Accenture has published the report “The Sustainable Last Mile”, which provides the keys to reducing emissions and optimising the logistics system.
The carbon footprint of the last mile has long been an environmental and social challenge and, surprisingly, the arrival of the pandemic brought opportunities to make it more sustainable. People stayed at home and e-commerce sales soared, so parcel delivery density increased. Shops became distribution centres, and both in-store delivery and curbside pick-up emerged. By pure necessity, consumer behaviours and retailers’ responses to them changed, opening a new door to a more efficient, less costly and greener last mile. So explains Accenture’s new report “The Sustainable Last Mile”.
Accenture and Frontier Economics conducted a study in 2020 to test the implementation of local micro-logistics centres in Chicago, London, and Sydney to cover e-commerce orders in those cities. Among its findings, it showed that last-mile delivery through local micro-logistics centres could reduce last-mile emissions by 17-26% by 2025.
The increased use of these micro-logistics centres, in addition to enabling same-day or next-day deliveries, can also substantially reduce emissions of carbon dioxide (CO₂), nitrogen oxides (NOX) and pollutant particulates (PM10) due to the reduced use of heavy vehicles and substitution by more sustainable alternatives such as delivery by bicycle or on foot.
According to the report, last-mile delivery accounts for 53% of the total cost of shipping—and 41% of total supply chain costs. With no interventions, we can expect a 32% jump in carbon emissions from urban delivery traffic by 2030.
This proposal demonstrates that there is a real opportunity to optimise last mile delivery, something that the SENATOR project will seek to contribute to and gives ideas on how to develop a more sustainable system. The ground is set, and these sustainability gains after the pandemic are only the beginning of a whole new opportunity.
Collaboration between all the actors
Real change toward a more sustainable last mile takes coordination and collaboration across the ecosystem. The Sustainable Last Mile report explains some priority actions that every player can take to start making a difference:
SENATOR will develop a smart network operator, as a control tower that will work as a support tool for decision making, integration and planning of all logistics operations. This aims to constitute an effective mean of collaboration between the agents involved (operators, transporters, administrations and citizens).
“Thinking outside the box to deliver the box”
To create a more sustainable last mile, Accenture proposes three key fundamentals:
To incentivise greener choices
Making purchases is so easy that people sometimes do not think about how their choices (shipping option, size of the basket, when the order is fulfilled) can impact the environment. However, 43% of consumers are more likely to choose retailers that offer more sustainable delivery options. So, the key would be to increase buyer awareness and develop incentives and “choice architectures” that encourage them to receive deliveries in a more sustainable way.
Moreover, the report proposes to extend this to city and national governments and planners, who must weigh the trade-offs they can make to incentivise delivery companies to invest in greener fleets, enable the circular economy and develop greener route management practices.
To rethink asset use
In the aftermath of the pandemic, retailers have repurposed their shops into hybrid spaces for shopping, pick-up and return deliveries. In a shared-use model, other spaces such as shopping malls or other unused urban spaces can become multi-tenant fulfilment centres. Breathing new life into these spaces can generate revenue for towns, cities and local authorities, while enabling a sustainable last mile. Making it happen requires favourable zoning, tax incentives and creative urban planning.
Delivery companies can also enhance cooperation and move to asset sharing in new ways. Providing access to each other’s networks can eliminate costly redundancies and reduce emissions by sharing delivery infrastructure, including open locker and pick-up and drop-off networks that support interoperability.
At the same time, cities and regulators can encourage asset sharing. One way to do this is to create points on the outskirts of cities where deliveries for all carriers are concentrated.
To harness data and analytics
In-depth knowledge of customers enables delivery companies to adopt more proactive and environmentally friendly delivery approaches, enabling route optimisation: they can make routes more efficient considering traffic and other real-time conditions, such as local traffic or weather patterns. They can integrate route planning with the availability of smart charging stations. Combining local fulfilment with last mile with route optimisation, together they can reduce emissions by 7-9% in the cities studied by Accenture. Considering that each failed delivery costs about $5 – and that 5-10% of all last-mile deliveries fail – this would be a big improvement.
It is about harnessing real-time information on consumer preferences and shopping patterns to innovate and optimise inventory and route management for a lower last-mile carbon footprint.
SENATOR responds to this Accenture report by offering an advanced technological solution that improves the life and air quality in cities. These solutions will be tested, readjusted and improved in the two Urban Living Labs (ULLs) of the project in Zaragoza and Dublin.
In the ULLs, the collaboration between the agents involved in the logistics processes will be essential. In fact, local authorities are involved in the project as partners, which are key to develop this type of initiative. Moreover, the project will incentivise greener options such as the use of alternative energy vehicles (electric vehicles).
As for the use of data, the control tower developed by SENATOR will make possible to obtain and manage information in real time and will facilitate data-driven decision making. The project also includes a very important part of route optimisation to avoid overlapping of logistics networks, as well as dynamic optimisation, allowing to manage incidents in real time to minimise the impact on quality and putting the customer at the centre.
For example, if a van fails, their shipments could be transferred to other operators that can be near. This way, they do not have to go out again for delivery, what will minimise next day traffic and maximise that the vans go as full as possible. And avoids more emissions and pollution.
As a conclusion, with SENATOR all the actors will be connected, planners will have data to select the most sustainable options, and all the process will be managed in a dynamic way.