# The Last-Mile Reckoning **Author:** Eric Lobdell **Date:** 2026-05-14 **Description:** Legacy carriers lost 24 points of last-mile market share in five years. Who's winning, what drove the shift, and what smart ecommerce brands should do now. **URL:** https://thrive3pl.com/blog/the-last-mile-reckoning --- > **TL;DR:** UPS, FedEx, and USPS controlled 85% of U.S. parcel volume before the pandemic. By 2025, that number dropped to 61%. Amazon, regional carriers, and startups are taking share by doing what the legacy carriers won't: quoting a price and sticking to it. The shift is already here. Brands that diversify now will pay less and ship better. This is the third piece in a series. [Part one](/blog/parcel-pricing-broken-on-purpose) covered how UPS and FedEx use surcharge complexity as a business model. [Part two](/blog/usps-ten-year-plan-eighteen-month-job) looked at the Postal Service's 10-year plan to fix a problem that needed 18 months. This one is about what happens next. The short version: the legacy carriers created the conditions for their own disruption. And the disruptors showed up. ## 85% to 61% in Five Years Before COVID, UPS, FedEx, and USPS handled roughly 85% of every package shipped in the United States. They were the industry. If you sold something online, your package moved on one of their trucks. By 2025, according to ShipMatrix data, that combined share had fallen to 61% of 23.9 billion annual deliveries. Twenty-four points of market share — gone in five years. That doesn't happen because someone built a slightly better mousetrap. That happens because the incumbents stopped trying. ## Amazon Didn't Ask Permission The biggest shift is the most obvious one. Amazon delivered 6.7 billion packages in 2025. That's more than the U.S. Postal Service, which handled 6.6 billion. Amazon is now the largest parcel carrier in the country by volume. UPS came in third at 4.4 billion — down 8.6% year over year. FedEx was fourth at 3.6 billion. Revenue still favors the old guard. UPS pulled in $58.3 billion. FedEx was close at $57.1 billion. Amazon Logistics brought in $38.5 billion. But revenue lags volume, and [volume is moving](/blog/amazon-overtakes-usps-new-era-us-delivery) in one direction. Amazon built its own delivery network because the existing options weren't good enough. The world's largest e-commerce company looked at UPS and FedEx and decided it was easier to build from scratch than to keep negotiating. ## The Carriers Are Retreating — On Purpose Here's the part most brands miss. UPS and FedEx aren't only losing volume. They're walking away from it. Both carriers decided to retreat from commodity last-mile delivery and chase B2B logistics and higher-value e-commerce where they can charge a premium. The economics make sense for them. Low-weight residential parcels are expensive to deliver and generate thin margins on networks built for heavy B2B freight. But here's what that strategic retreat looks like from the shipper's side: - Ground fuel surcharges rose 26.7% year over year in Q1 2026 — while diesel prices rose only 10% - A five-pound ground package from Atlanta to New York City costs 41.8% more in 2026 than it did in 2022 - Delivery Area Surcharges keep expanding to cover more ZIP codes every year - [The rate sheet](/blog/parcel-rate-sheet-problem) shows one number. The invoice shows another. The carriers aren't trying to win your lightweight DTC shipments anymore. They're [pricing you out on purpose](/blog/fedex-ups-ecommerce-food-chain) so they can focus on the freight they actually want. And if you're a brand shipping 5,000 to 50,000 packages a month, you're not their priority customer. You're the volume they're shedding. ## Who's Filling the Gap The market share that UPS, FedEx, and USPS are losing has to go somewhere. It's going to a new generation of carriers that figured out something the incumbents forgot: shippers want to know what they're going to pay before they ship, and they want the package to arrive when promised. ### OnTrac OnTrac has been the regional carrier success story for years, primarily covering the western United States. In early 2026, they launched a hybrid air-and-ground Express delivery product with ClearJet that offers consistent two-to-three-day coast-to-coast transit. That's a direct challenge to UPS and FedEx Express services — at lower cost, with simpler pricing. ### Veho Veho expanded to 66 markets by February 2026 and was named to Fast Company's Most Innovative Companies list for 2026. They're a technology company that happens to deliver packages. Their CEO, Itamar Zur, said something worth paying attention to: "Peak surcharges fall disproportionately on small-medium sized retail and ecommerce brands with less negotiating power than industry giants." Veho doesn't charge peak season surcharges. They opted out entirely. That alone tells you something about who they're building for. ### The Long Tail