The logistics of the final mile have always been a challenge, but sustainability is now a top priority even for smaller operators, says Johanna Parsons…
Cynics might say that, for parcel carriers, sustainability just means getting deliveries right and not having to repeat them. Home delivery is notoriously tricky, and the main priority is decreasing wasted journeys, which does, of course, reduce emissions. But some would argue that this approach to sustainability is just focussing on the bottom line, with lower emissions as a happy side effect of a lower fuel bill.
However, it seems that in recent years there has been a shift, with investments of time and money in emerging technologies, significant pledges from some of the biggest delivery firms, and more options for smaller operators to go green.
Sustainability has been on the agenda for a long time but increasing awareness and demand for cleaner delivery options is being taken ever more seriously. “Customers are increasingly environmentally conscious and will hold businesses to high standards of sustainability, making it a critical focus,” says Richard Crook, fleet director at DHL Express UK. “Sustainability is a crucial driving force at DHL as we work towards our Mission 2050 goal of net zero emissions.”
Crook explains that electrification of its final-mile fleet is key to achieving this goal. Following last year’s introduction of 50 electric vans across UK operations, in March DHL announced the rollout of 270 new electric vans and it plans to introduce at least 200 further EVs in 2023. This will take DHL Express UK’s fleet to more than 40% electric.
Carl Moore, Yodel’s chief operations officer, says sustainability is a key driver for the company, “with CO2 per tonne per delivery down 40% over the last five years”. Yodel continued its sustainability drive whilst also securing a jump of more than 40 million parcels delivered by its couriers across the country.
What’s more, Yodel has switched all its local delivery depots to be powered by renewable energy sources and made more than half a million deliveries via pedal power over a six-month period in the last year. Its target for carbon neutrality is 2035.
Money grows on trees
It seems that sustainability is no longer secondary to profitability but is increasingly viewed as a driver of future growth. “Businesses who have a sustainable purpose, or a robust sustainability strategy, are outgrowing their competitors,” points out Nancy Hobhouse, head of environmental, social, and governance at Evri (formerly Hermes UK). Hobhouse explains that Evri’s directors and the senior management team have sustainable business objectives directly linked to their compensation package.
Simon Englander, head of customer strategy at Doddle, says that sustainability has become a fundamental part of business strategy. “It’s broader than just environmental concerns – it’s the ability for that business or industry to continue to grow and thrive in the long term.
Sustainability is now a source of competitive advantage. Simon Thompson, chief executive of Royal Mail, underlines how seriously the business case for sustainability is being taken. “Environment is the next battleground for businesses, and we are determined to lead. The transition to electric vehicles is a key part of our strategy to reduce our emissions whilst delivering a seven-day parcel service to our customers.”
Royal Mail has also brought forward its net zero target by 10 years to 2040. As Thompson noted, electric vehicles are a cornerstone of Royal Mail’s strategy and, to that end, the carrier announced a tenfold increase in the number of electric vehicles in its fleet, with its 3,000th electric vehicle rolled out in the summer. So far, 70 delivery offices across the country have switched to full or part electric deliveries and collections, too.
“Previously, factors such as availability of technology and the range of electric vehicles, have impacted how feasible they are for last-mile deliveries,” says DHL Express’s Crook. “Now, the industry is reaching a stage where the technology for electric vehicles has reached the market at scale, so we are able to expand our EV fleet at greater pace.”
The 270 new electric vans DHL Express announced in March have a range of 140 miles and a payload of approximately 1,000kg, like the diesel vans they are replacing. “As such, they are a strong and more sustainable alternative to ICE vehicles,” says Crook.
But achieving competitive efficiency from low-carbon vehicles requires considerable planning and investment in infrastructure. Regarding biomethane or biofuel vehicles, companies will require either an understanding of their closest filling station or have a mobile or permanent filling station within their own operations.
The route planning between filling stations, and even the process of filling is more complex than with internal combustion engine vehicles, but Evri’s Hobhouse believes adjustments will be worth it. “Although these are new challenges for a business, they are certainly not insurmountable and, in the long-term, solid sustainable policies will increase business revenue as a consequence of attracting new business, and increasing the loyalty of current customers,” she says.
Pet shops pick Paack
Pet shop chain Miscota has taken on Paack to deliver its products across 23 cities in Spain using zero-emission vehicles. Miscota has some 25 years of experience and offers pet products through an omni-channel network.
Xavier Blanch, Miscota’s chief operations officer, explains that “when it comes to selecting partners, we look for them to go beyond providing an excellent service. Values, and in particular sustainability, are an essential aspect when choosing our suppliers. With Paack’s last-mile deliveries, we reduce our CO2 emissions and reaffirm our commitment to improving the lives of animals, people, and the planet – the mission of our corporate social responsibility programme.”
