Reducing the environmental footprint of on demand and home delivery services (last mile logistics)
The biggest factor leading to disproportionate emissions in the last mile is the lack of consolidation. In the earlier links in the delivery chain, such as from manufacturer to warehouse or warehouse to a local depot, a large number of items are carried together in larger vehicles and delivered to a single place. The last mile of delivery means smaller, less efficient vehicles going to lots of different places.
In addition, B2C delivery services are less efficient than deliveries to businesses (B2B) due to lower density of deliveries. B2C deliveries tend to involve parcels with less items inside, less parcels being delivered at one time to a single address and larger distances between delivery addresses.
One approach used in numerous trials is to have local consolidation centres, where larger vehicles deliver parcels in bulk before smaller (potentially more efficient) vehicles carry out the last stage of delivery. In urban areas, this opens up opportunities for very low emission approaches, such as bicycle delivery services. However, many trials have failed due to logistics companies seeing consolidation centres as slowing down supply chains, reducing flexibility or increasing costs (both operating costs and high costs related to renting suitable land in urban areas). The examples which have worked tend to be driven by regulation or specific local constraints.
Urban Consolidation Centres “reduce the numbers of freight vehicles operating within the urban area (Browne et al., 2005) and reported reductions in vehicle trips and kilometres travelled have been between 60% and 80%, with associated reductions in greenhouse gas emissions of between 25% to 80%”.
One particular study looked at student halls of residence as an example. The work showed that effective consolidation could result in a reduction in total courier visits by 98% but would cost around £18 per recipient per year. It would also require the majority of individuals sign up to the scheme (or be forced to use it).
- How might we encourage more consolidation?
- How might we make consolidation centres more attractive for delivery companies to use?
- How might we drive consolidation amongst smaller food and drink providers?
- How might we make more use of rail or bus links for light goods?
Urban and rural factors
The effects of consolidation issues are greater in rural areas, where the distance between delivery addresses is greater. On the flip side, increasing numbers of LGVs in urban areas and increasing congestion are issues there, impacting on delivery efficiency and emissions. As more urban clean air restrictions come into force this will also have an impact.
- How might we better tailor logistics services to specific environments?
- How might we create a more holistic approach for rural communities, potentially making use of community hubs or motivated individuals?
Shifting expectations, to some extent driven by the so-called ‘Amazon effect’, mean that to compete in the e-commerce market retailers need to offer more flexible and speedy delivery options. The ability to receive our purchases next day (or even same day) has been shown to be a significant factor in purchase decisions. One McKinsey study found that 30% of consumers would be willing to bear the (significant) extra costs if it meant receiving their goods on the same day as ordering.
The second shift is in consumer expectations of delivery windows and flexibility. Delivery services are much more efficient if the recipient is in when they arrive and ready for the delivery but this means informing the recipient in advance and committing to a tight delivery window. Consumers often expect to have some choice in delivery windows as well, an effect driven to extremes in terms of fresh food delivery. An Italian study showed that reducing delivery windows from all day (and asking recipients to wait in for delivery) to a chosen two hour time slot meant a 400% increase in emissions due to reduced efficiency in delivery routing.
These shifts in consumer expectations show no sign of reversing, so any solution must take them into account.
- How might we make the costs and environmental impact of last mile delivery more transparent to consumers and help influence behaviour?
One reason why logistics companies have moved towards tighter time slots is to ensure that the recipient is present to receive the delivery. Missed deliveries, generally due to the recipient not answering the door, are a significant issue for retailers and logistics companies, with re-delivery estimated to cost retailers £4.90 per package according to IMRG (the UK’s online retail association). This matters particularly when delivery is offered for free or subsidised, as is common with B2C services. The total costs of missed and late deliveries in the UK is estimated at £1.6bn per year.
Recently, there has been a shift to couriers making more use of alternative drop mechanisms (e.g. leaving parcels in a safe place or with a neighbour). This reduces missed delivery frequency but raises other questions around security and convenience.
- How might we increase communication with recipients to ensure they are present?
- How might we use mobile local hubs to drive efficiencies?
Unlike B2B supply deliveries, B2C e-commerce includes a significant level of returns. In fashion retail, for example, between 20% and 30% of items end up being returned (Barclays data). This is problematic because the logistics operations are primarily designed to work efficiently in one direction. Collection of items slows down routing, is less predictable and there are more likely to be issues with poorly packaged items or inaccurate addressing. Therefore, returns tend to be managed separately to the delivery process, through consumers dropping off items at a depot or local store.
- How might we enable better management of returns could reduce emissions by making use of delivery vehicles as they return to depots empty?
Routing and addressing
The problem of efficient routing for delivery rounds has been tackled by numerous academics and businesses over the years. Whilst it is unlikely that big step changes will be seen in the near future, even very small improvements could have a significant impact on emissions (and costs) given the sheer number of miles being driven every year. In particular current routing algorithms may not take into account the dynamic factors at play at that point in time, such as traffic conditions, weather or even noting if the recipient is likely to be in.
A more immediate problem is around addressing. Inaccurate or imprecise addressing is a key cause of missed deliveries and inefficiencies, to the extent that some researchers have started talking about the ‘last 30m’ as being more of a problem than the ‘last mile’. Even when items have been addressed and sorted correctly, postcodes may describe anything from an entire hamlet of spread out houses down to a part of a large building. They do not relate across well to geolocation tools (like GPS) that could give an absolute location.
In addition, addressing cannot take account of specific limitations regarding an address which may impact on delivery times. For example, traffic and parking limitations, steps, access restrictions or delivery to the front or rear of an address will not be available information for the routing software or delivery driver. The success and time taken for a delivery could come down to something as mundane as the big dog living at the property and whether it is inside or outside when the driver arrives.
- How might we enable more dynamic routing?
- How might we better manage the last few metres of delivery, such as management of kerbside space in busy cities?
The vast majority of vehicles used for last mile delivery are either part of small business fleets or owned by individuals. This means that they are very diverse and tend to be older, less efficient vehicles. In particular, there is a high concentration of diesel-powered light vans.
Short of national regulation or local initiatives like clean air zones, it is difficult to see how small operators can be persuaded to move to less polluting vehicles in the short term, as the capital costs of changing are high and availability of electric vans (for example) is poor.
- How might we encourage the use of the more polluting vehicles for longer legs of journeys?
- How might we enable the utilisation of other, less polluting vehicle types for last mile delivery?