With net-zero goals becoming increasingly prominent in today’s world, the push to reduce carbon emissions has become more important than ever for people, companies, and the entire planet.
It’s the end of the world as we know it.
Yes, really. The world in the 21st century is a rapidly changing place, with growing awareness of the ills of carbon emissions affecting a wide range of industries.
Nowhere is this more prevalent than in ecommerce, which is undergoing a massive upheaval. Ecommerce has given rise to more packages being delivered than ever before, and consequently more carbon emissions than ever before. Yet at the same time, with growing consumer consciousness to make eco-friendly choices, consumers are demanding that retailers and brands make sustainability a core value.
Can retailers and their providers satisfy consumer demand for faster, more convenient delivery at increasingly high volumes, while also meeting their net-zero carbon emissions goals?
To answer this question, we need to first understand what carbon emissions are, how and why they are so important, and what they have to do with last mile delivery and fulfillment today.
What are carbon emissions?
Carbon emissions are quantities of carbon dioxide (CO2) produced directly or indirectly by individuals, organizations, or countries through a variety of methods, including the burning of fossil fuels, manufacturing processes, as well as from the production of food.
Carbon emissions also include emissions of other greenhouse gases containing carbon, including methane, nitrous oxide and chlorofluorocarbons (CFCs).
What do carbon emissions mean for last mile delivery?
The drive to reduce ghg emissions (greenhouse gas emissions) in general is of significant concern to governments the world over. The UN has repeatedly warned that humanity as a whole must effect wholesale changes in order to prevent drastic global warming. As a result, countless laws have been enacted in order to curb the effects of global warming.
The Intergovernmental Panel on Climate Change has made clear its insistence that all countries must substantially reduce their use of fossil fuel in order to reduce carbon emissions, as well as improve overall energy efficiency and expand availability to alternative fuels.
Over the coming years and decades, whole industries will have to change their models in order to ensure compliance with the latest regulations. And for those involved in the last mile delivery process, those changes will be especially keenly felt.
Last mile logistics and carbon emissions
According to the OECD, by 2030, e-commerce growth will lead to a 33% increase in delivery related carbon emission, or 3.1B tonnes of CO2. At the same time as ecommerce fulfillment has grown, there has been a large shift in global public consciousness as scientists and academics have warned of the dangers of not maintaining sustainable lifestyles and business practices.
In fact, the issue of global warming – the long-term process in which Earth’s climate has gradually risen, and continues to do so – has become a focus of international politics, with the vast majority of the world’s governments involved in the effort to reduce greenhouse gas emissions.
Climate change has been the subject of several inter-governmental treaties and conferences, most recently the Paris Agreement of 2015. This binding multilateral agreement aims to limit global warming to well below 2 degrees, and sets out to meet this goal ensuring there are fewer global greenhouse gas emissions so that the upward trend is stopped. As a result of government commitments, private companies are now required to meet certain environmental guidelines and reduction targets in order to conform with regulatory pressure.
So where does last mile logistics fit in?
Last mile logistics is all about getting products from A to B. Doing so invariably requires great planning, and more often than not relies on trucks carrying products anywhere between a distance of a road or two to hundreds of miles away. And the more miles driven by trucks, the more carbon dioxide emissions and other greenhouse gas emissions are released into the atmosphere.
With e-commerce seeing substantial growth over the last two decades, the industry already faced a real challenge to conform to the rules and regulations being proposed by governments and climate change pressure groups. But emission reduction has become complicated by the e-commerce boom fueled by the pandemic.
Every time a consumer orders a product, it triggers a complex process, one largely hidden from view. The item has already likely traveled hundreds or thousands of miles by ship, together with large quantities of other goods, to reach a warehouse. That’s already a tremendous amount of carbon dioxide emitted. Now, it needs to be separated from the rest of the stock, packaged either alone or together with other products in the same order, and dispatched.
This final stage of the chain, known in the industry as the “last mile,” in which customers take delivery of their orders, is particularly complex and challenging. At this point, delivery routes become fragmented as massive stocks are divided up into much smaller orders, and sent to a high number of destinations.
