Walk through Sydney’s CBD at 7am and you’ll find loading bays and pedestrian walkways littered with delivery vehicles restocking stores and delivering building materials to impatient construction managers. 

It’s the same in the suburbs, where thousands of drivers deliver millions of parcels to eager shoppers.

While it might not be immediately obvious, Australia is facing a critical shortage of delivery drivers. 

According to the IRU's Global Driver Shortage Report, Australia has a driver deficit of 12% (up from 10% in 2024). What’s more, 24% of the existing workforce, representing more than 43,000 drivers, will retire by 2030. That’s a significant cliff edge. 

We chatted about those numbers with Adam Amato, route optimisation expert at NowGo by Shippit, to find out if it’s as bleak out there as the research suggests, where fleets are currently falling short, and what the solution is.

TL;DR

• Australia’s driver shortage is worsening, with 43,000 drivers set to retire by the end of 2030;
• Zone-based routing - built for an era of stable labour, local street knowledge, limited technology - hurts efficiency and forces fleets to overhire to cover zones;
• Dynamic optimisation removes that restriction, cutting cost per delivery and enabling fleets to do more with less.

The driver shortage is real, and it’s impacting bottom lines and service levels

“[Driver shortages] are becoming a top priority,” Adam says. But shortages are only part of the problem: “Ten years ago, driver attrition levels were around 10-15%. That was your normal, day-to-day attrition level. We’re now hearing they’re as high as 25% to 30%.” 

When fleets are short of drivers, and have to contend with regular turnover of their existing workforce, it hurts both bottom lines and service levels.

Almost three quarters (71%) of fleets say labour shortages lead to delays during peak periods or higher costs to maintain service levels, according to Shippit’s State of Shipping Report. What’s more, 43% expect the operating environment to get harder over the next 12 months.

The problem, Adam says, is other forms of driving work have a more driver-friendly proposition.

Compare that to delivering for a traditional fleet. There are compliance checks, specialist machinery and equipment training and certifications, and coffee-stained, paper manifests rather than a driver app. 

It’s an arms race, and most fleets are competing for talent against an experience built to be as effortless for the driver as it is for the consumer.

To alleviate the issue, many operators are applying short-term fixes. Shippit research shows that 86% have extended operating hours, while 57% have brought on temporary workers.

Both solve an issue, but create a problem. Extend operating hours too far and you risk breaching fatigue-related laws, particularly on regional routes where the 12-hour driving cap is already squeezed. Meanwhile, push vehicle capacity too far and you run into HVNL regulations on weight limits, with fines for overloaded vehicles. 

Not only do they carry risk, but they’re short-term patches, not permanent solutions.

Zone-based routing is no longer fit for purpose

Most fleets still run on zone-based allocation. That means a driver is assigned to a fixed geographic ‘beat’, working the same area day after day. 

“There wasn't much technology when people were doing zone-based,” Adam adds. “They were essentially making the operator's job more efficient, not necessarily the driver or the throughput. 

“They might have had multiple dispatchers in one state. And they might manage five or ten drivers in that zone. For example, one would control the Northern Beaches, someone else would control Western Sydney. This is fantastic for someone like Australia Post, which has really dense volumes.”

Paying overtime or hiring external contractors to fill service gaps can carry a hefty cost. And with 12% fewer drivers than needed today, and another quarter set to retire by 2030, whole communities risk losing the local knowledge that zone-based routing depends on.

So what’s the solution?

Dynamic optimisation solves routing issues, and labour issues

Rather than assigning jobs by default, dynamic optimisation allocates them based on real-time efficiency and constraints: which driver, vehicle, and route suit a given delivery.

Shippit’s research shows that 71% of fleet operators rank route optimisation software as their top technology investment, a sign that the industry is beginning to take action. 

“Now we’ve got this technology to be able to do all of that thinking instantaneously,” Adam says. “So we could essentially have one dispatcher managing a whole state.”

Once a fleet switches to dynamic optimisation, it doesn’t take long to see the gains.

Dynamic optimisation also unlocks combinations that zone-based routing can’t handle. One business, Adam explains, had three separate fleets, three driver categories, and three separate systems running side by side. Each required its own operator.

“NowGo, with its configurability, was able to merge those together and make decisions based on efficiency. The TMS system was very rigid, and so their workflow for two-man furniture delivery had to be done on a different system than the heavy dense parcel delivery fleet could manage.

“They might have a parcel and a sofa going to Sydney CBD. They might be right across the road from each other. Typically they would be sending two drivers out, regardless of the distance; it might be an extra 30 kilometres for that second driver to do a small parcel.”

But with modern route optimisation software, that driver has the ability to handle both deliveries. They can follow the compliance workflow needed for the sofa delivery, and the system calculates the extra time required for the two-minute parcel drop-off across the road.

As businesses scale, the gulf between zone-based and dynamic only grows.

“I was recently at an event where one of the largest delivery companies in North America spoke about this. They process a million parcels a day. They learned early on that dynamic optimisation was far more efficient than zone-based.” 

Dynamic optimisation doesn’t just make the drivers you have more productive; it can reduce the number of drivers you need in the first place. In a market short on talent, with further disruption to come, that’s very important.

Transitioning from zone-based to dynamic optimisation

Ripping out an existing model or mandating a new process with experienced drivers or dispatchers overnight is destined to fail. For Adam, an incremental process works far more effectively. 

Ask yourself:

1. Which zones can you merge first? Look for two or three adjacent zones with enough overlap to combine without disrupting every driver on day one.
2. Can you roll out a hybrid model in the short-term? Keep a fairly loose zone structure in place while spreading a series of runs dynamically across a smaller group of drivers.
3. What are the early numbers telling you? Track cost per delivery, throughput, driver satisfaction, overtime hours, etc. in the first few weeks, to measure the impact.
4. Do your drivers and dispatchers feel the difference? In a traditional industry, change management is hard; the change needs to be felt by the people doing the work.
5. What’s stopping you from scaling the trial fleet-wide? Once the proof of concept works, extend the logic across the rest of your fleet.

The already-worrying driver shortage is only going to worsen. But the fleets treating it as a routing and optimisation problem, rather than a hiring one, won’t be as adversely affected. They’ll be enjoying lower cost per delivery, higher throughput, and less contagion when attrition hits.

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