As the e-commerce landscape is rapidly developing, consumer behaviors are consequently undergoing profound changes. With the rise of mobile shopping, the adoption of digital payment, and the huge influence of social media platforms, most consumers now prefer online shopping for its convenience, access, and availability of information.

Yet, as this trend continues to rise, customer expectations are rising too. Cheap, fast, yet free deliveries are what customers look for nowadays. This definitely creates a huge burden over e-commerce companies who want to keep up with customer demands. One bottleneck that may hinder them from achieving what their customers opt for is the increased last mile delivery costs! Global Studies show that last mile shipping can account for up to 53% of the total shipping costs.

In Saudi Arabia, where e-commerce is witnessing strong expansion driven by the Saudi vision 2030 initiative, the stage of last mile delivery may face big challenges including traffic congestion, lack of efficient workforce, and continuous rise in package volumes.

However, technology is here to do the heavy lifting! Smart routing and telematics systems are now provided with the tools and features needed for last mile optimization, cost reductions, and achieving the utmost level of customer satisfaction.

In this article, we’ll delve into the last mile delivery process, breakdown its challenges, and explain how cutting-edge tracking solutions play a major role in reducing last mile delivery costs in KSA.

Table of Contents

·       What Is Last Mile Delivery?

·       The Biggest Challenges Associated with the Last Mile Delivery Process

·       The Role of Telematics in Enhancing Last Mile Delivery in Saudi Arabia

·       Key Steps for Last Mile Optimization in Saudi Arabia

·       Choose AFAQY’s Route for Cost-effective, Efficient Last Mile Delivery Operations

What Is Last Mile Delivery?

‍

‍

In the simplest of terms, last mile delivery refers to the last stage of the shipping process when the order finally reaches the consumers’ doorstep. This stage is the most critical of all as it undergoes many conditions such as traffic congestion, volume of orders, driver behaviors, and lack of delivery personnel. Thus, it highly impacts customer satisfaction and is a very challenging stage in the supply chain in general.

Actually, the shipping process incorporates several stages, such as:

·       Packaging Stage: It all begins at a local distribution center, a transportation hub, or a retail store where orders are prepared and shipped. Items are checked carefully and packed securely.

·       Transit Stage: In this stage, the goods start to be actually transported, and this can involve various transportation modes like sea, air, or land transport. 

·       Delivery Stage: This is the so-called final delivery stage or last mile delivery stage when goods are eventually handed over to the final recipient.

The last mile delivery stage is the most important touchpoint in the customer journey that many companies may overlook. Ignoring or neglecting this stage may result in customer dissatisfaction and lost brand reputation.

The Biggest Challenges Associated with the Last Mile Delivery Process

Being the most challenging and expensive part of the supply chain, this final leg of the journey encompasses several challenges, including:

High Costs

The last mile delivery stage is notoriously expensive and can account for more than half of the logistics costs. A detailed cost breakdown reveals that labor makes up about 39% of marginal cost per mile, fuel around 25%, followed by vehicle costs, maintenance, insurance, and other overheads.

Additionally, in many developed economies, the average cost per parcel is around $8, and even higher for same-day services in dense areas, sometimes exceeding $20.

These rising expenses can squeeze your margins even further, especially when your customers increasingly expect low-cost, or even free delivery as the standard.

Inefficient Routes & Traffic

In busy urban areas, you know how much congestion and poor route planning can slow down your operations. Your drivers may spend up to 30% of their time just searching for parking, while missed deliveries and rerouting can add to nearly 40% of urban delivery challenges and congestion.

Without dynamic route optimization, these inefficiencies only get worse. By adopting advanced digital route optimization, you could cut vehicle use and mileage significantly, helping you lower both costs and emissions at the same time.

Rising Customer Expectations

Your customers now expect deliveries to be fast, flexible, and transparent. Same-day and next-day options are increasingly seen as the standard, and many customers want real-time visibility into their orders along with flexible delivery slots.

Thus, these rising expectations can put pressure on your operations, but with advanced tracking and smart delivery solutions, you can not only meet customer demands but also streamline your processes, improve efficiency, and strengthen customer loyalty.

