Carrier diversification unravels the last-mile delivery duopoly

The Retreat Was Deliberate

Amazon handled 6.7 billion parcels in 2025, up 9.8%, passing the Postal Service to become the largest domestic parcel carrier by volume, according to data published in March by ShipMatrix Inc. USPS volume fell 8.3% to 6.6 billion. UPS dropped 8.3% to 4.4 billion. FedEx delivered 3.6 billion, up 5.9%.

Total industry volume barely moved, rising 0.4% to 23.9 billion packages. Volume at alternative carriers, a group that includes UniUni, Veho, Gofo, Jitsu, SpeedX, OnTrac and Better Trucks, grew 13% to 2.6 billion units. Revenue for that cohort climbed 15.4%.

None of this volume growth went to UPS and FedEx. Both are walking away from commodity last-mile delivery to chase B2B logistics and high-value e-commerce shipments where they can charge a premium for complexity. The problem with that pivot is the math: business-to-consumer traffic now represents 75% of the parcel market, and the B2B segment they are pursuing has shrunk to 25%.

The exit shows up on invoices. Ground parcel rates ran 34% above the 2018 baseline during last year’s peak season, with the average surcharge climbing 13% from the third quarter to the fourth, according to the TD Cowen/AFS Freight Index. Both carriers implemented a 5.9% general rate increase for 2026. Ground fuel surcharges grew 26% year-over-year while tracked diesel prices rose 4.7%.

“Record-high rates do not spell good news for shippers, but there is still room for pricing concessions if shippers know where to look and what buttons to push,” said Mingshu Bates, chief analytics officer and president of parcel at AFS Logistics, in a news release.

Why Carrier Diversification Became the Default

More than 90% of executives surveyed by AlixPartners now run a mix of last-mile carriers, and 32% use four or more. What once was a hedge became infrastructure.

The carriers absorbing that volume are building for it explicitly. Veho relies on 120,000 crowdsourced drivers using their own vehicles and delivers in nearly 60 markets for Macy’s, Lululemon, Sephora, HelloFresh and Stitch Fix, along with logistics providers including Flexport, ShipBob, ShipHero and Stord. In February the company introduced FlexSave, which lets shippers trade day-definite delivery for a wider window at a lower rate, routed by a platform Veho calls MaestroAI.

“The ever-increasing shipping rates have put brands in an impossible ‘Catch-22’: pay hefty, unsustainable shipping fees, or bear the cost of slow and low-quality delivery that erodes the customer trust,” said Veho co-founder and CEO Itamar Zur in the announcement. “FlexSave gives brands and logistics leaders a new, better path: a highly cost-effective delivery that keeps the brand promise intact.”

That pitch lands because the alternative keeps getting more expensive. E-retailers face legacy carriers raising rates roughly 6% annually and layering on surcharges that function as profit centers, according to Veho and parcel industry analysts.

Reliability Overtakes Price

A more telling finding in this year’s AlixPartners data is not the 55%. It is that reliability has edged past cost as the top reason executives pick their primary last-mile carrier. Procurement teams spent two decades optimizing for cost per package. They must now optimize for consistency.

Amazon set that benchmark and keeps raising it. The company added one-hour and three-hour delivery windows this year, priced at $9.99 and $4.99 for Prime members, covering 90,000 SKUs across hundreds of cities. It also invested $4 billion in its rural delivery network, while FedEx and UPS impose remote delivery surcharges of $16.50 and $16.75.

Parcel analyst Nate Skiver described the mechanism in a LinkedIn post: Amazon creates demand with fast delivery, which builds package density, which lowers unit costs, which enables faster delivery, which creates more demand.

That flywheel sets the standard every other retailer answers to, whether it competes with Amazon directly or not. AlixPartners found 90% of consumers want notification when an order will run late along with an updated arrival time, and 68% of executives named ETA accuracy their top AI priority for the next two to three years.

The Orchestration Problem

Running four to 12 carriers is a technology problem more so than a procurement one. Maersk, which spent decades moving containers, built its parcel business around exactly that premise after acquiring Visible Supply Chain Management and B2C Europe.

“Our multi-carrier network allows us to flex capacity significantly. I don’t need to load and plan for that because I know I can move it,” Sam Coiro, head of e-commerce commercial business development at Maersk, told FreightWaves in March. “If we relied on a single asset, that would create constraints.”

Maersk issues one label carrying two barcodes, one for tracking and one identifying the assigned carrier. When that carrier stumbles, the system reassigns the package without the shipper touching anything.

“If a carrier experiences a service disruption, our system may reroute shipments through alternative providers where commercially and operationally feasible,” Coiro said. “You as the customer, you know what you have to do? Nothing. I do it.”

Most shippers do not have Maersk’s balance sheet, which is why the orchestration layer has become its own market. Ben Emmrich, founder and CEO of Tusk Logistics, told FreightWaves in February that his company gives shippers a virtual national network stitched from multiple regional carriers, then monitors performance and shifts volume to balance cost against quality.

“Shippers are faced with a complex carrier environment where costs are rising quickly, their resources, bandwidth and tooling are limited, and the path to lower cost per unit needs to go through either more effective carrier negotiations, carrier diversification or a combo of the two,” Emmrich said. “It’s hard to be a shipper in 2026.”

Why it matters: Retailers that still rely primarily on FedEx, UPS and the Postal Service are now competing against a new delivery standard of free shipping in 2.6 days, while more than half of their peers have already diversified to alternative carriers to protect both reliability and margins. The shift means last-mile strategy has moved from a back-office cost exercise to a core determinant of customer retention and profitability.