Over the past decade, last-mile delivery has evolved from a niche operational function into one of the most strategically important components of the supply chain. As e-commerce expanded and consumer expectations accelerated, the final mile became a defining factor in both customer experience and logistics economics.

The COVID-19 pandemic only intensified this transformation. During that period, disruptions across global supply chains forced many shippers to diversify beyond traditional national carriers. Regional and alternative delivery providers stepped in to fill the gap, offering flexible capacity and specialized services that helped companies maintain delivery commitments during an unprecedented surge in demand.

These providers have since become a meaningful part of the logistics ecosystem. Today, alternative last-mile carriers account for an estimated 8% to12% of the U.S. parcel delivery market, offering a complementary network that allows shippers to diversify risk, manage overflow capacity, and often reduce costs compared with traditional national carriers.

Many regional delivery providers were created specifically to address the gaps between large national carriers and the growing demands of e-commerce logistics. These new entrants were built around the idea that regional networks, supported by modern routing technology and data visibility, could offer shippers both flexibility and reliability while maintaining sustainable operating models. The networks can complement national carriers by handling regional density, overflow capacity and specialized delivery needs without requiring the scale or overhead of national parcel networks.

In many cases, the result was a win for everyone involved: Shippers gained flexibility and competitive pricing, consumers benefited from lower shipping costs, and alternative carriers built sustainable businesses serving specific geographic or operational niches.

Today, however, a new dynamic is emerging within the last-mile market, one that raises important questions about the long-term sustainability of the sector.

A growing number of new entrants are pursuing aggressive market-share strategies built around extremely low pricing. In some cases, delivery services are being offered at rates that appear well below the true cost required to operate a stable logistics network.

At first glance, these offers can be difficult for shippers to ignore. Lower shipping costs immediately improve margins, particularly in an environment where logistics expenses have become one of the most scrutinized line items in retail and distribution.

But history across multiple industries suggests that unsustainably low pricing rarely produces stable long-term outcomes.

When companies prioritize market share over sustainable operations, service levels often become the first casualty. Drivers face mounting pressure as compensation models tighten, operational investments are reduced, and service quality begins to erode. Experienced regional providers, many of which operate with responsible pricing models that reflect real operational costs, can be pushed out of the market by competitors willing to absorb losses in the short term.

If that cycle continues long enough, the consequences will extend far beyond individual companies.

The logistics ecosystem relies on a diverse network of providers, including national carriers, regional specialists, technology platforms and independent drivers who collectively form the backbone of modern supply chains. When aggressive pricing forces stable providers out of the market, the industry risks losing the very capacity and expertise that allowed it to function resiliently during recent disruptions.

This dynamic is not unique to logistics. Many industries have experienced similar cycles in which price competition escalates to the point that service quality and professional expertise begin to deteriorate. In those situations, the market often resets only after significant consolidation or disruption.

Last-mile delivery is particularly vulnerable to this pattern because of its labor intensity and operational complexity. Unlike purely digital services, parcel delivery requires physical infrastructure, trained drivers, compliance with safety regulations, insurance coverage, vehicle maintenance and sophisticated routing systems.

These cost structures cannot be indefinitely compressed without consequences. The result can be a gradual degradation of service reliability. Missed delivery windows increase; driver turnover rises, and the operational stability shippers rely on becomes harder to maintain. What initially appeared to be cost savings can ultimately create new risks within the supply chain.

Another concern involves the long-term resilience of delivery networks.

One of the lessons many companies learned during the pandemic was the importance of diversification. Relying on a single carrier or logistics model left businesses vulnerable when capacity tightened or disruptions occurred. Alternative and regional carriers provided a critical pressure valve that helped many organizations maintain delivery continuity.

If aggressive pricing drives those providers out of the market, that diversification disappears. The industry could find itself with fewer options and less flexibility during future disruptions.

This is particularly important as supply chains continue to adapt to changing global conditions. From geopolitical tensions to climate-related disruptions and evolving consumer expectations, resilience has become a defining priority for logistics leaders.

A resilient supply chain requires a healthy ecosystem of providers capable of operating sustainably over the long term.

None of this suggests that price competition itself is problematic. Competitive markets are a cornerstone of innovation and efficiency. New technologies and operational improvements that genuinely reduce costs should absolutely be embraced by the industry.

The challenge arises when pricing strategies are disconnected from operational reality.

Sustainable innovation in logistics typically emerges through improved routing algorithms, better demand forecasting, automation and smarter network design. These innovations lower costs by improving efficiency while maintaining service quality.

Simply lowering prices without a viable operational model, however, does not constitute innovation. It shifts risk across the ecosystem — onto drivers, service quality and, ultimately, the supply chains that depend on reliable delivery networks.

For shippers, the takeaway is not to avoid new entrants or alternative providers. Many of these companies are delivering real value to the market and expanding the capabilities of the logistics sector.

Instead, the key question should be one of sustainability.

When evaluating delivery partners, businesses should consider not only pricing but also the operational structure behind those prices. How are drivers compensated? What investments are being made in technology and infrastructure? Does the pricing model reflect the true cost of maintaining a reliable network?

These questions may not always be the most visible in procurement decisions, but they are increasingly important for organizations seeking to build resilient supply chains.

The last-mile sector has evolved rapidly over the past decade and will undoubtedly continue to do so. Innovation, competition and new technologies will continue to reshape how goods move from distribution centers to doorsteps.

But if the industry hopes to maintain the reliability and flexibility that modern commerce demands, it must also ensure that the economic foundations of last-mile delivery remain sustainable.

Otherwise, the race to lower prices could ultimately undermine the very delivery networks that businesses and consumers have come to depend on.

John Zendejas is founder and chief executive officer of Hovership.