For decades, parcel delivery has been the go-to solution for retailers and shippers — a reliable, catch-all mode that promised simplicity and scale. But in 2025, that legacy model is cracking under pressure. Rising surcharges, unpredictable service levels and a growing demand for same-day and scheduled delivery are exposing the limits of a parcel-only strategy.
The truth is, parcel isn’t broken — it’s just no longer a one-size-fits-all answer.
The future of fulfillment — and today’s current climate — demand flexibility. Retailers are being forced to balance customer expectations with cost pressures, and that means rethinking the modes they rely on to move goods the final mile. That’s why retailers and shippers are mode shifting, moving to a smarter, tech-enabled approach that dynamically selects the right delivery method based on cost, speed, availability and service-level agreements (SLAs).
This isn’t about abandoning parcel altogether. It’s about evolving beyond defaults — and making every delivery decision a strategic one.
The Cracks in the Parcel-Only Model
What was once considered the gold standard for last mile delivery is now weighed down by inefficiencies and cost surprises. In 2025, the parcel-only model is facing serious headwinds — and retailers are feeling the impact. Here’s a look at the most pressing parcel-related issues:
1. Surcharges Are Skyrocketing
Parcel carriers are no longer shy about penalizing packages that fall outside their preferred specifications. UPS’s 2025 surcharge updates tell the story:
- Additional handling fees now run as high as $55 for weight, $38 for dimensions and $31.50 for packaging.
- Large package surcharges can reach $260 for commercial deliveries and $305 for residential deliveries.
- Exceeding maximum size limits triggers a flat fee of $1,325 per domestic package and $1,375 for international shipments. Ouch.
These fees are rarely transparent at the point of label creation, leaving shippers to discover cost overruns after delivery, when it’s too late to course-correct.
2. Carriers Are Actively Discouraging Oversized Parcels
Whether it’s dimensional surcharges or minimum billable weights for large packages (90 lbs. or more), it’s clear that parcel carriers are engineering their networks to exclude what they deem inefficient. Unfortunately, that leaves retailers in a reactive position — absorbing inflated costs without the data to anticipate them.
3. Air Parcel Inefficiencies Compound Other Issues
Many air shipments never touch a plane, traveling via ground while still incurring premium rates. In low-zone deliveries (Zones 2-3), shippers are paying for speed they don’t actually receive. With a $35+ minimum charge on many air labels, the inefficiency is baked in.
The three challenges above underscore the current parcel paradox: It still appears cost-effective at first glance. But once accessorials, failed SLAs and lack of visibility are factored in, parcel’s promise of simplicity often comes at a high operational cost.
Beyond Parcel: Why Retailers Are Embracing Smarter, Mode-Optimized Delivery
Retailers are under pressure from all sides — customer expectations are rising, margins are shrinking and legacy delivery models are showing their age. Parcel carriers are tacking on new fees. LTL shipments bring their own cost burdens. And the “default” approach to mode selection is no longer sustainable.
That’s why mode shifting is gaining momentum.
Rather than relying on a single mode to handle every delivery scenario, retailers are now adopting multimodal strategies that match each shipment to the most efficient, cost-effective delivery method, in real time. The shift is all about right-sizing the mode for the moment.
Evolving customer expectations are a driving force. Shoppers expect speed, including same-day, scheduled and even “faster than fast” delivery options — and they’re willing to reward the brands that can deliver. But meeting those demands with a parcel-only or LTL-heavy model often leads to bloated costs and inconsistent outcomes.
LTL shipments, in particular, carry hidden complexity:
- Pricing is influenced by freight class, distance, weight, linear feet, fuel surcharges and accessorials.
- Minimum charges alone can range from $75 to $200+, even for short-haul deliveries.
- Unlike scheduled local delivery, LTL lacks the precision to guarantee a positive customer experience.
By contrast, OneRail’s next-day scheduled model streamlines delivery through smarter routing, simplified pricing and a network of pre-vetted couriers — all orchestrated through real-time decisioning. The results include reduced costs, better SLA performance and greater control over the customer experience.
Technology makes it all possible.
With OneRail’s platform, delivery mode decisions are no longer static or manual. They’re powered by intelligent automation that considers real-time variables like:
- Shipment size and weight
- Delivery zone
- SLA requirements
- Carrier availability
- Total cost to serve
The future of fulfillment is smart mode rather than single mode. And it’s already here.
From Data Silos to Delivery Intelligence: The Engine Behind Smart Mode Shifting
Mode shifting sounds simple, but it’s nearly impossible to execute without the right data infrastructure. That’s the hidden challenge most shippers face today.
In many organizations, mode selection is still manual, fragmented and reactive. Teams are forced to make critical decisions without visibility into real-time factors like:
- Internal fleet availability
- Courier capacity and performance
- Parcel carrier constraints and surcharges
This lack of visibility leads to inconsistent delivery outcomes, avoidable cost overruns and missed SLAs — all stemming from disconnected data and outdated decision-making processes.
The OneRail platform turns fragmented delivery data into a single source of truth. It ingests and normalizes data across parcel, courier and internal fleet sources, creating a unified foundation for real-time orchestration. From there, OneRail applies automated, rules-based logic to select the best mode and carrier for each delivery — factoring in cost, SLA, location, capacity and more.
The goal is to empower shippers to make the optimal choice instantly, every time. With OneRail, mode shifting moves beyond just a logistics workaround to become a strategic advantage.
From Static to Strategic: Embracing Multimodal as the Future of Fulfillment
Last mile delivery has become a strategic lever for customer experience and margin control. In 2025, the retailers leading the pack are those moving beyond defaults to embrace multimodal delivery by design — powered by data, automation and real-time orchestration.
This shift is now essential as customer expectations include flexible delivery windows, from same-day to scheduled. As parcel and LTL costs continue to climb, this new reality calls for fulfillment strategies that are:
- Multimodal by default
- Customer experience-led
- Transparent in cost and performance
Smart mode shifting delivers on all three — reducing total delivery cost, increasing on-time performance and elevating customer satisfaction.
At OneRail, we offer the platform needed for your business to mode shift with confidence, so it can step into the future of fulfillment. Ready to see what this game-changing strategy looks like in action? Schedule a demo.