This process requires retailers and logistics companies to make use of entire fleets of vehicles, traditionally vans and trucks with low fuel efficiency. And all of these gas-guzzling vehicles combine to emit large quantities of carbon dioxide and other unwanted greenhouse gases.
Consumers are demanding more from last mile delivery
The challenge for the last mile is that, at a time when consumers are ordering more than ever before, retailers and logistics companies are being tasked by the same consumers – as well as governmental and industry regulations – with trying to reduce the carbon emissions output of deliveries.
Those demands are complicated to an extent by the fact that consumers themselves are demanding a more environmentally-friendly approach from last mile delivery.
In what’s known as the green consumer paradox, customers are demanding more sustainability from the companies they deal with, but are frequently far less demanding of themselves.
This cognitive dissonance is often expressed in terms of consumers’ requirements for both immediacy and sustainability. When immediacy of delivery is not supported by proper operational models for logistics, the desire for same day and on demand delivery can end up harming the environment.
This often happens because retailers want to be competitive, but don’t operate effectively and thus consequently waste resources, which in turn negatively impacts carbon emissions.
Despite the paradox, as awareness of the need to take care of the planet grows, consumers are increasingly prioritizing consumer habits and preferences that reduce their carbon footprint. This concern is expressed in a variety of ways, including a willingness to pay more for eco-friendly foods and carbon footprint labeled food goods, and are looking to companies and brands to reduce waste, and decrease plastic packaging specifically, or to introduce forms of packaging and containers that are fully compostable.
Why carbon emissions matter
It’s important to zoom out in order to fully understand the big picture. As greenhouse gases and other emissions are emitted into the atmosphere, they build up and warm the globe.
A shift of even just a few degrees in the average global temperature can have a significant impact on the sea level, and result in great expanses of land being covered in water. Numerous cities around the world are presently at risk of being flooded.
In addition, the rise in tropical storms, hurricanes, unseasonal heatwaves and extended water shortages are playing havoc with flora and fauna as well, and threatening the extinction of hundreds of thousands of species.
For these reasons, it’s crucially important for humankind as a whole to come together to urgently address the issue.
The carbon footprint of logistics – in numbers
- Approximately 20% to 30% of a city’s carbon dioxide emissions are sourced to last-mile deliveries
- By 2030, e-commerce growth will lead to a 33% increase in delivery related carbon emission, or 3.1B tonnes of CO2
- 30% of all transport-related CO2 emissions come from fuel combustion
- The transport vector as a whole is responsible for 7% of global CO2 emissions
- The freight industry as a whole was responsible for 2108 million tonnes of emissions in 2010 – and by 2050, that number is projected to rise to 8132 million tonnes
- Road freight represented 53% of total international trade-related emissions in 2010. That number is expected to grow to 56% by 2050.
(Statistics by the Hellenic Institute of Transport, the OECD International Transport Forum and the World Economic Forum)
How can last mile logistics reduce carbon emissions?
Achieving net zero carbon emissions is a crucial element of modern business. Companies face a pressing need to keep pace with the demands of both governments and consumers, without compromising significantly on speed, convenience, or price.
Fortunately, solutions are constantly being developed to help address this challenge. From smart delivery lockers to specially adapted ‘green’ delivery vehicles, there are a plethora of ways that can help reduce carbon emissions in the last mile delivery process.
Measuring last mile carbon footprint
Whenever seeking to make a change of any kind, it’s always good business practice to first take stock of the situation. Measuring to see which parts of your business contribute most to your carbon footprint will allow for intelligent, fact-based decisions leading to a more focused, effective approach overall.
Then, once the relevant data has been collected, the next stage is to compile a report which tells the story of the raw information in a way that leads to actionable insights. Businesses need to understand which parts of their last mile operations are energy efficient, and where there is room for improvement.
Optimizing delivery through technology
The most cost-effective way to reduce carbon dioxide emitted from delivery, is to cut down on fuel used in the last mile.
