Who would have thought that Greek mythology could teach us so much about sustainability?
Cadmus, a character in Greek mythology, killed a dragon and, on instructions from Athena, planted the slain dragon’s teeth into the ground. The teeth then turned into soldiers who fought each other until only a few remained. Digitisation and sustainability have been exactly the same over the past few years.
Digitisation first exploded during the pandemic. With us all in lockdown, we couldn’t fly, drive, or go out shopping. This meant we were doing so many more things at home, replacing our well-worn means of polluting the environment. Dolphins returned to the canals of Venice, and the satellite images that proliferated social media gave us a glimpse of how clean air might look if we hit our Net Zero targets in 2050. Was this the environmental turning point that so many had been waiting for? Like Cadmus’ Dragon’s teeth, sadly, it was not.
Global retail e-commerce sales boomed during the pandemic, that’s for sure, rising by over 22% to $5.2tr in 2021, and the pandemic did improve our global emissions overall, but it did unleash a new beast from Pandora's box. Retail e-commerce sales meant we were no longer at the major store checkouts and products had to be home delivered. This meant individual units being delivered to individual households - requiring last-mile delivery, which has adverse effects on the environment.
In this article, we will explore why e-commerce companies should look at sustainable logistics, how it is ultimately in their financial interests to do so (as well as that of the planet) to support sustainability - and how the last mile delivery needs to become more sustainable.
The Forces driving e-commerce companies to support Sustainable Deliveries
There is a range of forces that are driving e-commerce companies to reassess their own carbon footprints and to embrace sustainability, especially for deliveries, and we will focus on three core forces:
- Demand-pull by consumers
- Supply-push from the logistics ecosystem
- Governmental regulation
Demand-pull forces driving sustainability and sustainable deliveries
Across the world, consumers are becoming increasingly conscious of the impact of their purchases on the environment. As an indication of this, in their 2021 eco-awakening report, the Economist Intelligence Unit highlighted that there had been a 71% increase in online searches for sustainable goods since 2016. This increased interest has particularly been focused on the cosmetics, pharmaceutical, fashion, and food sectors and demonstrates confirmation of an underlying and building trend that perhaps we have all felt instinctively. The big question is how has this interest in sustainability translated to checkouts and tills.
The Global Sustainability Study 2021 conducted by Simon-Kucher & Partners, strategy and marketing consultants, helped to put some colour around the commercial layers of this developing trend. Their survey interviewed over 10,000 consumers from 17 countries, with some very eye-opening conclusions.
- While most consumers are not willing to pay more for sustainability, there is still a sizable group — 34% of all consumers interviewed - that will.
- This 34% group was broken down further to Gen. Z (39%) and Millennials (42%), who were more willing to pay for sustainability than Gen. X (31%) and Baby Boomers (26%).
The results again vindicate probably your own instincts. Gen. Z and Millenials are the core target audience that are digitally native and embrace both sustainability. It’s not just sustainable products that appeal to consumers either, it's also at the checkout too.
Research highlights that 43 per cent of consumers are more likely to shop with an e-commerce business that has sustainable delivery options. Doddle, who carried out the research, quizzed shoppers about their green shopping habits, with a quarter of mainly younger consumers highlighting their annoyance that home delivery is posted as the default option, recognising the additional unnecessary carbon emissions.
The data on increasing consumer interest in sustainability also supports our own individual anecdotes, I am sure. I know whenever I head down to my local supermarket, I am pleasantly surprised to see more and more brands actively promoting their sustainability credentials, with many aggressively and proudly announcing their 100% sustainability on their packaging, which, of course, is made from recycled material.
While I am sure e-commerce companies recognise the power of sustainability to their customers, let’s check out the logistics industry to see how they are approaching sustainability and how this can help reduce an e-commerce company’s carbon footprint.
Supply-push forces driving sustainable deliveries
When it comes to carbon emissions, transport has the highest use of fossil fuels of any Industrial Sector globally. The International Energy Association (IEA) reported in 2021 that transport accounted for a whopping 37% of global CO2 emissions. They estimated the sector emitted 7.7 Gigatonnes (Gt) of carbon, an increase of 8% from the previous year. This latter increase in emissions is a little overstated given the pandemic ended in 2021, leading to life coming back to some semblance of relative normality, re-visiting the underlying trend for carbon emissions.
The global target for transport carbon emissions is set at less than 6 Gt by 2030, shown in the diagram above - and will be hard to achieve without some concerted effort all round by the entire industry and probably increased governmental regulation. To hit the target shown in the chart above, a 20% reduction in carbon emissions is required over the next 8 years.
With such a high percentage of emissions from the sector, governments across the globe have the sector well and truly in their crosshairs as one that not only needs to change but has to change. Indeed global pressure is increasingly building to reduce climate change, with 140 countries as at September ‘22 according to Climatetracker’s presentation at Climate Week NYC 2022 (check out their great, full presentation) considering or have committed to Net Zero objectives by 2050 - i.e. to reducing carbon emissions to zero.
These 140 countries represent 88% of all carbon emissions created globally. So, the more global unity there is around climate change, the more pressure there will be for countries to perform.
Undoubtedly, unless the transport sector enhances its commitment to sustainability, government policies will be very likely to get tighter and tighter as it becomes increasingly difficult for countries to hit their sustainability targets. In many ways, all of us in the logistics sector need to play our part.
