Sustainability and the Last Mile Delivery Problem: A Conversation with eCommerce Magazin

septembre 10, 2021
Sustainability and the Last Mile Delivery Problem: A Conversation with eCommerce Magazin

The last mile delivery problem for retailers and logistics companies is very real. Consumers want rapid, low cost deliveries, but margins are incredibly low and operational costs are only rising as traffic congestion worsens.

Add in the environmental impact of all this activity and it’s clear there’s a real need for novel solutions that enable senders to manage their last mile logistics in a more efficient, sustainable manner.

This was the topic of a recent interview between our CEO Jonathan and Ecommerce Magazin. You can read the interview in German here…

Verbraucher bevorzugen umweltfreundlichere Lieferungen, trotz längerer Wartezeit und höherem Preis – Ecommerce Magazin

… or alternatively, you can stay on this page for the English translation below!

Everyone is talking about sustainability. Companies want to reduce CO2 emissions, but this can take decades. How can you go faster?

Many of the pledges for companies to go carbon neutral in their logistics are long-term goals. For example, DHL’s commitment is to be net-zero for CO2 emissions by 2050. Another popular strategy today is carbon offsetting, which doesn’t address the root cause of rising emissions levels. Research by the World Economic Forum (WEF) shows the carbon footprint of the last mile will rise by another 30% in the next ten years.

last mile delivery

In Europe, consumer attitudes are becoming more eco-friendly. And legislative steps are being taken to try and accelerate the move to a greener society. The EU has proposed an effective ban on petrol-burning cars by 2035. People realise the need for change, but right now it’s a case of business objectives and available technologies catching up. It’s where we find we have a lot of traction with large enterprises, who want to minimise the environmental impact of last mile delivery operations to meet their corporate sustainability initiatives, but don’t necessarily have the tools to do so.

The volume of e-commerce is booming, but so is the volume of traffic in the last mile. How can you get a grip on that?

It’s one of the most fundamental questions facing retailers and their delivery partners in the last mile. According to the WEF, the largest cities will be populated with 36% more delivery vehicles by 2030 due to the booming demand for urban deliveries. And this is expected to increase the typical commute time by as much as 11 minutes.

More traffic means more emissions, but it also means higher costs for logistics. Optimised route planning is something everyone should be doing. The algorithms are so good now that they can consider more variables than is humanly possible. But it’s just a first step and there’s much more that can already be done to use less and cleaner fuel.

In Europe, consumer attitudes are becoming more eco-friendly. And legislative steps are being taken to try and accelerate the move to a greener society.

You can prioritise the use of electric (EVs) and two-wheel vehicles, prefer greener third-party logistics (3PL) partners, combine drop offs and pick ups in the same routes, offer curbside pickup options so that consumers can collect goods from locations such as parcel lockers and encourage them to book greener time slots – all these things will cut the amount of delivery traffic congesting urban areas. The aim is to maximise your drop density (in other words, you want the deliveries on any given route to be as close together as possible) and your first-time delivery success rate. That way you will know your drivers are delivering with the maximum efficiency.

Talking of recipients, there’s growing research that most consumers prefer eco-friendly delivery options, even if that means less choice in time slots. Consider how you might prioritise greener slot booking practices that help you ensure a higher drop density, as it means fewer vehicles on the road for the same number of deliveries.

Digitalisation can save CO2. That sounds plausible, but how does logistics have to be digitized and what is the current state of affairs?

Digital transformation is disrupting every industry and logistics is no different. Most ecommerce players will already have the backend infrastructure in place in the form of order and warehouse management systems. Using a last mile delivery management platform is the natural continuation of the delivery orchestration process, which also results in cutting CO2 emission and costs.

FURTHER READING: How to Optimise Retail Last Mile Delivery Operations to Thrive in 2021

And you can fine tune the algorithms to optimise for maximum CO2 reduction in a way that would be too complicated for a single dispatcher with a spreadsheet or pen and paper to calculate. It’s simply a case of plugging your business rules into the algorithm, so the optimiser you use knows to prioritise the use of eco-friendly vehicles and carriers.

If you can feed the algorithm commercial mapping data, that’s even better because it can actually optimise the path the vehicles will take based on their type. So you won’t get a scenario where your delivery vehicles are wasting fuel as drivers try to reach inaccessible locations.

With a platform, you can automate the optimisation of hundreds or thousands of scheduled deliveries in just a few minutes. That’s a huge resource saving for what is otherwise a very labour intensive manual process allocating those jobs and planning those routes.

However, with increasing digitalization, power consumption also rises. How can this be done sustainably?

One of the big benefits of cloud solutions is that you can centralise your operations and access the platform remotely. So instead of running separate route planning operations in each of your distribution centers using on-premise systems, software and manpower, you can do it all in a single platform from any web browser.

last mile logistics

Webinar: Can the Chinese Delivery Ecosystem Become a Role Model for the UK & EU?

Of course the data centers that host infrastructure and platforms use a lot of electricity. Currently around 2% of total global electricity consumption. But pressure is growing on the tech giants behind them – Google, Amazon, Microsoft and the like – to design and manage their data centers in more sustainable ways. Microsoft, for example, expects all of its Azure data centers to be running entirely on renewable energy sources by 2025.

Urbantz claims to have developed a unique approach to saving CO2. What is it?

Sustainability has always been at the heart of our mission. We want to drive greener last mile practices for the retailers and 3PLs making the highest number of deliveries. Where we differ from some of our competitors is that sustainability is on an equal footing with cost saving when it comes to assessing new features and building our product roadmap. So it means that our platform is currently doing things others aren’t that can help deliver tangible savings.

I’ve already talked about our optimisation engine. We’ve invested heavily in enabling customers to configure it in ways that prioritise the use of eco-friendly vehicles and route jobs smartly across different fleets and 3PLs to minimise CO2 emissions.

Our platform also provides real-time visibility and driver-recipient communications to ensure that deliveries are successful on the first attempt, meaning emissions are not redistributed across future delivery rounds.

We’re always developing sustainability features, such as intelligent time slot booking, which gives customers a way to rank delivery time slots by their environmental impact (e.g. a delivery during rush hour will result in higher emissions because of traffic congestion) and then visualise this data to consumers at the point of sale, so the green-minded, which research suggests now number the majority, can choose a more sustainable delivery option.

Our new eco driving module uses a courier’s smartphone to capture numerous data points about their driving behaviour. This behaviour is then analysed using AI to provide feedback on how they can drive greener, while the aggregated data is provided in a dashboard to get a better understanding of emissions savings over time.

What needs to be done so logistics companies can start saving CO2 now? Must there also be more pressure from consumers?

Consumer demand is one of the most effective ways of encouraging businesses to change their behaviour. The current state of last mile delivery is a response to the consumer appetite for near instantaneous deliveries. Just look at the popularity of on-demand services from companies like Uber, as well as the rise of 15-minute grocery deliveries.

But we also see the research that suggests consumers prefer greener delivery methods, even if that means waiting a bit longer or paying a bit more. The University of Rotterdam conducted research suggesting that more than 80% of users will select a green-labelled time slot if given the choice.

At the same time, EU legislation and more emphasis being placed on corporate sustainability is driving longer change, we need tangible technology solutions that can be deployed today for businesses to improve the sustainability of their logistics. And we feel this is an area where Urbantz has a lot to offer.

Want to Talk About Sustainability and Your Last Mile?