Last-mile delivery is the final leg of a parcel's journey — from a local distribution facility (a USPS SCF, a UPS hub, a FedEx ground terminal, or a regional carrier yard) to the recipient's door. The phrase is somewhat misleading: the "last mile" can be 20+ miles in suburban or rural areas. The point is that it's the *final hop* in the network, not literally one mile.
Last-mile is the most expensive leg of any parcel journey in unit terms. The trunk-haul from origin to destination is efficient — one trailer carries thousands of parcels. The last mile is the inverse — one truck delivers maybe 100-200 parcels in a day, with stop-and-go fuel use, driver labor per stop, and per-package handling. Carriers' residential delivery surcharges exist mostly to recoup last-mile cost.
For shippers, the practical question is who handles your last mile. UPS and FedEx run their own last-mile networks end-to-end. USPS handles last-mile for Priority Mail and Ground Advantage with their existing residential delivery infrastructure — every mailbox already gets visited daily. Hybrid services (USPS SmartPost, UPS Mail Innovations, FedEx SmartPost) hand parcels off from the originating carrier to USPS for last-mile delivery, exploiting USPS's coverage at a lower cost.
L5 rate-shops across all of these options. Some lanes are cheapest on direct UPS Ground. Some are cheapest via USPS Priority. Some hybrid lanes (parcel-to-USPS handoff) can be cheaper than either pure carrier. The optimal answer changes per lane, per weight, per residential vs commercial — which is why automated rate-shopping is the only way to get the math right at scale.