So, let's look at the ways in which the logistics sector’s carbon footprint can be reduced - both directly and indirectly - and how this can help e-commerce companies.
The adoption of sustainable trucks for sustainable deliveries
All the major global truck manufacturers are already beginning to launch ranges of sustainable trucks. Many are embracing battery electric technology, ranging from the established veterans of logistics Kenworth to the highly innovative autonomous and electric Swedish truck manufacturer Einride . Other truck manufacturers are transitioning to electric trucks by running turcks on renewable fuels as biogas. Sadly, the long-awaited electric truck from Tesla continues to be delayed but shows great promise, great branding and great performance - but just not on the production front just yet.
Volvo is also driving innovation very strongly in this entire space with their objective to decarbonise logistics with fuel cells powered by hydrogen, which they first tested on a test track in 2020. This innovation represents a step change in renewables logistics where the trucks;
- Only release water vapour (nil carbon emission)
- Are targeted to have a range similar to diesel trucks (up to 1000km), and
- Only take fifteen minutes to refuel.
These trucks are expected to be launched in the second half of this decade - so the sustainable future is looking very rosy, with plenty of green petals of course! Additionally, governments are playing their part.
Across the globe, there are increasing releases of tax incentives to buy electric vehicles, which are slowly making their way into electric trucks.
So, at a longer-term level, the hardware side of the transport industry is beginning to build strongly towards sustainable logistics. Not only does this help reduce not only the carbon footprint of the industry but it also enhances longer-term sustainable deliveries for e-commerce companies, with government tax incentives easing the path to Electric vehicle purchase. Another way to consider reducing your carbon footprint as an e-Commerce company is to look at proactive ways to support logistics companies that are focused on reducing the number of miles that their trucks travel every year.
The reduction in the miles driven - indirect reduction of the carbon footprint
Historically, the development of the “hub and spoke” models of logistics helped logistics companies reduce their operating costs. By having major regional distribution centres, logistics companies could optimise their costs by having smaller centres closer to the centre of cities and towns. These deliveries could be bundled together for the main motorway routes, with the parcels broken down for more localised delivery.
This model is now extending further to include the opening of micro fulfilment centres that are able to cater to highly targeted localised geographic areas to reduce carbon footprints, especially for the last mile of delivery, which will tend to be mostly in urban areas. At Urb-it, we have deployed micro fulfilment centres from which we can deliver quickly and effectively via our e-cargo bikes.
There is another objective for the logistics industry to embrace the inefficiencies that exist within the industry, which can be resolved through technology. One such example is backloading.
Backloading is a problem for almost all logistics companies. For example, transporting products from Madrid to Barcelona or from Paris to Lyon or from London to Manchester, companies use the main motorway systems as a means of delivery. Many are working on-contract for major brands, and they deliver products to the chosen destinations and unload appropriately. The problem arises, however, on the way back. Their trucks may only be at 25% to 40% filled to capacity. Online software providers are now putting together marketplaces that seek to match trucks returning with capacity with those that may want one-way logistics options. As an e-commerce company, by considering such options it can reduce your carbon footprint and see a reduction in the costs of delivery as logistics companies seek to fill their empty capacity at reduced rates. The challenge may come, however, if your customers need urgent delivery - but by making them aware and giving them the option of a more sustainable delivery structure at reduced costs - helps not only give your customer more sustainable options but also positions you in the mind of your customer as a business that is committed to sustainability. It is the last mile, however, that represents one of the biggest challenges for e-commerce companies and for sustainability.
The last mile
The majority of parcel deliveries are made to the largest Urban areas of the population - primarily cities and large towns.
The very significant problem for sustainability for the last mile is traffic congestion. More often than not, heavy traffic means not only are deliveries held up in traffic, but carbon emissions are worse as engines continue to run, emitting carbon. This is potentially bad business for you as an e-commerce business - as it may make the timings of deliveries harder to predict accurately, and it is bad for the environment.
At Urb-it, our entire business model is based around overcoming this problem.
Making the last mile for deliveries sustainable - urb-it
Within the UK, France and Spain, we have created hubs for last-mile delivery that are not only sustainable but also cost-effective because of how we avoid congestion.
To support our e-commerce customers, we have
- Micro hubs in the cities in the UK, France and Spain (why not check which cities we support for sustainable deliveries)
- Fleets of e-cargo bikes driven by pedal power, that deliver parcels within that last mile
- We use the ever-increasing cycle tracks being built in major cities right across Europe and beyond
This means for our e-commerce clients that we bypass the majority of traffic congestion, resulting in more drops per hour via our e-cargo bikes, which because they are driven by pedal power, emit next to no operational emissions. How green is that?
The pandemic gave us all a glimpse into how the future could look with cleaner air. It also showed us the added challenges of eCommerce delivering sustainably. As the sector that contributes most to carbon emissions, sustainable logistics should not be a pipedream - it is achievable with concerted action from e-commerce companies and the industry working together. Without that action, governments may take up the mantle themselves and drive enhanced regulation. Ultimately, it will be the consumers that will vote with their wallets as they show their enhanced commitment to sustainability and sustainable delivery. So, overall, it makes sense for the planet and commercially to embrace an ever-growing consumer trend that shows no signs of abating.
Thanks for taking the time to read my blog today! Please follow us on LinkedIn if you wish to keep up-to-date on our latest urb-it news and if you have any general enquiries about how we can help transform your business with our last mile delivery services, click here.