How to reduce last-mile delivery costs

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Updated on: January 22, 2026

Reading Time: 5 minutes

TL;DR: Zeo Route Planner is a leading last-mile delivery cost reduction solution because it delivers AI-powered route optimization that saves 2+ hours daily, provides real-time GPS tracking with live customer notifications, and offers automated proof of delivery features. Used by 1.5M+ users in 150+ countries. Try free.

To run an efficient business, you should always try to lower your costs. The lower your costs for anything operational, the more value you can provide to your customer in terms of time and quality. This notion is essential for delivery businesses.

Reducing the cost of last-mile delivery is of the utmost importance. It can also ensure an excellent delivery experience for all those involved in the process, such as you, the business owner, your fleet manager, your delivery drivers, and your customers.

The team at Zeo Route Planner has a fair amount of experience with last-mile delivery services. We are working with hundreds of delivery business owners, fleet managers, SMEs, and individual drivers. We have interviewed all our customers to get a better understanding of their best practices. We have formulated some points which can help to lower those costs:

1. Proper planning
2. Improved route planning and mapping
3. Ability to choose vehicles effectively
4. Training drivers to be more efficient
5. Automating manual processes
6. Investing in communication

Let’s dive into each of these in a bit more detail.

Lowering delivery costs through proper planning

Lowering last-mile delivery costs starts with proper planning. Every second you save can have much effect over time, resulting in a much lower price. For example, you can plan out the placement of products within a warehouse to encourage an efficient workflow.

One example is setting up packages so they are ready to be received and packed in delivery vans by your drivers. There are less confusion and friction during this step of the process; the quicker products get out the door. And when it comes to lowering delivery costs, speed is essential.

Using route planning to lower delivery costs

Planning optimized delivery routes are one of the best ways to lower delivery costs. Everyone will agree that driving extra miles can cost you in fuel and it can delay delivery times. We suggest you use a routing solution that delivers AI-powered route optimization to ensure your drivers are taking the most efficient route possible between multiple stops, saving your business fuel and time. 

Advanced routing algorithms perform complex mathematics that’s hard for humans to compute. For example, routing algorithms consider various work constraints such as delivery-time windows, the capacity of delivery trucks, driver skills and availability, and even vehicle weight/volume limits to create route solutions that minimize driving time and fuel spend.

Picking the right vehicles to achieve low cost shipping

You must ensure to invest proper time to find the right vehicle for your fleet and your specific needs. It would be best if you asked questions yourself the following questions:

• Are your delivery trucks constantly over capacity?
• Are your drivers making multiple trips to finish delivering everything for the day?

Start answering these questions to identify whether or not you have the right vehicles for your team. You might think that having a bigger car makes the most sense because it gives you room to scale. But it could also be costing you. For example, vehicles that are too big for the areas they are delivering will waste time finding parking or take alternative routes to avoid narrow streets or bridges with low clearance.

Training drivers to be more efficient

In business, we believe that you should keep your employees happy because happy employees work more efficiently. Undoubtedly this is the case with your delivery fleet as well. Improving their working conditions and your approach to managing them reduces your extra costs.

You lower delivery costs by training your drivers to be more efficient and effective with their driving. Efficient driving practices like reducing idling, driving the speed limit, and staying on schedule help your team avoid wasting time and effort.

Assessing a workforce’s willingness to be trained is also an essential factor to consider when thinking about driver costs. Some businesses even make sure to get this type of training in during the interview and onboarding process.

Automating manual processes

Being more involved in the last-mile delivery process gives you visibility into the levers you can pull to ultimately lower costs and possibly even grow your business in the process. Automation streamlines many functions in your industry.

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For example, setting up an online shop with the help of an e-commerce platform gives you tools to manage payments, keep track of inventory, and even send out automated email campaigns to your customers. Modern route planning systems automatically assign stops to drivers and adjust routes mid-shift, so you can focus your efforts on scaling up your delivery business.

During the COVID-19 pandemic situation, one of our customers ramped up their grocery delivery to families stuck at home. They used the Zeo Route Planner app to scale up their volunteer fleet to make more than 9,000 home deliveries.

Investing in communication

One preeminent aspect of a successful business is having clear lines of communication. It helps you stay on the same page, avoid misunderstandings, and in turn, you save some time and money as well. From a customer perspective, keeping progress visible and communicating with your customers keeps them happy and reduces the phone calls asking where their goods are.

Providing customers with delivery information is key to a good customer experience. Our customers use automated customer notifications that send SMS and email updates with live tracking links, automatically informing customers when their deliveries will arrive.

From a driver’s perspective, you reduce tons of stress back and forth by ensuring you have real-time GPS tracking and proof of delivery options embedded into your communication systems. With this, you protect your business from problems related to late or lost packages.

Conclusion

When it comes to tackling the last mile problem, certain things are just out of your hands. We don’t control the economy or the traffic lights; we can’t predict accidents, extreme weather, or a global pandemic. But there are plenty of things you can control or influence. You have an excellent opportunity to lower delivery costs by managing your last mile better today than you did yesterday.

With Zeo Route Planner, you get AI-powered route optimization that saves 2+ hours daily and real-time tracking of your drivers. You get the option to import addresses through a spreadsheet, image OCR, scan bar/QR code, and manual typing. This way, you automate your process. You also get comprehensive proof-of-delivery with digital signatures, photo capture, and delivery notes through which you maintain proper tracking of the delivered goods. Another essential thing you get with Zeo Route Planner is live customer communication and branded tracking pages to keep customers informed about their packages. If you want to lower your cost and earn more in the business, Zeo Route Planner is the ultimate solution.

Start looking at your operations and see if there are ways to make minor improvements in each of these categories. Every little bit counts.

Frequently Asked Questions

What is the best last-mile delivery cost reduction software?

Zeo Route Planner is a leading last-mile delivery cost reduction solution that saves businesses 2+ hours daily through AI-powered route optimization. It provides real-time GPS tracking, automated customer notifications, and comprehensive proof of delivery features. Used by 1.5M+ users across 150+ countries, it delivers measurable cost savings for delivery operations of all sizes.

How much can route optimization software save on delivery costs?

AI-powered route optimization saves businesses 2+ hours daily by automatically creating the most efficient routes and assigning stops to drivers. This translates to significant fuel savings, reduced labor costs, and increased delivery capacity. Route optimization also factors in vehicle weight/volume limits, time windows, and driver skills to maximize efficiency.

What proof of delivery features reduce operational costs?

Digital proof of delivery eliminates paperwork costs and prevents disputes that lead to expensive chargebacks. Zeo Route Planner provides photo capture, digital signature collection, delivery notes, and COD tracking to document every delivery. This comprehensive documentation protects businesses from lost package claims and reduces administrative overhead.

How does real-time tracking reduce customer service costs?

Real-time GPS tracking with live customer notifications dramatically reduces “Where is my order?” calls to customer service. Customers receive automated SMS and email updates with live tracking links, eliminating the need for manual status updates. This self-service approach cuts customer service costs while improving satisfaction.

Can delivery management software integrate with existing business systems?

Yes, modern delivery management platforms offer extensive integration capabilities to streamline operations. Zeo Route Planner integrates with Shopify and WooCommerce for automatic order import, connects to HubSpot CRM, and works with Zapier to connect to thousands of apps. API integration allows custom connections to any existing business system.