How to achieve sustainable last-mile delivery & why it's important

The first, middle, and last-mile context is rapidly changing owing to growing awareness about environmental sustainability. While regulations are being imposed on logistics companies to curb carbon emissions, the demand for fast fulfillment dramatically increases trip volumes, resulting in a growing carbon footprint. This paradox may drive businesses to consider selecting either customer experience or sustainability goals, but that's not viable in reality. Turning a blind eye to customer demands will culminate in business continuity challenges, and ignoring sustainability objectives will cause reputation damage and attract hefty penalties. Hence, deploying digital strategies to strike a balance between these two critical delivery KPIs is the only logical way forward.

The demand for last-mile delivery is increasing by the day. The World Economic Forum highlighted that by 2030 its demand is going to grow by 78%. In the race to satisfy customer demands, the number of vehicles operating in the last-mile carrier ecosystem in the top 100 cities will increase by 36% by 2030, considering no immediate measures are implemented to curb emissions. This, in turn, will contribute to a 32% increase in delivery traffic and a 21% surge in road congestion. The environmental impact of such a growing density of last-mile operations will increase emissions multifold and expedite occurrences of natural disasters.

Governments are taking measures across the world to push enterprises towards building more sustainable business practices. Here's a quick look at some key steps taken by U.S. and U.K. governments and the EU to battle carbon emissions.

• The U.S. aims to curb CO2 emissions by approximately 1.1 billion metric tons and oil consumption by 530 million barrels.

• The U.S. can levy fines of more than $30,000 if businesses do not follow environmental regulations.

• England's Environment Agency can order closure or suspension of a business until a breach in environmental law is rectified.

• Britain levies fines of up to $60,000 for bypassing environmental rules.

• The EU has established targets for reducing the average emissions from lorries by 2030.

• The EU recently highlighted its target to shrink global emissions by at least 55% by 2030 from 1990 levels.

While these targets and regulations are inspiring large enterprises, like Amazon, Unilever and Walmart, to make their delivery operations sustainable, a large population of businesses is still struggling to contribute to reducing global carbon footprints. Caught up between operational inefficiencies, evolving customer demands, final mile tracking and rising delivery costs, these businesses are missing out on the bigger picture. A closer look at existing logistics processes will reveal multiple opportunities to optimize everyday delivery operations and reduce CO2 emissions.

A key driver of sustainable logistics is customers themselves. The growing momentum of consumer activism, especially the Boycott and BUYcott movements in the U.S. and U.K., is being perceived as a critical thrust behind making delivery operations eco-friendly. A 2020 IBM report revealed that nearly eight in 10 customers indicate sustainability is important for them. And for those who say it is very/extremely important, over 70 percent would pay a premium of 35 percent, on average, for brands that are sustainable and environmentally responsible. Having said that, it's also true that increasing customer demand for same-day and one-hour deliveries are driving businesses to ramp up trip volumes and deploy more vehicles on the road.

Inefficient packaging, growing trip volumes, failed delivery attempts, increasing returns, among others, are some of the major culprits behind growing last-mile emissions.

1. Inefficient Packaging

Excess use of plastic and over packaging are significant reasons behind rapidly growing landfills. Using a minimum amount of packaging that lives up to ISTA standards is a great way to ensure eco-friendly packaging. Shifting to reusable containers, implementing 'right size' packaging techniques, reducing packaging layers, and constantly analyzing the impact of packaging changes are other ways to make delivery processes sustainable.

2. Growing Trip Volumes

An increase in demand for faster deliveries has ballooned trip volumes, especially after the pandemic started. Planning highly efficient multi-drop delivery routes, seamlessly executing click and collect and time-slot deliveries, and optimizing capacity can address this challenge.

3. Repeated Delivery Attempts & Increasing Returns

Poor address quality, delayed deliveries, and unavailability of customers results in repeated attempts to deliver a parcel, thereby growing emissions released by multifold. Deploying tools that guarantee address accuracy, ensure flexible fulfillment, and make customer communication personal is a great way to resolve this problem and curb emissions.

4. Increasing Returns

Returns also increase the carbon footprint of a delivery task in two major ways. One, it drives emissions while processing used products, and two, emissions from executing reverse logistics. Leveraging solutions that help understand customer behavior better, improve visibility of materials handling processes, and reduces chances of damage to goods can go a long way in slashing returns.

5. Intensifying Capacity Crunches

Capacity crunches, especially in LTL delivery models, have become a common challenge across carrier ecosystems. This problem also leads to growing trip volumes and adversely impacts last-mile sustainability. Using intelligent carrier management platforms to boost vehicle utilization and onboard new logistics partners who are experts in local fulfillment operations can aid enterprises in managing this challenge. Also, embracing efficient packaging and sorting methodologies can help optimize capacity planning.