tools to extract efficiency gains. Specific technologies cited include route optimization, predictive ETA, and computer vision for damage assessment.

Consolidation Expected

Consolidation is also on the horizon, according to the report, particularly as the economics of serving rural and suburban stops grow more challenging. Building scale or a broader national footprint is increasingly necessary to make unit economics viable in lower-density markets.

The last-mile segment represents a small but important niche within the broader operations of LTL and truckload carriers. While specific earnings breakouts for final-mile operations at companies such as J.B. Hunt were not detailed, Kulisch acknowledged its significance as a portion of their business portfolios.

Labor Availability and CDL Enforcement

Labor availability adds another layer of uncertainty. Regulatory enforcement targeting non-domiciled CDL drivers — a group that has historically filled straight-truck and box-truck roles attractive to last-mile operators — is shrinking the available driver pool. While Kulisch noted that specific data on the impact are not yet available, he emphasized that the concern is widespread among industry members.

"Labor availability is a big concern going forward for these last-mile, big-and-bulky providers," Kulisch said.

Broader Freight Market Context

The discussion also touched on the broader relationship between housing and freight. A FreightWaves SONAR situational report examines how weak single-family housing starts have affected the flatbed market, which has historically tracked single-family construction activity. However, flatbed demand has been bolstered this year by industrial expansion and AI data center construction, partially offsetting the freight demand typically generated by a stronger housing market.

Source: FreightWaves