Last-mile delivery jumped from 41% of total shipping cost in 2018 to 53% in 2023 (World Economic Forum, Transforming Urban Logistics, 2024). The single most expensive part of getting a parcel to a door is now more than half the bill, and most small businesses never see it coming.
Logistics does not kill you with one big bill. It bleeds you slowly.
Nobody closes shop because of one delivery run. They close because delivery quietly took a bite out of every order for eighteen months until there was nothing left.
For most online retailers, shipping and delivery run 10% to 15% of total revenue (Eightx e-commerce shipping benchmarks, 2026). For low-value, high-volume sellers, that number climbs to 20% to 30% of order value. Think about what that means. If you sell a $25 item and delivery eats $6 of it, logistics is not a cost centre. It is your second-largest expense after the product itself.
Here is the part that hurts. Every other cost scales with sales. Delivery does not. When orders dip, your driver salary, your van lease, and your warehouse rent stay exactly the same.
Cash flow is what actually closes the door, and logistics is a cash-flow machine.
Businesses do not die from being unprofitable. They die from running out of cash. And logistics is one of the biggest reasons the cash runs out.
In Singapore, 51% of SMEs now report difficulty managing cash flow and access to funding, up from 36% a year earlier (QBE Singapore SME Survey, released February 2025). In the same survey, 66% named rising costs and shrinking profitability as their number one business challenge, versus half the year before. Borrowing to plug the gap got worse too: average SME borrowing costs hit 8.47% per annum in 2024, the highest in recent years (Linkflow Capital SME Financing Survey, 2024).
Now layer logistics on top. A fixed monthly van lease or an in-house driver salary is a cash outflow that hits on the first of the month whether you did 200 deliveries or 20. Your customers pay you in 30 to 90 days. Your driver gets paid regardless. That mismatch is exactly the structural cash-flow gap the QBE survey describes, and for a small business it is often fatal.
If your logistics bill is fixed while your revenue is variable, you are carrying the risk your carrier should be carrying.
Last-mile is the most expensive leg, and it is the one you control least.
The final stretch to the customer's door is where logistics economics fall apart. It always has been. Small businesses just rarely price it in.
Last-mile now accounts for 41% to 53% of total logistics and shipping cost, with dense urban operations sitting at the top of that range (Capgemini Research Institute; World Economic Forum, 2024). Singapore is about as dense-urban as it gets. HDB blocks with no loading bays, CBD buildings with 45-minute lift queues, condos that make drivers sign in at the guardhouse. Every one of those minutes is money, and it all lands in the last mile.
Then there are the failed attempts. A failed first delivery costs roughly $17.20 per attempt in redelivery, labour, and customer service (GoBolt last-mile analysis, 2024), and around 8% to 10% of deliveries fail on the first try. For a Carousell seller or a Shopee store doing a few hundred orders a month, that is a five-figure leak nobody put in the spreadsheet.
We wrote a full breakdown of what last-mile delivery actually costs in Singapore if you want the numbers behind the numbers.
If you are eating redelivery costs and dead lift-queue minutes, you are subsidising a broken model out of your own margin.
The fixed-cost trap: an in-house driver looks cheap until the orders stop.
The instinct when volume grows is to hire your own driver and buy a van. It feels like control. It is actually the fastest way to lock in a cost that does not flex.
Run the real numbers on a full-time driver in Singapore, not just the base pay:
Monthly cost of one in-house driver
- Base salary: $2,500
- CPF employer contribution (17%): $425
- Van installment: $1,200
- Fuel: $1,200
- Insurance: $200
- Road tax, carpark, cashcard and ERP: $340
- Total fixed monthly overhead: $5,865
That is roughly $70,000 a year that goes out the door whether you are busy or dead quiet. In a slow month, you are paying full price for a driver sitting idle. In your peak month, one driver cannot cope and you are scrambling for backup anyway. The fixed cost punishes you at both ends. We put the full comparison in our piece on hiring an in-house driver versus a man and van.
The trap is not the driver. The trap is committing a fixed cost to a variable business.
Turn your biggest fixed cost into a variable one you only pay when you sell.
The fix is not to cut delivery. It is to stop paying for it when you are not using it. Match your logistics spend to your actual order flow so a quiet week costs you nothing.
That is the entire reason BoxPls prices the way it does. Instead of a $5,865 monthly commitment, a BoxPls Man and Van starts from $165 per half-day or $299 per full-day on weekdays. You book it on the days you actually have volume. No CPF, no van lease, no idle driver on a slow Tuesday. For scattered drops, multi-stop delivery starts from $9 per stop with the exact price shown before you book, so you never guess. On the last-mile leg where costs run wild, our guide on cutting your last-mile logistics costs walks through the tactics that stack on top of variable pricing.
The businesses that survive are not the ones with the cheapest delivery. They are the ones whose delivery cost breathes with their sales, so a slow month is just a slow month and not the start of the end.
