Singapore’s last-mile delivery shifts from growth to efficiency as costs rise

These pressures are structural rather than temporary.

Singapore’s last-mile delivery operators are prioritising efficiency over expansion as rising labour, fuel, and facility costs collide with growing customer expectations, forcing a rethink of operational strategies.

Easyvan (SG) Pte. Ltd., which operates Lalamove in Singapore, reported that 43% of small and medium enterprise (SME) clients cited rising logistics costs as a top concern, whilst over half flagged higher delivery demands, according to an internal survey of 1,000 Singapore SMEs.

“The main challenge will be handling higher costs while meeting higher customer demands, especially in e-commerce,” Alex Lin, managing director at Lalamove Singapore, told Singapore Business Review.

“These pressures are now viewed as structural rather than temporary,” he said in an emailed reply to questions.

Labour remains the biggest and most persistent cost driver, Lin said. Facility costs are also high due to Singapore’s limited land availability, leaving operators little room to absorb inefficiencies.

Idle assets, excess capacity, and poor routing now directly eat into margins.

Richard Schubert, group chief operating officer at Cartrack Holdings Ltd., said fuel and labour costs dominate last-mile economics, with warehouse location and storage methods becoming increasingly consequential.

“Where and how you're storing your goods are critical,” he said via Zoom.

Margins are tightest at the final stage of delivery. “The last mile remains highly labour-intensive, energy-intensive, and exposed to urban complexity,” Ezanne Soh, a senior manager for Southeast Asia at Geotab, Inc., said in an emailed reply to questions 

Inefficiencies that were once tolerable are now costly, and she predicts pressure will intensify this year as inflation converges with rising service expectations.

Peak demand days, not averages, now define performance. Lin noted that sudden surges and overlapping festive periods, including Christmas, Chinese New Year, and Ramadan, test logistics networks. Operators are moving from reactive scaling to deliberate capacity control, preparing year-round for spikes two to three times normal levels.

Talent scarcity further complicates operations. Finding drivers is becoming increasingly difficult, Schubert said, noting that operational visibility, including real-time driver dashboards, is key to preventing small disruptions from cascading.

Technology investments face higher scrutiny. Lin described artificial intelligence (AI) as a supporting tool rather than a substitute for operations.

“AI is an important enabler for Lalamove, but not the sole driver of performance,” he said. “For us, the biggest gains come from applying AI practically to support daily execution.”

Soh warned that standalone AI tools risk underperformance unless fully integrated into operations. “Bringing every asset into one open platform creates a single source of truth.”

Schubert said financial accountability is the ultimate measure of technology’s impact. “You can’t  optimise what you can’t measure,” he said, adding that cost per delivery is the ultimate test.

For senior leaders setting priorities early in the year, Soh has this advice: “I’d urge them to consolidate their operations into a single operational brain.”