The home stretch: decarbonising last-mile logistics

8th October 2020

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Dave Oldaker

Emily Gould looks at potential solutions to the increasing problem of delivery vehicle emissions

In January 2020, the World Economic Forum's report The Future of the Last-Mile Ecosystem forecasted that, by 2030, the number of delivery vehicles in cities will increase by 36%, leading to a 32% rise in emissions and 21% increase in congestion. This issue has been amplified by the pandemic, with consumers relying more than ever on online and delivery services; online shopping in the UK has increased by nearly 20%. We could see this rise further as the industry 'builds back better', with improved supply chain resilience and greater emphasis on business-to-consumer (B2C) markets. How can parcel carriers manage rising customer demand and expectations while also reducing emissions and congestion and supporting the UK's recovery?

A growing issue

E-commerce has grown significantly in recent years, particularly in the B2C market. According to RetailX's United Kingdom 2020: Ecommerce Country Report, this market is expected to be worth €222.5bn in the UK by the end of 2020 Рan 11% increase on 2019. With major factors such as COVID-19, Brexit, climate change and other disruptive forces impacting the way we live and how we move goods through the supply chain, logistics is crucial important to the UK's businesses, customers and economy.

E-commerce company Wunderman Thompson Commerce reported that, in the UK, online purchasing accounted for 62% of all shopping during lockdown, compared to 43% before the pandemic; only 16% of people expect their pre-lockdown shopping habits to return when the pandemic ends.

National and local lockdowns have highlighted our reliance on logistics for home delivery services. When we consider this together with environmental concerns and consumers' expectations around delivery times and options, should we be attributing a greater monetary value to delivery services – one that is passed on to the customer? Or do we need to reset customer expectations to allow for a more sustainable system?

Due to fierce competition among parcel carriers and just-in-time models, customer expectations were largely being met before the pandemic. The pandemic placed a lot of stress on supply chains, and the increase in online orders led to longer delivery times, fewer options and limited real-time information. The continued shift away from the high street generates greater opportunity for last-mile delivery solutions.

The last mile

The 'last mile' is defined as the movement of goods from a transportation hub to their final destination. Last-mile deliveries are traditionally served by two vehicle types: large vans that travel in and out of cities with a high volume of parcels, and small vans operating around cities and towns. If we are to tackle congestion and poor air quality, alternatives need to be introduced. Some UK cities are introducing Clean Air Zones, and there is to be significant investment in walking and cycling as part of the country's post-COVID-19 green recovery. We have also seen many authorities re-allocate road space to active travel modes in order to allow for social distancing, and this has restricted or stressed the road network. How will the logistics industry respond, and how will government encourage a shift to more sustainable solutions?

Although the parcel delivery market is dominated by diesel vans, it has diversified in recent years, with a range of modes and services emerging. These include electric vehicles, drones, autonomous delivery bots, parcel lockers and drop-off points. The market has also adopted walking, cycling and light-powered delivery solutions, such as cargo bikes, e-cargo bikes, e-walkers and e-micro vehicles. These are most applicable for urban last-mile deliveries, with payloads ranging from 50-500kg. For example, DPD's Paxster, a light-powered electric vehicle classified at European level as a light quadricycle, has a payload of 240kg but is restricted by its 1,000-litre volume, meaning it is best suited for delivering large numbers of small parcels. Fernhay's eQuad and eWalker solutions pick up containers from a drop-off near a city centre to provide last-mile delivery, and can be reloaded throughout the day. The drop-off could potentially be on the edge of a Clean Air Zone, reducing city-centre emissions and congestion while also meaning a business will not have to pay congestion and emissions charges, boosting its profitability.

A trial conducted by UPS and Fernhay in Dublin in July 2020 demonstrated this application, with mini-urban consolidation centres optimising parcel deliveries in the city centre. UPS reports that the Dublin trial removed five diesel vehicles from the road, reducing carbon emissions by up to 45%. The eQuad meets legal regulations for e-bikes and can therefore be used in cycle lanes; due to its narrow width (840mm) it is found to interact better with pedestrians and with other cycle lane users, as well as being able to manoeuvre through narrow city streets more easily.

Playing catch-up

These last-mile delivery solutions provide an opportunity for logistics companies to decarbonise operations, as well as reduce local air pollution and congestion and encourage active travel. However, regulators struggle to keep pace with innovation, and many new innovations in this market are challenging the status quo. These solutions blur the traditional lines of vehicle modes and vehicle licensing. For example, the eWalker is not currently allowed on pavements, although Dublin City Council granted permission as part of the trial in order to evaluate its application and performance ahead of any regulatory change. Symmetry can be seen in other areas of transport such as e-scooters, which are only just being trialled on roads and in cycle lanes in the UK. If the government is going to achieve its net-zero targets by 2050, innovations such as the eWalker should be supported by regulatory reform and funding stimulus. Currently, there is limited funding available from the Department for Transport for businesses trialling alternative last-mile urban delivery solutions, and an absence of funding for the charging infrastructure that may be required for electric last-mile logistics.

There would also be benefits for urban last-mile logistics if cities were operating platforms to provide real-time data on traffic flow, emissions and dynamic traffic interventions and regulations that could inform when and how deliveries are completed. This could help identify alternative routes and times for 'non-van' deliveries. Other opportunities and policy mechanisms could also be introduced to encourage a shift to more sustainable logistics, taking a more data-driven approach. These mechanisms could include dynamic routing, freight lanes, kerbside charging, shared multi-modal micro-hubs, load pooling and collaborative procurement.

Within the Cycling and Walking Plan for England, published in July 2020, the government committed to extend the e-cargo bike grant programme as part of its wider programme to decarbonise deliveries, set out in its position statement on last-mile logistics and the Transport Decarbonisation Plan. However, to tackle the issue of moving goods around our cities, and the impact it has on our health and wellbeing, greater efforts to transform last-mile deliveries are required. We need cities to act, and to enforce tighter regulations. Policymakers must keep pace with viable new technologies and operating models, in order to ensure we reach net-zero and empower transport and city planners to design more liveable cities.

Dr Emily Gould leads on Cleaner Transport for Amey Consulting.


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