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Last-mile costs are up 18.9% year-on-year, and operators can see where most costs land directly through fuel, driver, and vehicle costs, but not where it is created
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Across the Asia Pacific region, three of the top four challenges operators named were physical: geographic dispersion, multi-island distribution and infrastructure gaps
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Technology’s job is practical: showing where every shipment is in real time, re-planning routes when conditions change, and making hidden costs visible
Logistics operators cannot control disruptions, such as fuel prices and typhoons. What they can control is the cost that sits on top of them, according to Suryansh Jalan, chief business officer of logistics software firm FarEye.
According to FarEye’s Eye on the Last Mile 6.0 report for Asia-Pacific launched this year, last-mile costs are up 18.9% year-on-year, and operators can see where most costs land directly through fuel, driver, and vehicle costs, but not where it is created.
The report surveyed operators across Southeast Asia, Australia, New Zealand and adjacent Asia Pacific markets during the first quarter. It was run by FarEye, with support from the Supply Chain Management Association of the Philippines and the Australasian Supply Chain & Logistics Association.
Jalan said much of the delivery cost isn’t in the fuel bill at all and is created by failed deliveries, reattempts, rescheduling, “where is my order” calls and poor routing. Based on the report, 75% of operators named inefficient routing as a top bottleneck, the most common pain point.
Challenges in an archipelago
In a mainland market, a parcel goes from warehouse to truck to door. In the Philippines, which is an archipelago, it usually goes by truck, vessel, truck, with ships carrying most of inter-island trade and every handover adds time and a chance for the shipment to drop out of view, Jalan noted.
Moreover, most manufacturing is in and around Manila, so goods flow outward and vessels and trucks return emptier. The Philippine Inter-island Shipping Association puts the imbalance at roughly three to every one container.
Many islands also lack the volume to justify dedicated services, so each parcel costs more to move. Typhoons regularly close ports and roads. A one-day closure can create a backlog that takes several days to clear.
Jalan said their report also found the same for Asia Pacific. Across the region, three of the top four challenges operators named were physical: geographic dispersion, multi-island distribution and infrastructure gaps. Urban congestion was the fourth.
Jalan noted that businesses holding up best do three things:
- They know their cost to serve. Not just total fuel or carrier spend, but cost per delivery by route, carrier and customer, so they can see which routes and promises lose money.
- They cut the waste first. Better routing, fewer failed deliveries and fuller vehicles save more than renegotiating a fuel contract.
- They plan for disruption as normal. Volatility is no longer the exception. Stock, capacity and delivery promises have to be set up so that a closed port or flooded road means re-planning, not chaos.
“Technology’s job is practical: showing where every shipment is in real time, re-planning routes when conditions change, and making hidden costs visible. Where customers have their data in order and a clear target, we have seen cost reductions of up to 12–15%,” Jalan added.
While technology does not “remove the sea crossing”, it can provide one view across modes and carriers, help choose the carrier by performance, show delivery dates that reflect reality, and allow fast re-planning such as when a port or road closes.
Owning or outsourcing fleet?
FarEye’s report also suggests that operators are moving neither towards owning or outsourcing their fleet, but towards the middle.
The report showed that 62% of operators surveyed run mainly on outsourced carrier networks, 27% own their fleets and 7% are on gig fleets. About 48% plan to outsource more over the next five years.
Jalan said FarEye’s own reading is that outsourcing is not automatically cheaper. A fully owned fleet cannot absorb swings in volume, and a fully outsourced one struggles to hold service levels. The report points to a mixed model with a core of controlled capacity.
“The catch is visibility. The survey found that 44% of operators cannot see in real time where a parcel is. And 35% lack the tools to track carrier performance, while 34% name invoice audit and reconciliation as a bottleneck,” Jalan noted.
Moreover, the biggest change in the Philippines for the past years is volume, particularly with e-commerce parcel volume roughly doubling from about 240 million in 2020 to 510 million in 2025, based on a report by Ken Research.
Networks built for deliveries to stores now carry huge numbers of small parcels to homes.
READ: FarEye, PASIA partner to help enhance PH logistics efficiency
Jalan noted that what companies want from technology has shifted too. According to FarEye’s report, it was real-time tracking in 2023; route optimisation and dispatch in 2024; managing mixed fleets and moving artificial intelligence (AI) from pilot into early production in 2025.
In 2026, cost, speed and customer experience have merged into one problem rather than three trade-offs.
Still, Asia Pacific is ahead of the West in AI in logistics. Based on FarEye’s report, 78% of operators are using or exploring AI: 43% are building it into their existing systems, 15% use it extensively in daily decisions and 20% are exploring.
Across the region, 31% of logistics providers have built AI into core operations, against 14% in North America and 6% in Europe.
The gap is turning experiments into results, Jalan said, as they see many pilots that never reach live operations.
The uses that work are each tied to one specific daily decision:
- Route planning and dispatch: which vehicle takes which stops in what order, re-planned when traffic, weather or a port delay changes the picture.
- Delivery time prediction: customers are told about a delay before it reaches them.
- Exceptions and carrier selection: flagging shipments at risk and sending orders to the partner most likely to deliver on time.
- Proof-of-delivery and invoice audit: one of our customers uses machine vision to check delivery photos and invoices for missing signatures and extra charges. At 10,000 shipments a day, no team can check every document by hand. This has cut manual hours on that task by up to 80%
In the next two to three years, logistics operators should still watch for parcel volumes, which is forecast to reach about 860 million by 2031, up from 510 million in 2025.
Cost to serve may also be a standard measure. Companies that can see cost per delivery by route, carrier and customer will price and plan better than those that only see total spend, Jalan noted.
Mixed fleets may also be a default, while AI moves from pilot to production.
Jalan noted that the past 12 months have been their strongest in the Philippines, “as companies look for AI that has been proven in live operations rather than another experiment.”
FarEye is increasing its investment in the Philippines, adding to its local team.
READ: FAST Logistics taps FarEye to upgrade operation systems
2GO, FarEye mark 5-year partnership with over 150M shipments
Its Philippine customers span consumer goods, retail, pharmaceuticals, food distribution and logistics providers, including 2GO and GoGo Xpress. Across the region, FarEye’s focus is helping customers plan, run and track every delivery in one system, across their own fleets and their partners.
FarEye will also continue its Eye on the Last Mile research, with the next Asia Pacific edition expected around April to May 2027.
