Early days in net-zero effort
13 July 2021
As logistics changes, so do the environmental challenges. We look at emerging green questions, such as the proliferation of micro-fulfilment centres, ponder the impact of the pandemic and ask if the logistics industry measures up in calculating its carbon footprint.
BY TAKING bold steps to transform how last-mile delivery ecosystems operate, post and parcel organisations, retailers and delivery companies could reduce harmful emissions and traffic congestion within cities, according to a new study by Accenture undertaken in collaboration with Frontier Economics.
The report, The Sustainable Last Mile: Faster. Greener. Cheaper., found that using local micro-fulfilment centres (MFCs) across Chicago, London and Sydney to fulfill 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 16%-26% by 2025. The model excluded the impact of fleet electrification.
A flexible logistics solution for e-commerce, MFCs enable 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 organisations with operational benefits while simultaneously creating significant positive environmental and societal impact, according to the study.
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 traveled by delivery vehicles. Chicago’s delivery traffic could also be reduced by 13%, equal to 127 million fewer miles travelled across Cook County. For Sydney, the report forecasts about a 2% reduction in delivery traffic, or about 16 million miles of reduced vehicle traffic across the Greater Sydney region.
“The carbon footprint of the last mile has long been an environmental and societal challenge,” said André Pharand, a managing director at Accenture who leads the company’s postal & parcel practice. “It’s time to take action and make the last mile supply chain more efficient, less expensive, and more sustainable. Organisations with innovative local fulfilment strategies and that lead in digital adoption and sustainable business practices will become tomorrow’s industry leaders.”
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. 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 centres, further contributing to reduced consumer traffic volumes and vehicle emissions.
To help capitalise on the opportunity, the report identifies key strategies for transforming last-mile delivery practices. These include governments and retailers incentivising 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 organisations.
The study also found that deploying route optimisation technologies alongside MFCs could reduce delivery traffic by an additional 3% to 4% across the three cities.
“No single entity can solve the challenge of last-mile delivery alone,” Pharand said. “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.”
The food supply chain has been a huge focus since the start of the pandemic, with real worries about continuity of supply. But While meeting the challenges of Brexit and the pandemic are high on the cold chain industry’s agenda, Cold Chain Federation chief executive Shane Brennan says the main focus going forward will be on the drive for net zero.
“Pre-pandemic, the UK cold chain industry was already a buoyant and growing industry with demand for cold storage outstripping supply, attracting investment from all over the world. The events of the pandemic have underlined the importance of our safe, resilient and flexible cold chain, and have highlighted the demand for greater cold storage capacity in the UK. Our industry is in a good position to continue growing and modernising, but any business that does not make net zero integral to its plans for the future will soon find itself left behind,” explains Shane.
“Stringent government regulation and customer requirements will increasingly compel cold chain operators to improve carbon performance and reduce emissions, but the striking opportunities to operate more efficiently, cut costs, reduce the tax burden and differentiate from competitors are already driving change too.
“There are plenty of actions that cold chain operators can take immediately to improve carbon performance and prepare for a net zero future, but the data, technologies and government support for the medium and longer term are not yet all in place. The Cold Chain Federation’s Net Zero Project is bringing our industry together with net zero experts, engineers and Government so that together we can set out a roadmap towards a net zero UK cold chain which is ambitious but realistic.”
Hatmill consultant Joe Metcalfe agrees there will be a renewed focus on sustainability as we emerge from the pandemic.
“Businesses are re-engineering warehouses to lower costs and reduce resource in pursuit of net-zero energy. Carbon-neutral transport is another key trend and represents one of the greatest challenges when looking at new warehousing sites; what infrastructure will you need to support these new vehicles? This could include different loading equipment, onsite fuel storage (or even production) or vehicle docking and recharging stations,” explains Joe.
“Planning to be carbon neutral in 10 years means businesses should be planning now – it always takes longer than people think because there are always so many knock-on impacts to consider. Our advice is to start planning now. Investigate the sorts of technologies that could transform your business and start to do small pilots to check their feasibility and payback.”
If you don’t measure carbon emissions, how can you reduce them? A survey undertaken for the Foundation for Future Supply Chain in collaboration with its research partner, Ti Insight, has found that out of 184 of the world’s largest transport and logistics companies, only 105 measured and published their carbon emissions, just 57% of the total.
John Manners-Bell, writing for the Foundation for Future Supply Chain in the white paper The Challenge of Measuring and Meeting Climate Change Targets says: “Measuring emissions is a fundamental step that needs to be taken before greenhouse gas reduction programmes can be initiated. Given that the transport industry’s success in reducing emissions will be critical to meeting governmental net-zero targets, the fact that such a large proportion of industry leaders have yet to start measuring their emissions is of major concern.”
There are some encouraging signs though, as in 2016 just under a quarter of logistics companies were publishing carbon emissions data (23%), so there has been significant improvement.
Manners-Bell concludes: “Most sectors of the transport and logistics industry are dominated by large numbers of small and medium-sized businesses, many of which will need support if they are to shoulder the additional cost burden of measuring emissions, setting targets and implementing carbon reduction strategies. These costs are significantly easier for big businesses to absorb and this could be an additional way in which to differentiate their operations from smaller competitors.
“Despite this, there seems to be a reluctance on the part of many corporate managers to embark on the net-zero journey, a position which is increasingly untenable. If more companies do not embrace the need to measure emissions, they will increasingly find themselves at a disadvantage when bidding for new business, or looking for new capital from investors becoming more sensitive to environmental considerations. Furthermore, governments around the world will undoubtedly regulate, or extend existing regulations, for mandatory disclosure.”