Mint Explainer | How faster deliveries are squeezing logistics firms

A wave of recent announcements underscores how speed is becoming central to logistics strategy. On Tuesday, Allcargo Logistics said it is working on expanding its express network to include tier-2 and tier-3 towns, noting that it already handles over 10 million packages every month across its nationwide e-commerce and quick commerce operations. Unicommerce’s logistics arm Shipway has partnered with ElasticRun to offer same-day and next-day delivery for consumer brands, it said on Wednesday.

Another logistics major DTDC rolled out a new vertical ‘Raftaar’ in August last year to offer 4-6 hours deliveries through hyperlocal dark stores. Delhivery’s two-hour delivery service, Rapid, reached an annual revenue run-rate of ₹15 crore with 23 dark stores as of December 2025, according to the company.

Newly listed company Shadowfax told analysts last week that hyperlocal commerce accounted for 17% of its third-quarter revenue, driven by demand from quick commerce and food delivery players.

Taken together, these moves signal a broader shift: logistics providers are adapting to delivery timelines compressed from days to hours as quick commerce expands beyond groceries into categories such as fashion, electronics and daily essentials.

The push for quicker deliveries is reshaping the logistics industry while adding cost pressures. Mint explains.

What’s behind this rush?

The push toward express delivery reflects deeper changes in how India shops online. As platforms promise faster fulfilment, retailers are increasingly seeking logistics partners capable of shorter turnaround times without disrupting inventory cycles. Third-party logistics (3PL) providers play a key role in this ecosystem, handling warehousing, mid-mile and last-mile delivery for marketplaces and brands.

According to Bain & Co.’s How India Shops Online 2025 report, released in March last year, India’s online shopper base continues to expand steadily, with growth increasingly driven by smaller cities. Digital commerce penetration is rising across categories, supported by deeper logistics reach and improved fulfilment capabilities. Faster delivery options are emerging as a key differentiator for platforms competing for customer loyalty, the report added.

The shift is also extending beyond consumer shipments. As Mint reported in July last year, enterprise e-commerce platforms are promising quicker restocking cycles to kirana stores and small businesses, squeezing supply chains that traditionally operated on longer timelines. Startups and wholesale platforms are investing in technology and fulfilment centres to enable faster turnaround for bulk orders.

Why is this challenging?

Logistics firms can offer quicker deliveries without hurting their profits only if speed is supported by operational intelligence, according to Madhur Singhal, managing partner and chief executive at consultancy Praxis Global Alliance. “Profitability depends on delivery density, optimized basket sizes, and minimizing return and fraud losses. Speed without network optimization limits margins.”

While express deliveries promise higher volumes and stickier client relationships, scaling them presents operational and financial challenges.

Faster fulfilment typically requires denser warehouse networks closer to consumption centres, greater reliance on air cargo for inter-city movement, and tighter coordination in last-mile operations. “Each of these adds cost layers to a business already known for thin margins,” Singhal added.

Competition in third-party logistics has also intensified, with established players and new entrants vying for contracts from large e-commerce marketplaces and direct-to-consumer brands.

Real estate is another pressure point. Logistics leasing touched a record 60 million sq. ft in 2025, driven by strong demand from manufacturing and e-commerce sectors, according to a December 2025 report by real estate company Cushman and Wakefield. Rising warehouse rentals, particularly in prime urban clusters, can increase fixed costs for companies expanding express networks.

Delhivery, for instance, saw its capex intensity settle at 5.2% of revenue in FY25, and capex outlays are expected to be “marginally higher” this year than originally anticipated, according to its Q3 shareholders’ letter.

Beyond infrastructure, companies must invest in technology for route optimization, inventory tracking and demand forecasting to maintain promised timelines. Labour management also becomes more complex as quicker deliveries compress operational windows and increase dependency on gig and contract workers, Praxis’ Singhal added.

What’s next?

India’s e-commerce market continues to expand, with deeper internet penetration and rising consumption in tier-2 and tier-3 towns widening the addressable base. A significant share of future growth is expected to come from smaller cities, where delivery networks are still evolving. This suggests a sizable opportunity for logistics firms that can combine reach with reliability, as per Bain’s report.

At the same time, companies will continue to grow their core offerings such as part-truck load (PTL), full-truckload freight, and integrated supply-chain solutions, which provide steady revenue streams.

“For established players, faster delivery is increasingly part of the core strategy rather than a diversion. Capital is flowing toward tech-enabled platforms and becoming more operationally efficient,” Singhal said.

“Players that overspend on speed without achieving scale discipline may face short-term margin pressures,” he added.