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Last mile and the parcel elements are expensive and have gotten more so in the last few years, in spite of the positive position parcel has in the industry. Competition has increased, fuel prices have gone down, and the labor market is better since parcel has the "more desirable" truck driver jobs (drivers can usually sleep in their own bed at night). LTL and parcel are often the more profitable these days, with long haul competing against rail for the business.
Not only are parcel rates high, but the associated warehouse functions (one-each picking) that accompany this process add more cost. On top is the unpleasant reality that customers don’t want to pay for the shipping—or returns. Free shipping becomes one of the deciding factors when customers choose an online retailer. Or they delay buying until free shipping and other promotions are offered, causing swings in demand, what to say of swings in operating costs and profit.
Shippers are in great pain to deal with this issue. Very few are making any money in the game, yet the types of fulfillment and services that customers want are increasing. And of course, this becomes more acute in peak periods.
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