Wednesday May 22, 2024

'Enhanced' last-mile delivery can reduce traffic congestion and air pollution, Accenture report finds

By taking bold steps to transform how last-mile delivery ecosystems operate, post and parcel organizations, retailers and delivery companies could reduce harmful emissions and traffic congestion within cities, according to a new report from business consultancy Accenture and Frontier Economics.

The report, entitled 'The Sustainable Last Mile: Faster. Greener. Cheaper', found that using local micro-fulfilment centers (MFCs) across Chicago, London and Sydney to fulfil just half of the e-commerce orders in those cities could significantly reduce traffic volume and harmful air emissions – and that last-mile supply chains using MFCs could lower delivery vehicle-related emissions by 16%-26% by 2025.

“The carbon footprint of the last mile has long been an environmental and societal challenge. The sustainability gains that came from the (COVID-19) pandemic were unintentional. Yet they happened at an ideal time. Now it’s time to get intentional and make the last mile more efficient, less expensive and more eco-friendly. The imperative to act is clear,” it noted.

“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. Consumers are watching. They have a tall order: convenience, speed and sustainability at the right price,” the authors wrote.

The report described MFCs as “a flexible logistics solution for e-commerce,” enabling inventory to be stored closer to customers in convenient suburban locations, enhancing supply chain processes, speeding up last-mile deliveries and enabling in-person pick-up of parcels. MFCs include in-store click and collect points, automated locker storage facilities, and stand-alone micro-warehouse facilities.

“Increasing the use of MFCs to enable same-day or next-day deliveries provides retailers and postal and logistics organizations with operational benefits while simultaneously creating significant positive environmental and societal impact,” the study observed.

Delivery traffic reduction

Of the three cities included in the study, London would likely see the largest delivery traffic reduction from the use of MFCs - 13%, equating to about 320 million fewer miles (520 million fewer kilometers) travelled by delivery vehicles. Chicago’s delivery traffic could also be reduced by 13% while for Sydney, the report forecasts about a 2% reduction in delivery traffic.

“It’s time to take action and make the last mile supply chain more efficient, less expensive, and more sustainable. Organizations with innovative local fulfilment strategies and that lead in digital adoption and sustainable business practices will become tomorrow’s industry leaders,” said André Pharand, head of Accenture’s postal & parcel practice.

The study identifies substantial and achievable reductions in the emissions of carbon dioxide (CO₂), nitrogen oxides (NOx) and particulate matter (PM10) arising from a reduction in delivery vehicle volumes through the increased use of MFCs.

According to its analysis, the greatest CO₂ reductions could be achieved in London (144,000 tons), followed by Chicago (68,000 tons) and Sydney (52,000 tons). The offering of convenient ‘click-and-collect’ options by retailers could encourage consumers to travel in-person — whether by low-emission vehicles such as private cars, by zero-emission vehicles such as bicycles, or on foot — to collect parcels at local fulfilment centers, further contributing to reduced consumer traffic volumes and vehicle emissions.

To help capitalize on the opportunity, the report identifies key strategies for transforming last-mile delivery practices. These include governments and retailers incentivizing greener choices among consumers and businesses; delivery companies and postal agencies re-assessing how they manage their supply chains and deploy assets such as heavy goods vehicles; and the greater use of data and analytics technologies by e-commerce retailers and logistics organizations.

The study also found that deploying route optimization technologies alongside MFCs could reduce delivery traffic by an additional 3% to 4% across the three cities. The additional reduction in vehicle travel would be highest for London (87 million miles, or 140 million kilometers), followed by Chicago (38 million miles, or 61 million kilometers) and Sydney (34 million miles, or 54 million kilometers).

“No single entity can solve the challenge of last-mile delivery alone,” Pharand added. “It will take an ecosystem of partners working together to create a major evolution in sustainable delivery practices through the pairing of human ingenuity with technology. We believe that our study points the way forward.”

Local fulfilment potential

The acceleration of local or market-based fulfilment was a stand-out impact of the pandemic, Amazon being a pioneer here, the report said, highlighting that the company’s ability to meet its Prime delivery promises has always hinged on its innovative local fulfilment strategy.

It underlined that in March 2020, the e-commerce giant had “doubled down” on its local delivery strategy, investing in a network of new micro-fulfilment centres located even closer to its customers that stock 'need it today' items.

“The goal was to offer more speed and convenience with a lower carbon footprint. To respond to Amazon’s delivery speed and cost, brick-and-mortar retailers had already been developing capabilities for omnichannel fulfilment using their stores or other local inventory options. The pandemic radically accelerated fulfil-from-store investments by about three to five years, permanently altering supply chains where inventory is placed closer to customers than ever before.”

The report added: “Retailers accelerated these investments as they scrambled to adapt. But these investments won’t be rolled back post-pandemic. Now, many more items will come from market-based inventory, which creates an opportunity for new experiences around local fulfilment for consumers and exciting potential for post and parcel and logistics organisations to create a more sustainable last mile.”


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