Reverse Logistics (Returns)

Managing returns such as collecting, inspecting, and restocking is also time-consuming and expensive. You might have encountered such challenges also during your everyday logistics operations.

In fact, this complexity is heightened in industries with high return rates, such as apparel or electronics, where same-day pickups, accurate tracking, and flexible schedules are essential to avoid customer dissatisfaction and cost blowouts.

Lack of Real-time Visibility & Tracking

Visibility failures such as not giving customers or operators real-time tracking can undermine trust and increase support load inside your company.

AI-enabled logistics platforms have significantly improved this. For instance, as mentioned by Business Insider, one last-mile provider saw a 80% drop in customer service calls due to real-time tracking and better ETAs.

In short, clear tracking data reduces anxiety and operational friction for both customers and businesses.

The Role of Telematics in Enhancing Last Mile Delivery in Saudi Arabia

Inefficiency, increased idle time, wasted fuel, and varied road conditions are the biggest contributors of increased last mile delivery costs. That’s where telematics technology comes in as a rescuer to optimize the operations of logistics companies, especially those operating large fleets.

Equipped with cutting-edge devices and sensors, fleet tracking systems not only accelerate delivery times but also save you a fortune.

Let’s have a look at some of the advantages of telematics systems:

Fleet Route Optimization

Telematics systems provided with advanced GPS devices are able to collect road data in real-time and transmit them to a software system that fleet managers can check anytime and anywhere.

This flexibility enables them to optimize roads on the go according to real-time conditions such as avoiding long roads or those with traffic congestion. This feature plays a major role in accelerating delivery times, increasing customer satisfaction and; hence, skyrocketing productivity.

Fuel Savings and Vehicle Efficiency

As telematics systems provide accurate data about fuel usage and driving behaviors, fleet managers can identify areas for improvement to save fuel costs and train drivers on the fuel-efficient driving habits. This has a great influence on fuel savings, extends vehicles’ lifespan, and lowers maintenance expenses.

Data-driven Decision Making

Telematics means data and data is the gateway for understanding your fleet inefficiencies. Advanced tracking solutions can integrate with delivery management systems to generate delivery performance KPIs reports, heatmaps of delivery density, and driver productivity insights.

These data points help businesses reconfigure routes, plan for peak demand, and make better resource allocation decisions.

Improved Driver Performance and Behavior

Observing your driver's behavior in real-time is also key to reducing last-mile delivery expenses. By monitoring behaviors such as harsh braking, speeding, over idling, and drowsiness, you will be able to notify drivers instantly so that they can correct their behaviors.

This enhances fleet safety, reduces accidents, and results in faster deliveries and reduced fuel consumption.

Key Steps for Last Mile Optimization in Saudi Arabia

As e-commerce and on-demand services continue to surge across Saudi Arabia, the last mile has become both the most critical and most expensive part of the delivery journey.

Urban congestion, sprawling rural areas, and the lack of a standardized addressing system present unique hurdles that drive up costs and complicate operations.

Therefore, optimizing the last mile in Saudi Arabia requires more than just incremental improvements, it calls for a tailored approach that aligns with the Kingdom’s geography, infrastructure, and Vision 2030 ambitions for digital transformation and sustainability.

The following are some key steps for optimizing last-mile delivery in Saudi Arabia:

·       Understand the Local Landscape: The geographical diversity in Saudi Arabia requires tailored delivery approaches. Thus, you have to carefully plan and adjust based on real-time conditions. For instance, you may need robust 4×4 vehicles for remote zones and agile vehicles for cities.

·       Leverage Smart Route Optimization: Using cutting edge telematics systems that combine GPS technology and AI tools is essential to optimize routes, enhance driver behavior, and increase safety, enabling more efficient last mile operations.

·        Optimize Resources, Payments & Returns: Automate order allocation, cluster deliveries, and optimize vehicle capacity to avoid empty runs and reduce costs. Also, you can digitize cash-on-delivery (COD) through mobile payments to reduce fraud risks. Returns can be streamlined through route reverse pickups alongside deliveries.

·       Adopt Sustainable Solutions: To improve your operations in alignment with Saudi Green Initiative and Vision 2030 sustainability goals, it is recommended to transition to electric or solar-powered vehicles.

