Creating eco-friendly last-mile delivery strategies is an important business and societal challenge. Here are some options supply chain leaders can explore.
The recent UN climate report sounded an urgent alarm on global warming. With that, an important source of carbon emissions may receive more scrutiny — the last mile.
The transportation sector is one of the main causes of global carbon emission, and last-mile deliveries are solidly in that category. Greening the last mile is a critical endeavor for today’s supply chain leaders. Most importantly, creating concrete sustainability goals that include a more eco-friendly last mile is an important step in the fight against climate change. But companies with business models that prioritize sustainability can also win with customers. More sustainable last-mile delivery models can also potentially add to the bottom line through greater efficiencies and enhance a company’s brand image.
“Enough customers care about the climate now, so it begins to become a potent aspect of a brand’s identity,” said Peter Dering, CEO at Peak Designs, a camera bag company headquartered in San Francisco that has an environmental focus as its core mission, and co-founder of Climate Neutral.
Here are 10 potential ways companies can opt for more sustainable delivery methods and support a more eco-friendly last mile.
Measure your last-mile carbon footprint
Taking an inventory of your current carbon footprint can help you understand what sustainability goals your company should focus on.
Peak inventoried its footprint and found that sourcing virgin aluminum was its biggest contributor to carbon emissions. However, sourcing recycled aluminum is challenging, particularly for a small companies that use a fraction of what large companies do. So, its leaders decided to invest in stockpiling recycled aluminum far above their requirements. Although stockpiling creates costs to manage, it is cheaper than the corresponding carbon offsets, or the investments that help cancel out carbon emission generation, such as planting trees.
Focus on sustainability metrics
Discovering the pragmatic steps you can take to reduce your carbon footprint is a key aspect of a sustainability initiative. Aspects to focus on include sustainability metrics and carbon offsets, and that may require working with an organization that specializes in these areas.
Climate Neutral, a nonprofit green trade consortium, is one such organization. Its mission is for companies to become carbon-neutral as quickly as possible.
Climate Neutral offers a carbon emission calculator to identify impact. Companies get certified by Climate Neutral through a process that involves measuring footprint and offsetting emissions.
Companies can work toward addressing past and present emissions through carbon removal efforts and avoidance credits, said Austin Whitman, CEO of Climate Neutral. This helps highlight the return on investment of aggressive investments in reduced air shipping, clean electric vehicles for ground transport and other sustainability efforts, he said.
Connect offsets to delivery
Investing in carbon offsets — such as planting trees or using solar or wind energy — can be an important move to making the last mile more eco-friendly.
Ware2Go, a UPS warehouse fulfillment company based in Atlanta, is investigating this route.
It has recently partnered with Pachama, a San Francisco-based startup that builds a technology-verified marketplace for forest carbon offsets. Pachama monitors reforestation projects using satellite imaging and AI to ensure those projects’ ability to offset emissions.
Ware2Go is working with Pachama in efforts to fund reforestation, protect old-growth forests and improve forest management, according to the company.
“All of our merchants are automatically enrolled at no cost to them, so every business that is fulfilling with Ware2Go is participating in the program,” said Patrick Cadic, chief revenue officer at Ware2Go at the time of writing.
This investment will also help Ware2Go justify investment in other sustainable delivery options and innovative solutions, he said.
Market the green delivery option
The exponential rise of online shopping has added to traffic congestion in urban centers and to carbon dioxide emissions, to name just two issues researchers have found. Choosing a fast delivery time exacerbates these problems. Fast deliveries — in particular, next-day delivery or same-day delivery options — are particularly bad for the planet, which customers may not realize.
For example, a group of researchers at MIT found that fast shipping not only increases costs by up to 68%, it also increases total carbon emissions by up to 15%.
Communicating that information and giving consumers a slower-speed choice may help decrease harmful carbon emissions.
Researchers on the “green button project” at MIT are investigating this issue in depth. Their work suggests that companies can influence shopping habits by empowering consumers with green choices.
The researchers found that environmental explanations of slower delivery worked better than merely offering financial incentives. For example, 30% of customers who didn’t opt for slower delivery merely for economic incentives said they would be willing to wait longer for home deliveries when given environmental incentives.
