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Greening the Last Mile of E-commerce: Pipe Dream or Possibility?

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The first and last miles are something of the Olsen twins of the logistics world.

On a good day, you can tell them apart. The first mile describes the trek a product takes from its manufacturer to the distributor or fulfillment center, while the last refers to its final schlep to the customer’s doorstep. You may also be forgiven for confusing one for the other, however, because “free and easy” customer returns sometimes turn the end of one journey into the beginning of the next.

It’s the last mile, however, that raises the biggest concerns for Miguel Jaller Martelo, co-director of the Sustainable Freight Research Center at the Institution of Transportation Studies at the University of California, Davis. Most neighborhoods, for one, were never designed for freight traffic. Considering that global e-commerce sales are expected to hit $3.5 trillion this year, per research from Statista, that’s a lot of brakes to pump and doorbells to ring.

Exacerbating the situation, Jaller Martelo noted, is the retailer arms race to offer increasingly faster modes of door-to-door delivery, resulting in more pollution-emitting trucks making multiple trips at less-than-maximum capacity.

“The faster your deliveries or the shorter your delivery window, the less ability you have to consolidate cargo,” Jaller Martelo said. “Therefore, you’re using more resources to transport the same amount of goods.” And since e-commerce incentivizes consumption by taking away the friction of physically traveling to a store, “we’re just putting more and more into the system,” he added.

Freight companies have been trying to whittle their environmental footprints for a while now, whether motivated by P.R. or a desire to maintain a habitable planet for conducting business. Clean-energy vehicles appear to be a critical piece of this roadmap. In November, FedEx announced it was purchasing 100 electric delivery vans and leasing another 900 for commercial and residential pick-up and delivery services in the United States. DHL, one of Sourcing Journal’s 2019 Sustaining Voices honorees, will be rolling out 63 new electric delivery vehicles for its U.S. market this year. And UPS is developing a “state-of-the-art” pilot fleet of 35 zero-tailpipe-emission lightweight composite vehicles to be trialed in London and Paris. Even the U.S. Postal Service is testing all-electric vehicles in the San Joaquin Valley in California.

Range isn’t an issue, since research shows 90 percent of trips by parcel-delivery vehicles fall within a 100-mile radius. But while these modes of conveyance may clear the air, they won’t do very much to alleviate gridlock, Jaller Martelo said. “It doesn’t matter if the vehicle is powered by electric, hydrogen or fuel cells,” he said. “You’re still occupying a space and causing congestion.”

There’s also the fact that all those packages need to be housed somewhere before they’re fanned out to their ultimate destination. Warehouses are usually built where land is cheaper, in places adjacent to disadvantaged communities, “so we may be enhancing problems with social equity or environmental justice,”Jaller Martelo said. 

The problem is people are buying too much “stuff” and then expecting it to be deposited on their porch near-instantaneously, like magic. We can blame the so-called endless aisle, too, Jaller Martelo said. Whereas we used to be limited by the selections of stores we had to drive to, no such constraints exist on the internet. What’s another click of a button?

Indeed, 75 percent of online shoppers in the United Kingdom “just automatically choose home delivery” at checkout, according to a recent survey by YouGov on behalf of Doddle, a London-based click-and-collect service that partners with businesses to create pickup points on their premises. Only 6 percent of the 2,196 consumers polled said they always collect their online shopping instead of having it delivered, though 17 percent said they “often or sometimes” choose collection over delivery. But the situation is reaching a watershed, said Kitty Poole, marketing director at Doddle.

“While the demand for e-commerce is growing—and the number of parcels being delivered are growing every day, every year—the fulfillment model hasn’t changed,” Poole told Sourcing Journal. “Delivering parcels to each and every home is no longer sustainable.”

Signs abound, however, that consumers may be beginning to recognize that delivery options carry their own environmental baggage.

Almost half—43 percent—of respondents, for instance, said they would switch loyalties to a rival retailer if it offered a wider range of sustainable delivery options such as click and collect (better known across the pond as buy online, pick up in store, or BOPIS), bicycle couriers and consolidated deliveries. Fifty percent of consumers, led by 18- to 24-year-olds, averred that they would like to support only retailers that offer such delivery alternatives in the future.