Choose AFAQY’s Route for Cost-effective, Efficient Last Mile Delivery Operations

When it comes to last-mile delivery, the difference between profitability and spiraling costs often lies in how intelligently you manage routes, drivers, and real-time challenges.

AFAQY’s "Route" has been purpose-built to address these exact pain points, empowering businesses in Saudi Arabia and beyond to run leaner, smarter, and more reliable last-mile operations.

Here’s why it stands out as the best solution:

Job Order Management That Works for You

Create job orders in seconds, whether manually or through automation. Assign routes directly within the platform, ensuring each task is matched to the right vehicle and driver. Whether it’s a pre-planned delivery run or a last-minute on-demand job, “Route” ensures seamless execution and optimized resource allocation.

Advanced Route Optimization with Built-In Intelligence

Powered by industry-leading algorithms and APIs like Google Maps, “Route” calculates and optimizes journeys for shortest distance, fastest time, or best delivery sequence.

Complex, multi-stop operations? No problem. "Route" continuously re-optimizes in real time based on traffic, delays, or shifting conditions, keeping your fleet on schedule and costs under control.

Real-Time Tracking & Instant Notifications

Gain live visibility into every vehicle and driver. With milestone alerts, delay notifications, and deviation warnings, managers can intervene instantly to keep service levels high. Transparency extends to customers too, with ETA accuracy and proactive updates that build trust.

Sensor Integration & Smart Alerts

Transporting perishable or sensitive goods? “Route” integrates with temperature, humidity, and weight sensors to provide instant alerts when thresholds are breached. This safeguard is critical for cold chain logistics like food, pharmaceuticals, and chemicals.

Advanced Reporting & Analytics

Turn raw data into actionable intelligence. “Route” generates detailed reports on performance, delivery delays’ causes, optimization success, and job outcomes. Managers can export data easily to refine strategies and continually improve operational efficiency.

Comprehensive Driver Management

Assign one or multiple drivers to a route with full support for shift changes, breaks, and handovers. “Route” ensures compliance with labor policies while keeping operations smooth and continuous with no delivery window missing.

Ready to transform last-mile delivery from a cost center into a competitive advantage? Use AFAQY’s Route and take the first step towards more efficient and transparent fleet operations! Contact us today!

FAQs

How to Reduce Last-Mile Delivery Costs?

·       Use route planning software to cut fuel and time costs.

·       Reduce failed deliveries with real-time vehicle tracking and customer notifications.

·       Embrace technology integrations (GPS, telematics, IoT) for efficiency.

What is Smart Routing in Logistics?

Smart routing is the use of advanced algorithms and real-time data (traffic, weather, delivery windows) to determine the most efficient path for deliveries. Unlike static route planning, smart routing dynamically adjusts routes on the fly, ensuring shorter travel times, reduced fuel use, and more successful on-time deliveries.

What are the Benefits of Route Optimization Software?

·       Cost Savings: Cuts fuel, labor, and maintenance costs.

·       Time Efficiency: Reduces delivery times and maximizes daily drop-offs.

·       Customer Satisfaction: Provides accurate ETAs and fewer failed deliveries.

·       Scalability: Handles more orders without needing a larger fleet.

·       Data Insights: Offers analytics to continually refine and improve logistics strategies.

References

1.  Christie, N., O’Toole, S., Holcombe, A., Bull, N., & Helman, S. (2024). Managing the road safety risks of last mile deliveries: Do telematics have a role to play? TrafficInjury Prevention, 1–7. https://doi.org/10.1080/15389588.2024.2413143

2.  SaudiArabia Last Mile Delivery Market Size & Outlook, 2030. (2025, April 30). https://www.grandviewresearch.com/horizon/outlook/last-mile-delivery-market/saudi-arabia

3.  Eurogroup Consulting Middle East and Asia. (2024, October 31). Optimizing Last-Mile delivery for consumer goods in Saudi Arabia: A route planning approach -Eurogroup Consulting Middle East and Asia. Eurogroup Consulting Middle East and Asia -. https://eurogroupconsultingmea.com/case-studies/optimizing-last-mile-delivery-for-consumer-goods-in-saudi-arabia-a-route-planning-approach/

‍