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Electrification of Parcel Carriers

Fedex is a major American delivery service company that is an integral part of many supply chains. Fedex does business in over 220 countries and territories and “serves a global transportation network and offers solutions that streamlines businesses’ supply chains and increases efficiency, accuracy and cost savings” (Galea-Pace). As consumer demands for sustainable business operations increases, Fedex announced its plan to be carbon-neutral by 2040. Many other delivery service companies such as UPS have also unveiled similar carbon-neutral and sustainable goals for their companies. In order for Fedex to achieve this goal the company plans to “convert its entire parcel pickup and delivery fleet to “zero-emission electric vehicles” (Brown). Fedex’s move to electrification will cost the company two billion dollars, but their Chief Sustainability Officer Mitch Jackson acknowledges that an investment in sustainability is not only the right thing to do, but necessary because delivery service is dependent on the health of the planet.


Not only is the move towards electrification and sustainability of supply chains good from a social marketing perspective, but it can be financially beneficial for companies. Supply chain and logistics authors explain how “companies could not only improve the planet’s prospects but also significantly improve their business results through related cost reduction, revenue enhancement, greater innovation, access to new markets, brand enhancement, greater ease in attracting and retaining talent, and other benefits” (Gideon). The reduction of costs that will come from Fedex’s electrification of their delivery fleet will lead to decreased costs for the company while setting a standard of sustainable values for other delivery companies.


So how will this change towards electrification impact the global supply chain and company operations? Many of these changes will become clear over time as the supply chain changes, but the trend towards electrification will need to be taken into account when forecasting for the future. In class we discussed how forecasting is the “process of creating statements about outcomes of variables that presently are uncertain and will only be realized in the future” (Lim). The future of sustainability in operations management and logistics is uncertain, but the outcome that it will have in the future can be forecasted. Trends need to be accounted for in forecasting and can be accounted for through using trend-adjusted (double) exponential smoothing or linear regression forecast. The trend of sustainability in logistics will not only be present in the electrification of package delivery, but will also influence consumer demand and purchasing habits.


That being said, an increase in electric vehicles in package delivery fleets will influence society in many aspects. The grid will need to be reinforced to support the new charging load that will come with an increase in electric vehicles or more localized energy sources will need to be created, and the gasoline industry and other industries related to gasoline using transportation methods will also be impacted. I currently am interning in the logistics department for a medical device company, and sustainability in the supply chain is a huge focal point in future planning. I would predict that the electrification of the supply chain will not only be present with vehicles, but will be present in more energy efficient planes, boats, trucks, and all other forms of transportation. As our planet gets hotter and hotter the need for drastic changes in how we conduct business will be asked for by consumers and consumer purchasing power could strongly influence which companies succeed in the future, thus the electrification of supply chains could be instrumental in company success in the near future.

Authored by: Christine Partington

References

Brown, A.B. “FedEx to Convert Parcel Fleet to EVs by 2040, Eyeing a Carbon Neutral Future.” Supply Chain Dive, 5 Mar. 2021, http://www.supplychaindive.com/news/fedex-transition-parcel-fleet-evs-carbon-neutral-2040/596200/.

Galea-Pace, Sean. “Inside FedEx Logistics: Logistics: Supply Chain Digital.” Logistics | Supply Chain Digital, 30AD, http://www.supplychaindigital.com/logistics-1/inside-fedex-logistics.

Leonard, Matt. “’Right Thing to Do,’ Financial Benefits Drive Supply Chain Investments in Sustainability: Gartner.” Supply Chain Dive, 2 Mar. 2021, http://www.supplychaindive.com/news/waste-sustainability-cost-savings-supply-chain-gartner-survey/595942/.

Walter, Gideon, et al. “Your Supply Chain Needs a Sustainability Strategy.” BCG Global, BCG Global, 12 Jan. 2021, http://www.bcg.com/publications/2020/supply-chain-needs-sustainability-strategy.

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