Fulfill orders using local inventory – Use inventory management software that integrates with your other last mile processes, to source inventory from the location closest to the delivery destination.
Optimize dispatch based on mileage – dispatchers and operational managers can use digitized, automated dispatch software to customize dispatching based on which driver, carrier or fleet will expend the least amount of fuel and emissions to reach the delivery destination.
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Batch orders and optimize vehicle loading – Use last mile solutions that batch orders going out to the same geographical area, within the same delivery time window. Another important step is to make sure that whichever vehicle is used is filled to full capacity – even for same-day orders. Both of these processes will save gas, and reduce the number of vehicles needed for the same number of orders.
Reduce emissions through intelligent route planning – Using smart route optimization software will result in fewer emissions per delivery.
Delivery with a hybrid or electric vehicle
Modern technologies mean generating clean energy is much easier, and more feasible on a large scale, than ever before. Renewable energy such as solar and wind power are now at the forefront of the push to overhaul our energy consumption habits, and offer a reliable and easily accessible alternative which can power a range of vehicles, from e-bikes to full scale 18-wheeler trucks.
According to the International Renewable Energy Agency (IRENA), just by implementing electrification and renewable energy, 75% of reductions required in energy-related carbon emissions can be achieved. For the last mile, this move towards eco-friendly delivery starts with ‘green’ vehicles that produce fewer carbon emissions than traditional delivery vehicles. These include:
- A hybrid or electric vehicle, including cars, vans and trucks
- E-cargo bikes for local last mile delivery
- Manually powered bikes
- Autonomous vehicles (AV), such as cars and drones, that run on renewable energy sources
No surprise, then, that retailers are increasingly adopting models which rely on a broad base of third-party delivery providers, with 56% of retailers using fleets with EV vehicles, and one in three using bike fleets.
One way to ensure delivery without the greenhouse gases is to choose providers, that offer delivery through ‘green’ vehicles. An easy way to check this is by using a delivery hub that allows you to automatically or manually select fleets with electric cars or other electric vehicles.
Last mile carriers can offer different options that are relevant for a range of scenarios, from electric vehicles for longer routes to e-bikes for deliveries that need to be made immediately and/or very locally.
According to Bringg market research, deliveries fulfilled through clean-fuel technologies is the short-term sustainability strategy most widely-considered by retailers, with over two in three companies looking to implement EV fleets and e-bikes within 6-12 months.
Alternative fulfillment methods
Making use of alternative delivery vehicles can make a marked difference in the total carbon footprint of a business.
Among the most effective strategies are the deployment of either ‘owned’ or crowdsourced delivery fleets of e-bikes and e-vehicles, thus cutting out the use of fuel altogether in the last mile. And then there’s pick-up and drop-off, also known as PUDO, which gives consumers the option to to collect parcels or drop off items as part of the returns process from a predesignated location.
Merge returns and delivery
Over 20% of ecommerce orders are returned today, according to DigitalCommerce360. Given the high cost of returns to the retailer, many retailers would rather mark these items as a loss, than invest in efficient returns processes. However, as ecommerce continues to grow, the last mile network as a whole must figure out ways to reduce waste and support a circular economy, in part by making sure returned items can be resold.
While offering easy returns will become more important to stand out in a commoditized market, if not properly planned, they can further increase co2 emissions from the last mile.
Support the circular economy
Every day, more and more brands crop up which use a circular economy as a core part of their business, involving product rental, leasing, refurbishing, or recycling.
These business models rely on extending the lifecycle of products for as long as possible, as well as a reverse logistics process of picking up products from consumers. The growing circular economy must be supported by stronger, more cost-effective returns processes that expend less carbon dioxide while reducing ecommerce waste.
The best way to manage both inbound and outbound logistics processes sustainably is to incorporate both returns and delivery orders in the same route, using the same drivers and vehicles. Provide drivers with a delivery driver app that lets them manage these complex routes and the different requirements per stop.
