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Considerations for Environmental Sustainability in Last Mile Logistics

By: Aruna Aggarwal

In this post, I will discuss the environmental impact of last mile logistics and current topics of research and early-stage implementation for improving the sustainability of last mile delivery. This post will cover existing statistics and future predictions based on findings from several noteworthy sources. All data presented is reported from 2014 and after, mostly being sourced from articles 2020 and after.

Since 2014, e-commerce sales have tripled globally, leading to pressure on logistics systems to meet the growing demand. Without intervention, the number of delivery vehicles in the largest 100 cities of the world will increase by 36% until 2030, carbon emissions from delivery traffic will increase by 32% causing another 6 million tons of CO2, and congestion will rise by over 21%, equaling 11 extra minutes of commute time per day [3]. Further, 35% of U.S. carbon emissions are generated from transportation [9]. In the future, these statistics are only expected to increase, leading to a greater strain on last mile systems to efficiently meet consumer demand without negatively contributing to the environment.

However, consumers care about environmental and damage as an emerging global issue. According to a 2021 Global Sustainability Study, 85% of people indicate that they have shifted their purchasing behavior towards a more sustainable decision in the past five years. Moreover, sustainability is rated as a very important purchase criteria for 60% of consumers [10]. From these facts, we know that understanding the environmental consequences of traditional logistics operations and proactively innovating solutions that push sustainability forward are important to the field of logistics and for the profitability of companies. If consumers want sustainability and companies do not catch up, they will lose business. The last mile transportation option that is currently being heavily focused on for sustainability applications is trucking and delivery vans, which currently contribute the most carbon to total emissions from last mile delivery.

Thankfully, several large companies are responding to the shift in consumer purchasing values. For example, e-commerce giant Amazon is acting on their last mile transportation operations by partnering with electric vehicle (EV) manufacturer Rivian to manufacture a fleet of 100,000 Amazon delivery vans by 2030 [5]. With vans already being unveiled in big cities across the U.S., Amazon is one of the first companies to implement fully electric technology into their logistics operations and sustainability into their corporate strategy, potentially reducing or eliminating the expected increase in carbon emissions from delivery vehicles. For a large company like Amazon that often sends delivery vehicles out under capacity to meet short delivery lead times, the company could save over 19 million metric tons of carbon emissions each year [11]. Additionally, UPS is another company that implements sustainability into their last mile delivery. To combat the inefficiencies of additional stops for single package deliveries, UPS is testing out programs to improve sustainability including alternative fuels, driving algorithms, and piloting alternative ways to make fewer stops primarily in congested urban areas. As of 2019, 22% of UPS’ fuel was from more sustainable fuel sources, there was an 18% reduction of carbon emissions throughout their network, and 10% of their new truck purchases run on alternative fuels [6]. Further, UPS’ ORION program (On-Road Integrated Optimization and Navigation) has strategized their driving routes and is saving an average of 6-8 miles per driver per day, eliminating 100 million miles driven per year and saving 10 million gallons of fuel [6].

Going forward, more and more companies are looking for ways to adopt green logistics and accelerate their way into meeting new order winning strategies. One way that companies are achieving sustainability is by harnessing data to act on real-time insights to consumer preferences and buying trends to optimize route management and decrease their last-mile carbon footprint [8]. Another way is to explore partnerships and shared assets with other companies to maximize the efficiency of local fulfillment centers and decrease the environmental and economic cost of having separate delivery services for every company’s product [1].

One way to enhance green last mile systems that is still being tested and developed is the use of robots, drones, or droids to complete last mile delivery. Based on the findings of a case study in Japan, many delivery robots would have to be in place, but would ultimately help companies not only become more sustainable by reducing carbon emissions but would also aid in labor shortages [2]. Further, delivery robots or drones could have the potential to increase efficiency in delivering to remote or rural locations because of their low carbon footprint and potential for route efficiency.

Last mile delivery is faced with a key issue of improving sustainability to avoid devastating environmental impacts and meeting shifting consumer preferences. Some companies have already made the shift towards more environmentally friendly logistics operations, and all will have to soon. Some ways that companies are beginning to think about sustainability include data collection and analysis and resource sharing. In the future, high-tech innovations such as droids, delivery robots, or drones may be implemented to further streamline all delivery operations for an area and significantly reduce the environmental cost of last mile systems.

References:

[1] https://www.accenture.com/us-en/insights/consulting/sustainable-last-mile-delivery#:~:text=In%20brief-,In%20brief,17%20and%2026%25%20through%202025.

[2] https://www.mckinsey.com/industries/travel-logistics-and-infrastructure/our-insights/efficient-and-sustainable-last-mile-logistics-lessons-from-japan

[3] https://www3.weforum.org/docs/WEF_Future_of_the_last_mile_ecosystem.pdf

[4] https://www.neutrl.com/blog/understanding-last-mile-deliverys-impact-on-the-planet

[5] https://www.aboutamazon.com/news/transportation/amazons-electric-delivery-vehicles-from-rivian-roll-out-across-the-u-s

[6] https://www.supplychaindive.com/news/last-mile-sustainability-strategies-ups-amazon-disclosure/546005/

[7] https://www.insiderintelligence.com/insights/last-mile-delivery-shipping-explained/

[8] https://www.accenture.com/_acnmedia/PDF-148/Accenture-Sustainable-Mile-POV.pdf

[9] https://www.neutrl.com/blog/emissions-enigma-answering-your-burning-questions

[10] https://www.businesswire.com/news/home/20211014005090/en/Recent-Study-Reveals-More-Than-a-Third-of-Global-Consumers-Are-Willing-to-Pay-More-for-Sustainability-as-Demand-Grows-for-Environmentally-Friendly-Alternatives

[11] https://www.cbsnews.com/news/amazon-prime-day-one-day-shipping-has-a-huge-carbon-footprint/

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