Beyond OnTrac and Veho, there's a long list of companies taking bites out of legacy carrier volume: Jitsu, UniUni, Better Trucks, SpeedX, and even DoorDash and GoBolt entering parcel delivery. Regional carriers collectively offer one-to-two-day delivery at up to 30% lower cost in coastal and urban markets. None of them individually threaten UPS or FedEx. But collectively, they've already changed how packages move in this country. ## What the Winners Have in Common The carriers gaining share have a few things in common. None of it is complicated. ### Transparent Pricing No hundred-surcharge menu. No weekly fuel adjustments that move independently of actual fuel costs. No ZIP code reclassifications that quietly add $2 to every package heading to a suburb. The newer carriers tend to quote a price that includes delivery costs. That price is what you pay. This sounds basic. It is basic. The fact that it's a competitive advantage tells you how broken the incumbents' pricing has become. ### Technology built in, not bolted on UPS and FedEx bolted technology onto networks designed in the 1970s and 1980s. The newer carriers built around it from day one. Route optimization that works. Delivery windows that update in real time. Photo proof of delivery. Notifications that don't require you to log into a carrier portal to find your package. ### They actually need your business UPS's CFO told shareholders that fuel surcharges exist to "protect us from impact to profit." Honest. Also tells you exactly whose interests the pricing model serves. The newer carriers grow by winning shipper volume and keeping it. They deliver reliably at a fair price because that's their only play. They don't have a legacy B2B book to fall back on. If they lose you, they feel it. ## What This Means for Brands If you're shipping DTC orders through one legacy carrier, you're overpaying. Here's what I'd tell any brand moving 5,000 or more packages a month. ### Diversify Your Carrier Mix The days of signing one UPS or FedEx contract and calling it done are over. A [good 3PL partner](/blog/how-to-choose-a-3pl-20-point-evaluation-framework) should be rate-shopping across multiple carriers on every shipment, legacy and regional, and routing each package to the best option for that destination and weight. If your 3PL only ships on one carrier, ask why. The answer is usually that it's easier for them, not better for you. ### Compare Total Cost, Not Base Rates Stop evaluating shipping options based on the rate sheet. That number is fiction. What matters is total landed cost — base rate plus fuel surcharge plus every accessorial that gets applied after the label prints. Any carrier or 3PL that won't quote you a total landed cost comparison is hoping you won't do the math yourself. We wrote a [full breakdown of how this works](/blog/parcel-rate-sheet-problem) and why base rates are misleading. It's worth reading before your next carrier negotiation. ### Watch Zone Coverage Regional carriers typically offer better rates in their core markets — often specific coasts or metro corridors. If 60% of your orders ship to the West Coast, a regional carrier like OnTrac might save you 20-30% on those shipments compared to a national carrier. Blend that with a legacy carrier for the zones where regionals don't reach, and your overall shipping cost drops meaningfully. ### Renegotiate Annually — Or More Often Carrier contracts aren't set and forget. If you signed a three-year deal with UPS in 2024, the market has changed underneath you. Regional carriers expanded coverage. New entrants launched. Your existing carrier's rate card probably changed too, just not in your favor. The brands paying the least for the best service are the ones renegotiating constantly and using real competitive alternatives as leverage. ## The Reckoning Is Already Here This isn't a prediction. It's a description of what's already happened. The legacy carriers had decades of dominance and used that dominance to build [pricing models that serve their margins](/blog/parcel-pricing-broken-on-purpose), not their customers. They assumed shippers had no alternatives. Now shippers do. Amazon built its own network. Regionals went coast to coast. Veho proved you can deliver reliably without a hundred different surcharges. Twenty-four points of market share moved in five years. The brands diversifying their carrier mix are seeing lower costs and better delivery performance. The brands still shipping everything through one legacy carrier are subsidizing a business model that's retreating from serving them. I've been in this industry long enough to know when the ground is shifting. This one's not subtle. The only question is whether you adjust now or wait until the [cost gap](/blog/how-much-does-a-3pl-cost) forces your hand. --- *Published by Thrive 3PL — Houston-based fulfillment for e-commerce brands. Learn more at [thrive3pl.com](https://thrive3pl.com).*