State of Green Business

Trend: Last-mile transportation inches closer to home

For many of us, December was a holiday season marked by last-minute, next-day Amazon deliveries. As boxes filled with your sister’s fleece sweater and your nephew’s LEGO kit piled up in your hallway, you might have paused over the environmental effects of all that packaging.

But just as big of a sustainability culprit are the hidden transportation-related emissions that come from the near-instant delivery of all those online boxed goods, which mostly reach your doorstep in delivery trucks powered by dirty diesel fuel. Delivery giants such as UPS, FedEx and Amazon are seeing their carbon emissions rise due to the boom of e-commerce and the promise of swift delivery.

At the same time, all those delivery trucks are causing many cities to see more congested streets and city residents to breath more polluted air. Freight movement is not only the fastest-growing source of greenhouse gas emissions, last-mile freight is a major contributor to local air pollution, often in disadvantaged communities.

But there’s some good news amidst all this urban doom and gloom. Last- mile package delivery in cities is ripe for a clean and electric transformation.

In 2020, a growing number of firms are expected to start using electric delivery vans, as well as e-cargo bikes and scooters, which can reduce both emissions and traffic. A combination of corporate sustainability goals, municipal mandates and incentives and dropping batteries costs is leading to a growing interest in acquiring electric delivery vehicles.

While the market for electric delivery vans is still nascent, making forecasts difficult, recently announced purchase orders show an uptick. Late last year, Amazon announced a plan to buy 100,000 electric delivery vans that will be created by startup Rivian, which aims to deliver some of the first vans by 2021. Meanwhile, UPS ordered 950 electric vans from Workhorse, and FedEx is planning on adding 1,000 electric delivery vehicles from Chanje.

Delivery companies, particularly with operations in Canada and Europe, also are rolling out e-cargo bikes made by companies such as Coaster Cycles, a startup that builds its bikes in Missoula, Montana. The biggest cargo bikes can carry close to 800 pounds of goods, but still can ride in the bike lane and route around congested streets.

Buying electric vehicles isn’t the only way that the delivery companies can clean up their routes. Fleet management software, artificial intelligence and data tools also can help make last-mile delivery routes much more efficient, slashing fuel use and making operations less energy- and carbon-intensive.

Delivery giants such as Amazon are also building more distribution centers closer to customers, so that the last-mile portion is becoming significantly shorter, requiring less fuel (although the products still need to be shipped to the distribution centers). At the same time, the delivery companies are experimenting with delivery drones, which one day might offer a freight method that would be an alternative to road trips.

One of the most promising delivery trends is emerging from brands. Some retailers, particularly those with deep sustainability programs, are beginning to push on the delivery supply chain to go electric.

In 2018, IKEA’s parent company Inkga Group committed to having electric vehicles deliver the last-mile portion of all of its product shipments — from ready-to-assemble lamps to bath mats — to customers by 2025. An interim goal will kick off with electric delivery in Shanghai, Paris, Los Angeles, New York and Amsterdam by the end of this year.

As IKEA doesn’t own its own vehicles — and its products are delivered via roughly about 10,000 partner vehicles — it has had to collaborate closely with its delivery supply chain. Already in 2019 in Shanghai, IKEA was able to reach its goal early by working with Shenzen-based electric vehicle leasing company DST and with IKEA’s local warehousing partner Beiye New Brother Logistics Co.

But the reality is that retailers are just waking up to this trend, and IKEA, with its long history of sustainability leadership, is the exception. The real tip of the spear is cities.

Cities across Europe — such as London, Berlin, Madrid and Amsterdam — are establishing fossil-fuel-free (or carbon-emissions-free) zones in city centers in an attempt to slash air pollution, cut traffic and lower greenhouse gases. Companies looking to deliver goods in these city centers can do so only with low-emissions vehicles.

These new "green zones" appear to be working from an environmental perspective. London found that thanks to the removal of 13,500 of the most polluting vehicles (such as big diesel trucks) from its city center on an average day, nitrogen dioxide levels in the air had dropped by 36 percent between February 2017 and October.

In addition to low-emissions zones, cities in China are trying other policy methods to get diesel-burning trucks out of the city centers, such as lotteries for license plates that offer more slots for electric vehicles. Other cities, such as India’s New Delhi, are struggling to implement aggressive policy measures and are seeing hazardous air shortening the lives of the 20 million residents that live there.

The United States, with its ingrained love affair with the automobile, has been slower to be as aggressive as Europe has with ditching diesel from downtowns, but some American cities are trying out initial programs. New York will be the first U.S. city to adopt congestion pricing at the end of 2020; it will charge car and truck drivers to enter Manhattan’s city center. Car drivers could be charged between $12 and $14 to enter the restricted zone. Truck drivers could be charged about $25 per entry.

While cities around the globe have been prioritizing reducing air pollution and traffic, more cities need better freight-specific plans, points out a GreenBiz report (PDF) on "The Road To Sustainable Urban Logistics." "Urban infrastructure is often not designed to accommodate critical logistics services," notes the report, but better and more data can help cities get the information they need to help solve the logistics infrastructure gap.

Combining the policy might of cities, corporate sustainability goals and electric delivery vehicles that are getting better and less expensive, delivery routes are starting to get cleaner and smarter. Better last-mile delivery doesn’t just help reduce greenhouse gases, and thus fight climate change, but it enables city residents to breathe easier on less-congested streets.