CHICAGO — Last-mile costs continue to rise, and operators are being pushed to manage both higher delivery expenses and tighter customer expectations at the same time. On Thursday, FarEye released new research that put those costs into perspective using survey data.

The survey found median last-mile costs rose 12 percent in 2026, matching the increase operators saw a year earlier. Six in 10 operators reported increases above 10 percent, and one in five reported increases above 20 percent.

Eighty-eight percent of operators said delivery cost is growing as fast as revenue or faster. Only one in eight operators is creating operating leverage. FarEye CEO and co-founder Kushal Nahata presented the findings Thursday at the Last Mile Leaders America event in Chicago.

“We thought probably it’s an anomaly, it’s not in double digits, but we saw that again this year as well,” Nahata said. “So now it’s probably the new normal that our delivery costs overall are increasing by almost double digits year on year.”

The survey gathered more than 3,000 data points from U.S. delivery operators in the first half of 2026. Control figures are based on the 41 operators who answered the control question. Fleet-mix figures are based on 84 operators.

Last-mile costs stay in double digits

Operators most often ranked fuel (70 percent), driver cost and availability (51 percent) and vehicle operating cost (40 percent) among their top three cost pressures. Inefficient routing made the top three for 21 percent, while failed deliveries and returns did so for 18 percent.

“This twelve percent is obviously a combination of about six percent, which is the public rates that were increased by FedEx, UPS,” Nahata said. “But along with that, this additional six percent which gets contributed by the operational inefficiencies that we have in our operations.”

That 6-and-6 split was Nahata’s on-stage accounting, not survey data. One takeaway from the findings is that the continued increase in costs is putting pressure on these businesses, especially as larger operators show the highest median increase in the survey.

“Neither the CFOs nor the business allow us to operate at any cost,” he said. “The cost needs to come down as well.”

That focus on cost reduction also appeared in the survey results. Forty-five percent of operators placed reducing delivery cost in their top three investment priorities, more than any other item. Companies with more than $1 billion in revenue posted a 13.8 percent median cost increase, the highest of any size band.

Reliability draws the promise

Predictable delivery time and successful first-attempt delivery together accounted for 55.7 percent of the delivery promise operators said mattered most. Fastest possible delivery accounted for 11.4 percent.

“What consumers are looking for, as we see it now, is speed along with certainty or reliability,” Nahata said. “The delivery promise is probably the biggest thing. That’s where consumers have moved.”

The eight operators that put maximum speed first posted 76 percent on-time performance and a 24 percent cost increase. Operators that put predictable delivery first posted 88.4 percent on-time performance and a 10 percent cost increase. Visibility-first operators posted 90.3 percent on-time performance and a 4.9 percent cost increase.

Where-is-my-order contact, or WISMO, followed the same pattern. Operators with WISMO rates above 30 percent posted 17.2 percent cost inflation and 81.4 percent on-time performance. Operators with WISMO rates of 5 percent or less posted 7.3 percent inflation and 86.5 percent on-time performance. The high-WISMO group carried 2.4 times the cost inflation of the low group.

“WISMO probably is a good economic indicator of your last-mile cost as well,” Nahata said. “It’s not just about customer experience.”

Proactive delay notifications were the only customer-experience capability in the survey tied to better on-time performance, at 88.1 percent with the notifications versus 81 percent without them.

“If we’re trying to make a delivery promise, it’ll impact the cost side as well,” Nahata said. “We can’t solve one for the other.”

Control tracks on-time performance

Among the 41 operators who answered the control question, on-time performance ranged from 65.5 percent in the low-control group to 93 percent in the middle group and 95 percent in the high-control group. WISMO ranged from 20.8 percent to 10.4 percent to 6.2 percent. Median cost inflation ranged from 14.5 percent to 10.5 percent to 8.3 percent. Median investment was the same across the three groups.

Higher technology maturity was associated with a lower cost-per-delivery band and had almost no relationship with year-over-year inflation or on-time performance.

The dominant network is already mixed. Fifty-seven percent of operators run a hybrid fleet, 26 percent are fully outsourced and 17 percent run an owned fleet only. Forty-seven percent of hybrid operators plan to outsource more. Hybrid networks posted 93 percent on-time performance and 7 percent WISMO.

These mixed network demands are putting more pressure on visibility as customers grow more accustomed to real-time tracking updates and want them as part of the buying experience.

“Can your team answer these questions without picking up a phone?” Nahata said. “Where is the shipment?”

AI adoption is ahead of execution

Operators at an implementation or operational stage of AI rose from 46.2 percent in 2025 to 66.3 percent in 2026. Extensive operational adoption rose from 4 percent to 13.8 percent.

“Last year when we looked at AI implementation, about forty-six percent of businesses said they are doing it,” Nahata said. “Now we hear it’s sixty-six percent.”

“There were four percent last year who said full scale. Now almost 14 percent are saying it’s a full-scale one.”

Leading use cases were ETA prediction at 39 percent, demand forecasting at 36 percent and customer support at 31 percent. Real-time dynamic routing, the only operational-decision use case in that list, ranked last at 21 percent. Mean trust in AI for real-time operational decisions was 1.98 on a 4-point scale.

“Where we see the biggest change is moving from prediction to execution,” Nahata said. “It’s not just about answering, it’s about getting things done as well.”

Operators with the least roadmap backlog posted 93 percent on-time performance and 5.2 percent WISMO. Operators with the most capabilities still on the roadmap posted 85.5 percent on-time performance and 17.4 percent WISMO. Operators running three or more named systems posted 80.9 percent on-time performance. Those on a single system posted 85.6 percent.

“The winners will not be the companies that promise the most,” Nahata said. “They will be the companies that can keep the promises that matter, at an economics the business can scale.”

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