“Instead of delivering to 27.5 million homes, a van could effectively [manage] 40,000 pickup-dropoff collection points across the U.K.,” Poole said. “As you can imagine, this would lead to a huge reduction in CO₂ coming from the number of vans on the road.”

Doddle espouses placing pickup kiosks in locations people already visit, such as Morrisons, a domestic grocery chain, “so there’s not the same need for two journeys.” Doing so could even boost foot traffic, since people retrieving packages might nip into the supermarket for a drink or snack.

It’s a tack that Amazon, which dominates nearly half of all online transactions, adopted in the United States soon after its $13.7 billion acquisition of Whole Foods in 2017, when it began adding self-service lockers to select locations. The convenience chain 7-11 boasts a similar network, and Stein Mart confirmed last week its plan to install Amazon lockers in roughly 200 stores across 28 states. Amazon is also building post-office-like storefronts—sometimes integrated with sorting depots—for picking up (and returning) packages without the potential vexation of missed deliveries or porch pirates. Over in Europe, the e-tailer has been partnering with brick-and-mortar outlets like Next to establish click-and-collect points for purchases made on its website.

In February, the online juggernaut introduced Amazon Day, a “new delivery innovation” that allows Prime members to designate a day of the week as their delivery day, making it easier to group purchases and deliver them together. It’s part of Amazon’s vision, the company said, to make 50 percent of its shipments net-zero carbon by 2030.

“We’ve been testing this program with a group of Prime members and Amazon Day has already reduced packaging by tens of thousands of boxes—a number that will only continue to grow now that the program is available to Prime members nationwide,” Maria Renz, vice president of delivery experience at Amazon, said in a statement.

Another trick the internet’s favorite retailer has up its sleeve? Rewarding Prime members who choose free no-rush shipping with credit they can put toward digital purchases, essentially paying customers to slow their roll.

Still, whether Amazon’s efforts can keep pace with its seemingly inexhaustible ambitions remains to be seen. 

Brian Olsavsky, its chief financial officer, revealed in an April earnings call that the Everything Store is working to “evolve” its default free two-day shipping for Prime members into free one-day shipping. This will require the e-tailer to spend $800 million in the second quarter just to improve warehouses and delivery infrastructures for the North American market, Olsavsky said. Amazon is also looking to expand its U.S. Delivery Service Partner program by offering eligible employees $10,000 to get their own delivery businesses off the ground. Rumor even has it that a homegrown shipping service—one that cuts out the middleman entirely—is nigh.

Even if technology alone won’t solve all our last-mile woes, the Internet of Things may be able to offer some relief, perhaps by grouping products more efficiently for transport and avoiding wasted trips. This would require brands and delivery providers to work together, of course, but “it’s a future possibility,” said Natasha Franck, founder and CEO of Eon, a New York startup—and a 2019 Sustaining Voices honoree—that promotes the use of digital identities so products can communicate information about themselves at every stage of the value chain.

“[A digital ID] lets us to measure and provide transparency, giving business and consumers more insight,” she said. “The measurements provide insight to support system design for less waste.”

Data is also the favored tool of Ashley Etling, CEO of LimeLoop, a California-based “full-circle packaging solution” and another 2019 Sustaining Voices honoree. This year, LimeLoop will begin incorporating sensors into its reusable mailers—made from discarded billboard vinyl—to enhance their intelligence-gathering capabilities throughout their extended life cycle.

“Our technology will shorten the total distance that our shippers travel and consolidate shipments to the same address, reducing the amount of carbon emissions, decongesting neighborhood roads and cutting down on infrastructure damage,” she said. “We will use our technology to prioritize electric delivery trucks, further reducing delivery attributed emissions.”

Jaller Martelo has a simpler solution: show the consumers the impacts of their choices and help them make smarter ones.

“Most of the strategies are only affecting the way we are responding to the demand,” he said. “If we can tackle the demand and drive the system from the demand side, that could also go a long way with sustainability.”

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