The final mile delivery market for heavy goods presents both significant opportunities and challenges for third-party logistics (3PL) providers. A recent report by Armstrong & Associates, a supply chain consultancy and global 3PL research firm based in Brookfield, in collaboration with the National Home Delivery Association, offers deep insights into this evolving sector.
Market Overview and Growth Trends
The report, titled "Navigating Uncertainty: Final Mile Heavy Goods Delivery in the U.S." , analyzes multiple factors shaping the market, including:
- Market size and growth drivers
- Key players and customer segments
- Transportation costs and regional delivery trends
- Labor dynamics and driver models (contractors vs. employees)
- Revenue trends and the increasing role of freight brokers
Final mile heavy goods delivery is defined as the transportation of large items (non-parcel) from the last warehouse or terminal to the end recipient. These goods include furniture/mattresses, appliances, electronics/high-tech equipment, sporting goods, building materials, industrial machinery, and medical equipment, delivered to either residential or commercial locations across the U.S.
The analyzed 3PLs reported 2024 final mile delivery revenues ranging from $1.5 million to $1.1 billion, collectively representing about 32% of the estimated $10.15 billion U.S. 3PL heavy goods final mile market. The market has grown at an 11.4% compound annual growth rate (CAGR) from 2017 to 2024, though growth is expected to slow to 7.2% CAGR from 2024 to 2026.
Challenges Impacting Growth
The report identifies two primary factors behind the projected growth slowdown:
1. New tariff implementations creating market uncertainty
2. Reduced consumer spending directly affecting final mile delivery demand
Evan Armstrong, CEO of Armstrong & Associates, notes that while challenges exist, the market remains attractive: "The shift from brick-and-mortar to online sales continues to drive demand. We're moving in the right direction for heavy goods final mile delivery, with shippers needing more capacity and significant merger and acquisition activity in this space over the past five years."
Delivery Capacity and Labor Trends
The report highlights a significant shift in labor models:
- Independent contractors and owner-operators now comprise 96.4% of final mile delivery drivers (up from 92.6% in 2023)
- Employee drivers account for just 3.6% of the workforce
"The predominant business model has been using independent contractors for final mile delivery," Armstrong explains. "Companies are increasingly working with freight brokers to access small fleets of 5-7 trucks, creating more flexibility in finding capacity."
However, regulatory challenges like California's AB5 legislation have created complications for some operators relying on independent contractors. Armstrong emphasizes the need for policies that allow both independent operators and employee drivers to coexist while maintaining efficient delivery performance.
Product Segmentation and Revenue
The 2024 market breakdown by product category shows:
- Appliances : 40.6% market share ($4.119 billion revenue)
- Furniture : 30.2% ($3.059 billion)
- Building materials: 9.0%
- Sporting goods: 6.6%
- Electronics/high-tech: 5.6%
- Mattresses: 3.1%
- Industrial machinery: 1.4%
- Medical equipment: 0.8%
- Other: 2.7%
"Appliances and furniture remain the backbone of final mile delivery services," Armstrong notes. "High-touch deliveries like white-glove appliance services require specialized skills - ensuring proper water connections for refrigerators or dishwashers, for example. This expertise creates value in the delivery process."
Looking ahead, the report projects U.S. 3PL heavy goods final mile revenues to reach $10.86 billion in 2025 and $11.66 billion in 2026, reflecting continued growth despite the anticipated slowdown.