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Retailers rethink last-mile deliveries to reduce emissions and meet customer expectations

A new report by eDelivery explores how retailers and carriers are looking for new ways to reduce carbon emissions and meet customer expectations of sustainability.

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Last-mile deliveries will rise by more than 30 per cent in 10 years
Last-mile deliveries will rise by more than 30 per cent in 10 years

Last-mile deliveries are experiencing ongoing disruption from new business models as retailers and carriers look for new ways to reduce carbon emissions and meet customer expectations of sustainability, a new report finds.

 

The Sustainability: After the Buy Button report from e-commerce title eDelivery examines the impact of delivery emissions and plastic waste and what UK and European sellers are doing to reduce them. It also evaluates the suitability of each delivery mode.

 

Continuing growth

 

A January World Economic Forum report forecast that emissions from last-mile deliveries will rise by more than 30 per cent in 10 years – up to 25 million tonnes per year – as the number of urban dwellers and online shoppers grows. It found that demand for urban last-mile delivery will grow 78 per cent by 2030, leading to a 36 per cent rise in delivery vehicles in inner cities.

 

Surveys show the issue is also on customer radars. According to research by the International Post Corporation, nearly half (48 per cent) of consumers are in favour of their deliveries being carbon-neutral.

 

Last year, Amazon announced a goal to go completely emissions-free on half of all shipments by 2030, and said it had undertaken an extensive project to develop its own “advanced scientific model” to map its carbon footprint.

 

Similarly, Etsy declared that it would offset 100 per cent of its carbon emissions generated by shipping, stating that 98 per cent of its total emissions stem from items shipped from sellers to buyers.

 

Going electric

 

A shift to electric vehicles is also evident. IKEA has pledged 100 per cent electric deliveries by 2025. The retailer is already making 100 per cent of deliveries in Shanghai by EV, deploying EVs in the last mile in 14 markets and doubled the share of deliveries via EVs in one year.

 

Angela Hultberg, head of sustainable mobility at IKEA, says greener deliveries and improved customer experience can go hand in hand. She commented: “We will not deliver goods the same way we have for the past decade, but instead introduce new concepts. Also, we see that over time, electric vehicles can actually contribute to lower cost, since fuel and maintenance costs are lower. As the price of the vehicles goes down, the business case will get better and better.”

 

In October 2019, Zalando launched a three-month trial using electric vehicles to deliver packages for customers of its loyalty programme. The 24 vehicles, which feature Zalando’s branding, are supplied by Mercedes, Nissan, Renault and ARI.

 

A study found that bikes are most cost-effective for distances of up to two miles and a delivery route of below 20 parcels.

 

Drivers will be provided by third-party logistics companies, while Zalando will plan and provide the charging infrastructure.

 

ASOS recently signed a new contract with DPD which requires that half of all deliveries within the London Ultra Low Emission Zone are served by electric delivery vehicles only. DPD installed an all-electric parcel depot in Westminster in October and aims to have nearly 600 electric vehicles on the road by 2021.

 

ASOS also works with Gnewt Cargo on electric deliveries in London. The retailer picks and packs parcels in Barnsley and moves them to Gnewt facilities in the outskirts of east London, where they are sorted before being loaded onto the electric fleet.

 

Hydrogen

 

While hydrogen vehicles are several years away from large-scale viability in both cost and infrastructure support, exploratory initiatives are underway. The vehicles combine hydrogen gas with oxygen from the surrounding air to create electricity, with pure water as the only emission.

 

 

The H2Haul project has received €12 million in funding from the European Commission and will test the viability of hydrogen vehicles.

 

The H2Haul project has received €12 million in funding from the European Commission and will test the viability of hydrogen vehicles at 16 sites across Belgium, France, Germany and Switzerland. Manufacturers INVECO FPT Industrial and VDL ETS will design, build and test three new types of fuel cell electric heavy-duty trucks. Participants including supermarket chains Carrefour, Coop and Colruyt will test the trucks in their daily logistics operations.

 

In 2018, Galeries Lafayette and outdoor advertising supplier JCDecaux began working with Akuo Energy to use 400 hydrogen-powered vehicles in its last-mile delivery fleet. Delivery companies CitySprint and FedEx are also both trialling hydrogen for deliveries.

 

 

Biking it over

 

Bikes are also gaining traction for the final stages of delivery, the report notes. A University of Washington study found that bikes are most cost-effective for distances of up to two miles with fewer than 20 parcels.

 

DHL has piloted one innovative approach to bikes in the Dutch capital of Amsterdam. DHL loads a boat (called the floating city hub) with goods from the service centre before it travels down the canals of Amsterdam. Bikes and electric vehicles meet it at key hubs to carry the goods for the last mile.

 

Some retailers are finding that an effective way to introduce delivery bikes to the final mile is by working with an agile start-up. In the UK, supermarkets Sainsbury’s and Co-op are both partnering with e-cargobikes.com to offer bicycle deliveries in selected areas.

 

Some retailers are finding that an effective way to introduce delivery bikes to the final mile is by working with an agile start-up.

 

Meanwhile, Swedish fashion retailer H&M is working with Dutch package delivery service Fietskoeriers.nl to offer bike deliveries to online customers in the Netherlands. Fietskoeriers.nl collects the parcels using a biogas vehicle from H&M’s warehouse before shipping them to local hubs. Bikes take them the rest of the way. The service is offered at the same price and speed as normal deliveries.

 

Finding the balance

 

The report concludes: “Moving towards sustainability is a journey that needs to be taken – the retailers who succeed will be the ones that bring the customer with them.”


It adds: “Retailers need to balance the new demand for sustainability from customers and governments with the old demands for price and convenience.”

 

Download the Sustainability: After the Buy Button report.

 

eDelivery.net is an affiliated publication of SmartCitiesWorld. eDelivery.net is part of the InternetRetailing Media group with a focus on supply chain, operations, logistics and delivery within multichannel retail.

 

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