Three actions for a truly sustainable last mile
August 19, 2021
Online ordering soared to new heights during the pandemic, and most people would assume that more delivery vehicles making more trips would cause carbon emissions to soar. However, an unexpected thing happened: the carbon footprint of last-mile delivery got smaller.
So why has this unexpected phenomenon occurred? COVID-19 radically accelerated local fulfilment – storing stock as close as possible to consumers. Prior to the pandemic, large online retailers already made use of this strategy to meet their delivery promises. Likewise, many bricks-and-mortar retailers had already developed capabilities for omnichannel fulfilment using their stores or other local inventory options. But the pandemic brought forward such strategies by approximately 3-5 years. Sheer necessity changed consumer behaviour and retailer operations, making last mile more sustainable – more by accident than by design.
Building on that strategy further could have a big impact. An economic model created by Accenture and Frontier Economics shows local fulfilment centres could reduce last-mile emissions by up to 26% by 2025 in Chicago, London and Sydney. The closer the fulfilment centre to the consumer, the more feasible alternative last-mile delivery modes, such as electric vehicle, bicycle, or even pedestrian, become.
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The entire last mile is at a tipping point
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With no interventions, we can expect a 32% jump in carbon emissions from urban delivery traffic by 2030. However, with collaborative action, the freight & logistics industry could create a truly sustainable last mile that’s faster, cheaper, and greener. To achieve this, the industry will need to collaborate on three fundamental actions:
The effect of e-commerce decisions isn’t obvious to everyone. Research shows that 43% of consumers are more likely to choose retailers that offer more sustainable delivery options. By adding value or discounts to consumers who, for example, choose to pick up their own packages at nearby fulfilment centres, the freight and logistics industry could further incentivise more sustainable choices.
Incentivization should also go beyond the business to consumer route. Governments could offer tax incentives to delivery companies that invest in greener fleets or develop greener route management practices. Cities could make recharging electric delivery vehicles more convenient by investing in charging infrastructures. This kind of bigger change would play a significant role in making sustainable delivery options the norm.
Every delivery organization invests in infrastructure, technology, people, and vehicles. This often leads to competing yet redundant networks. To make the last mile more sustainable, the freight and logistics industry should look to repurpose assets with sustainability as a priority. Delivery companies could provide access to each other’s networks, including fulfilment and open locker and pick-up/drop-off locations. Governments could encourage such asset sharing by creating points at the outskirts of cities where deliveries are concentrated for all carriers.
Retailers can continue transforming their bricks-and-mortar stores into omnichannel fulfilment hubs that support shopping, collecting, and returning deliveries. Dying shopping malls and other unused or underused urban spaces could become multi-tenant fulfilment hubs.
Better data and analytics make local fulfilment even more sustainable, by predicting who will buy what, where and when, giving retailers the ability to stock the right SKUs locally. Combining local fulfilment with route optimization could further reduce emissions by nearly one-tenth in the cities we studied. In fact, our model shows that when route optimization is applied with local fulfilment, delivery vehicles drive 87 million miles less.
Developing the necessary insights would require analysing a mix of internal and third-party data, social listening, and monitoring local trends and events. Cross-ecosystem data sharing via the cloud is key to making it happen.
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Commit to improved sustainability
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Ensuring positive progress and investments in improved sustainability will require a willingness to co-operate and to share data in unconventional ways within the freight & logistics ecosystem, including competitors. The logistics sector needs to be brave and innovative. Will we build on the unintentional gains COVID-19 brought, or will we let our carbon footprint grow?
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