Last-mile emissions set to climb by 30 percent

by Inside Logistics Online Staff

Urban last-mile delivery emissions are on track to increase by over 30 percent by 2030 in the top 100 cities globally.

Without intervention, these emissions could reach 25 million tons of CO2 emitted annually by that date. Along with increased carbon emissions, traffic congestion is expected to rise by over 21 percent, the equivalent of adding 11 minutes to each passenger’s daily commute.

New research, The Future of the Last-Mile Ecosystem by the World Economic Forum, suggests that growing demand for e-commerce delivery will result in 36 percent more delivery vehicles in inner cities by 2030, leading to a rise in both emissions and traffic congestion.However, effective interventions do exist. For example, options that have the greatest impact on reducing CO2 emissions include greener vehicle use choices, such as switching to battery electric or – in the long term – hydrogen electric vehicles. Another intervention, dynamic rerouting, finds the best way to get from point to point through constant updates that reduce mileage and the time drivers need to deliver goods. Other solutions include pavement delivery by automated robots, or droids, and parcel lockers.

Deliveries get faster

Demand and offerings of increasingly fast delivery options continue to grow at a greater pace than other delivery options. Currently, same-day and instant delivery are the fastest-growing segments of the last-mile delivery environment, increasing at rates of 36 percent and 17 percent a year.

“Consumer demand for the convenience of online shopping and fast delivery is rising rapidly and companies are struggling to meet this demand with sustainable delivery options,” says Christoph Wolff, head of mobility at the World Economic Forum.

“Rising congestion and emissions from e-commerce delivery are already putting stress on city traffic patterns and this pressure will only rise from growing demand unless effective intervention is quickly taken by both cities and companies.”

For example, Walmart just made its same-day delivery option available for 75 percent of the population of the United States, and Amazon already delivers to nearly three-quarters of customers within 24 hours. In China, same-day and instant delivery make up more than 10 percent of the overall parcel deliveries, more than double the rate in Europe. These faster delivery options put a particularly heavy pressure on already strained city traffic.

Tackling urban delivery

The Future of the Last Mile Ecosystem analysis, done by the World Economic Forum, McKinsey & Company and the World Business Council for Sustainable Development (WBCSD), assesses 24 supply chain and technology interventions by developing an advanced analytics-based congestion simulation and quantitative model, resulting in concrete, quantified insights on how these interventions can help solve inner-city delivery challenges, as well as lowering CO2 emissions.

“The ‘last mile’ is a complex, interwoven topic as it involves many ecosystem stakeholders. We have always had trends affecting the last mile, but not at that speed and not in parallel, not at this global scale,” says Bernd Heid, senior partner with McKinsey & Company.

“We see numerous technology and delivery chain solutions working independently. Our research shows, however, that in an ‘ecosystem scenario’ in which both public and private players work together effectively, delivery emissions and congestion could be reduced by 30 percent until 2030 when compared to a ‘do nothing’ scenario, and technology can help to bring delivery costs down by 25 percent at the same time.”

Intervention examples and results include:

  • Battery electric vehicle and hydrogen electric vehicles. Even in scenarios driven only by consumer choice (not public-sector regulation), battery electric vehicles and hydrogen electric vehicles can reduce CO2 emissions by 16 percent and 24 percent, respectively.
  • Night-time delivery. Night-time delivery or delivery during adjacent times can reduce congestion by 15 percent and can be best achieved through company choice and regulation. This intervention includes night runs by mainly electric vehicles during off-peak traffic times.
  • Multi-brand parcel shops. Shops with packages from multiple delivery players improve consumer convenience and can ease congestion by five percent to 18 percent, depending on the scenario. Such shops have been piloted in the German city of Hamburg since 2015. However, they require logistics players to cooperate on retail space and build merged supply chains. Such a model would have a tremendous impact on the competitive dynamics in the logistics industry.

Impact of interventions

The best results from the model involve companies, regulators, drivers and citizens to contribute to the ecosystem and change behaviour.

“Sustainable urban freight is the economic lifeline of cities of tomorrow where access and emissions are regulated,” says Thomas Deloison, director of mobility, WBCSD.

“We need to act at systems level to find the technology, policy and business-related interventions which will make a healthy and attractive urban environment possible. We hope to inform insightful discussions for private and public players through the simulation findings in our report.”

“A multiplayer approach is critical for optimizing the decrease in congestion and emissions while also decreasing delivery costs,” says Richa Sahay, lead, automotive and supply chain and transport at the World Economic Forum.

“However, fully implementing such a scenario would require investment of approximately $12.7 billion for any city with around two million inhabitants by 2030. Generating insights and financing for such sustainable transitions is the next step of this initiative.”

In the next phase of e-commerce delivery work, the World Economic Forum will apply the impact analysis of this report in upcoming projects with the cities of Amsterdam and Singapore.