The most effective way to motivate customers to wait was explaining their fast delivery choices in terms of trees.
When the MIT researchers gave consumers the choice between saving a hundred trees or opting for faster shipping, 40% said they’d wait. Researchers found that using trees to explain environmental impact has the potential for companies to cut their last mile delivery carbon footprint by 25%. They also believe it has the potential to increase customer satisfaction since the concept translates environmental issues into terms that are easy to understand and gives consumers a simple way to make a pro-environmental choice.
Use zero-emission delivery fleets
Last-mile delivery has traditionally relied on fossil fuel-powered delivery vehicles — a notorious source of carbon dioxide emissions — and supply chain leaders are beginning to look for alternatives to these.
Although delivery vehicles compose only a small portion of the traffic in urban centers, they generate more than half of overall emissions for certain contaminants, according to University of California Institute of Transportation Studies researchers. The use of zero emission and near-zero emission vehicles in the last mile is one way to help fight that. One concern about electric vehicles has been their limited range and performance compared to gas vehicles. But since 95% of parcel deliveries require ranges under 100 miles, commercially available zero-emission vehicles could easily fulfill these ranges.
Some cities are already exploring bicycle, drone and robot deliveries. Electric vehicles fall in this category as well.
Move to micro-fulfillment
Experts believe that enterprises can improve their sustainability by staging goods closer to consumers and solving some of the urban delivery issues.
Micro-fulfillment centers in the form of local smaller warehouse facilities, automated lockers, and click-and-collect points could help reduce harmful emissions and traffic congestion, according to an Accenture study on creating a sustainable last mile. A micro-fulfillment strategy in cities could reduce vehicle-related emissions by 16%-26% by 2025.
Revisit supply chain management strategies
Another complementary strategy lies in finding ways to optimize overall supply chain management methods around logistics, including better aligning the last mile with the rest of the distribution network.
One major consumer packaged goods company redesigned its supply chain to reduce the overall miles traveled by 11%, said Michael Zimmerman, partner in the strategic operations practice of global management consulting firm Kearney, headquartered in Chicago. The change produced a 10% improvement on $250 million in supply chain costs and reduced the company’s carbon footprint by 6,700 metric tons of carbon dioxide emissions per year.
Pack deliveries more efficiently
Since inefficient packing — often as a result of the push for fast deliveries — requires more vehicles to go out on the road, looking for packing efficiencies is a critical aspect of last-mile sustainability.
Consumer packaged goods companies are also finding ways to optimize the packaging dimension that reduces the pallets used, Zimmerman said. This can allow them to fit more products on each truck, lowering the total number of trucks on the road.
Teams can further improve sustainability by considering how the final container is packaged for transit, said Tara Milburn, founder and CEO of Ethical Swag, a Certified B Corp located in Novia Scotia, that distributes promotional products. This includes making sure the box is no larger than needed and that you’ve opted for sustainable packaging.
“This can be a complex process for many companies because shipment packages come in all shapes and sizes,” Millburn said. “It takes careful thought and consideration to make sure each client’s package is thoughtfully assembled.”
Explore sustainable packaging options
The amount of cardboard and plastic trash that home deliveries generate is staggering.
For example, in 2019 alone Amazon created 465 million pounds of plastic packaging waste, according a report from Oceana, a nonprofit organization.
The report focused on Amazon since it’s the giant of e-commerce, but other companies contribute to the issue, albeit on a smaller scale, and can learn from some of the takeaways.
For example, 86% of customers worried about plastic pollution, and 87% wanted Amazon and other retail giants to take major steps to reduce plastic packaging, including offering plastic-free packaging at checkout. Clearly, creating a more sustainable last-mile delivery requires funneling investments toward new packaging approaches. Prioritizing sustainable packaging options is key.
Realize greening the last mile is complicated
By 2030, demand for last-mile deliveries is expected to grow by 78% and emissions from those are expected to grow by more than 30% in 100 cities across the globe, according to a 2020 study by the World Economic Forum.
However, by forming public-private partnerships to create infrastructure improvements, looking for opportunities to improve sustainability as quickly as possible and exploring a variety of strategies, those numbers can change and companies can help bring emissions and costs down significantly.