Incentivize consumers to reduce greenhouse emissions from delivery
Some consumers want same day delivery and are willing to pay for it; others prefer slower and cheaper delivery. Give consumers the power to choose how sustainable their delivery is by offering multiple fulfillment options at checkout, and highlighting which ones use fewer emissions.
By making consumers aware of the emissions per fulfillment option, the consumer learns to see the energy use from delivery as part of their personal carbon footprint, and will be incentivized to choose retail fulfillment options with lower emissions.
Alongside reducing emissions directly, the concept of carbon offsets has developed. Another way to reduce carbon emissions, the method is simple: rather than making changes in a company’s entire business model, it invests money in schemes that help reduce carbon emissions elsewhere, the thinking being that the most important thing is to look at the planet as a whole.
This is also something that consumers can actively take part in. For example, when booking a flight, passengers are sometimes given the opportunity to make a donation in order to counterbalance their carbon emissions by paying for planting trees or investing in solar energy projects, and thus effectively make their own trip carbon neutral.
Services even exist for booking flights through agencies that donate their booking fee to partially or completely offset a flight’s carbon emissions.
Carbon offsetting in last mile delivery is gaining prominence. In recent years, numerous well-known companies have invested in going effectively carbon neutral by offsetting their own emissions by purchasing carbon-offset credits.
But while carbon offsets are beneficial, they cannot provide a long-term answer to carbon emissions in last mile delivery. Retailers and logistics providers still need to take responsibility for how much carbon dioxide their delivery operations generate. For that reason, companies pledging to reduce their carbon emissions to the point of achieving zero emissions often include the goal of reaching this point without the use of offsets.
There are numerous challenges facing retailers and logistics providers in reducing carbon emissions, let alone achieving carbon neutrality.
Finding green last mile partners
With the sustainable logistics market still yet to achieve full maturation, there is still plenty of room for growth relative to the overall logistics market. Furthermore, stakeholders do not always offer the same level of service, with large discrepancies in the extent of their green operations.
When sourcing a green delivery partner, it’s important to understand four key criteria:
- Multi-modal flexibility
- Network optimization
- Clean technologies
- Full carbon transparency
These four elements cover the basics of green logistics: the flexibility to use the least harmful delivery method as appropriate, the ability to send packages effectively, thereby reducing waste, the usage of clean-tech, and the ongoing reporting of carbon output. Not all of these are provided by logistics partners, and so retailers sometimes have to contend with only partial information or less than ideal green options.
Communicating sustainability to consumers
Communication is everything. It is essential for retailers to work with green delivery providers to impact both their carbon emissions and their brand image.
Many retailers understand that reducing mileage through automation and optimization also reduces carbon emissions, supporting net zero emissions goals, and that the same applies to using green delivery vehicles. However, most retailers fail in measuring and communicating their emissions reduction.
First, it’s important that retailers clearly communicate the sustainable delivery options to consumers at checkout. Doing so can play an active role in making them partners in reducing the environmental impact of their order fulfillment.
Thereafter, capturing meaningful data analytics insights, and automatically communicating the savings to customers, can add an additional layer of value to each delivery. The relevant sustainability data can also be tracked and measured across all green delivery providers to further optimize provider selections against predetermined business goals and KPIs.
The future of carbon emissions in last mile delivery
Retail and retail delivery is full of paradoxes today: fast fashion competes with sustainable fulfillment; quick commerce is at odds with brands that want an environmentally conscious image. The good news is, there are solutions that enable retailers and other players in the last mile ecosystem to offer competitive delivery and fulfillment services, while reducing their carbon footprint. A mix of local last mile delivery models like ship from store, which place inventory closer to consumers, as well as technology that cuts down equally on delivery mileage and fossil fuels, will empower businesses to reduce carbon emissions while remaining competitive in their respective markets.
Climate change and ecommerce sales are only going to accelerate, and supply chain leaders need answers fast. Now is the time to invest in new logistics software and processes, and moving forward, ensure these best practices are implemented in their long-term business strategy.