Paack is growing its electric vehicle network, increasing sustainable coverage in all the countries it operates in. In the UK, Paack offers business courier and parcel delivery with its own distribution centres and last-mile delivery stations. It recently took on a modern refurbished warehouse in Tamworth, West Midlands on a 15-year lease and is aiming to be a net zero carbon company by 2030.
David Jinks MILT, head of consumer research at ParcelHero, reckons distance is the main issue holding back electric vehicles. “The chief obstacle to their deployment in rural areas is range. Despite improving battery technology, fleets need to be stabled within a certain radius of the addresses they are delivering to for electric vehicle to be practical,” but he observes that “that’s another reason why we might see further growth of logistics depots across the UK in years to come.”
So, the drive for sustainability may be a factor in decisions to open more regional distribution centres. Indeed, Jinks asserts that postal and courier operators have opened more new premises than any other industry and outperformed the overall logistics sector growth. “Since 2011 the number of postal and courier depots and distribution centres has grown by an astonishing 147%, as Covid-19 restrictions fuelled a surge in demand for home deliveries.”
Yodel, for example, has a nationwide network of key national hubs located at Shaw, Wednesbury and Hatfield, along with a network of local delivery depots, and it recently announced a new site in Huyton, Merseyside to improve capacity and capability in the North-West. “The location of the distribution centre can have a profound impact on delivery,” says Yodel’s Moore.
Indeed, the profusion of distribution centres and depots is a reflection of the complex and speedy logistics required to fulfil orders as fast as customers demand. “Increased demand for fast deliveries has produced a need for more localised distribution centres, especially in urban areas,” says DHL’s Crook. “In any case, to implement an effective last-mile service, providers need to analyse their operations and optimise routes, allowing them to meet customer demand as well as environmental responsibilities.”
According to Fergal O’Carroll, CRO of Scurri, the main growth of distribution centres will be around the big cities. “In terms of the UK, that means hubs springing up around major cities like London, Birmingham, Manchester and Glasgow, for example. Companies that have logistics facilities outside of these hubs could experience some added complications, notably having to enforce earlier cut-off times for next day deliveries. This can put a strain on their operations and mean that some orders do not make it to customers within agreed parameters.”
Piggybacking into sustainability
The growth of delivery management platforms such as Scurri and ParcelHero mean that efficiencies and premises of the big operators are opening up to smaller retailers, and potentially smaller carriers looking to outsource certain jobs. Essentially, offering a piggybacking into the efficiency and sustainability that scale allows.
“Until recently, it was only larger retailers that could benefit from cheaper rates because they buy space in bulk from carriers,” says Jinks. “Today, platforms such as ParcelHero, and ParcelCompare enable smaller businesses to access couriers at the cheaper rates usually reserved for large customers, because the shipping platforms buy space in bulk.”
Jinks adds that delivery management platforms, such as Parcelvision, ParcelPerform, and Aftership, can also integrate retailers’ customer orders across a range of couriers, provide their customers with proactive, branded tracking updates via e-mail and SMS, and update carriers of new customer instructions without any human intervention.
Scurri’s O’Carroll believes it’s crucial for businesses to incorporate a multi-carrier shipping strategy. “We are aware that 86% of UK consumers prefer it when merchants provide a range of delivery options. It makes perfect sense to include more carriers and broaden the selection of shipping services offered – it provides flexibility for both the business and the customer while giving your business a competitive edge over your larger competitors.”
Doddle’s Englander agrees that the benefits for smaller businesses of taking on outside help to offer a better delivery service are compelling. He says that Doddle’s research showed that retailers who offer different delivery options, including out-of-home delivery points such as lockers or convenience stores can improve sales, average order value and NPS, with retailers who added out-of-home delivery options to their checkouts typically seeing at least one of these KPIs improve.
By taking on the services of a big-name carriers, smaller couriers can also take advantage of their investments in sustainable practices, and pass them on to their own customers. But that is only available because the bigger players have embraced the value of environmental objectives. “We believe cost cannot be the driving force behind investment in sustainability,” says DHL’s Crook. “Our approach is to invest in technologies in their earlier stages, to push the market forward, bringing benefits to the wider industry.”
Developments in tracking technology and route optimisation, along with improved options and communication with the customer, have no-doubt improved sustainability in home delivery by decreasing wasted road miles. But it’s encouraging that eliminating failed deliveries is now just a small part of environmental strategies.
It is clear emissions are a genuine concern for board members and even shareholders, with trials and pledges converting into investments in infrastructure and strategy. From designing depots to include electric vehicle charging infrastructure and planning regional route networks to allow shorter and alternatively powered journeys, to the wholesale adoption of electric vehicles, it seems the final mile is finally going green.