Last-Mile Focuses on Sustainable Shipping
[Stay on top of transportation news: Get TTNews in your inbox.]
The trucking industry has increased its focus on sustainability this year, mostly geared toward last-mile operations.
“Each year sustainability increases as a focus within transportation and this year has been one of the strongest yet,” said Jordan Webster, futures research analyst at Merchants Fleet. “We’re seeing both auto manufacturers and last-mile fleets move toward electrification.”
Merchants Fleet data shows electric vehicle sales were up 80% in the third quarter compared with last year. The fleet management company also found much of that has been focused on last-mile operations with companies like Amazon.com Inc., FedEx Corp., UPS Inc. and the Postal Service obtaining electric delivery vehicles.
“Unlike the last-mile space where delivery vehicles are generally small to medium trucks running shorter routes, freight must contend with larger vehicles running longhaul routes,” Webster said. “In order to support these types of operations, electric trucks need large, heavy and expensive batteries as well as access to public fast-charging on key shipping corridors.”
GM's BrightDrop EV600 electric van for FedEx. (General Motors via AP)
A survey by DispatchTrack, released Dec. 1, showed supply chain organizations became more focused on sustainability in last-mile operations between October and November. The delivery management software provider found that 77% of respondents are already prioritizing sustainability or plan to in the next year. That compared to 69% in August.
“One of the most interesting and a pleasant surprise was the sharp increase in interest in sustainability within our customer base and within the last-mile logistics industry,” said Shailu Satish, co-founder of DispatchTrack. “With our focus being on route optimization, DispatchTrack has always been interested in how optimization allows you to run a sustainable fleet. But sustainability has taken more of a center stage.”
Satish attributes this increased focus on a cultural shift toward environmentalism and economic headwinds. Customers are pushing for more sustainable shipping options, which can also be good for business operations because of increased efficiencies. These factors are coupled with technologies that have helped make sustainability more accessible.
“Telling your customers that we are sustainability focused is good for business,” Satish said.
UPS-founded Ware2Go has zeroed in on last-mile operations to bolster sustainability. The company operates an on-demand fulfillment network and integrated tech platform that enables merchants of any size to offer one- to two-day shipping. Its data shows 74% of consumers want greener shipping but also want one- to two-day deliveries.
“We made a decision in early 2021 that we were going to be carbon neutral on final-mile,” Ware2Go CEO Steve Denton said. “Our clients typically do anywhere between $5 million in gross merchandise sales a year to $250 million in gross merchandise sales a year. It’s important to them and it’s important to their consumers. The hard thing is how do you do it.”
Denton added sustainability can be really difficult for small to medium-sized businesses. Ware2Go in response made sustainability a standard part of its services instead of an option that costs more. He noted that it’s worth the margin hit to be able to deliver that for customers. He noted 66% of consumers are more likely to shop from a merchant that offers sustainable shipping.
“You’ve got to offer it as an option to be in the consideration set for a large portion of the population,” Denton said. “But how do you do that and still offer one to two days? Now, our business model lends itself to reducing a carbon footprint. Because getting a truckload of goods into a warehouse that’s closer to your consumers is certainly going to be a smaller footprint.”
The transportation sector has become increasingly more interested in sustainability beyond just last-mile operations. The growing push by customers, government initiatives and business efficiencies have all been pushing the sector in that direction.
“Sustainability increasingly became the center stage for logistics teams for many reasons, from ambitious corporate climate commitments to increasing regulatory pressures and federal incentives to mitigate climate change,” said Kiana van Waes, corporate sustainability analyst at Convoy. “For the trucking industry, shippers are looking at eliminating empty miles through efficient routing, transitioning to alternative fuels and adopting fuel cell, battery-electric and hydrogen trucks. The trucking industry was transformed by rules, regulations and disclosure in 2022.”
UPS ranks No. 1 and FedEx No. 2 on the Transport Topics Top 100 list of the largest for-hire carriers in North America. Amazon ranks No. 19 on the TT Top 100 list of the largest private carriers.
Want more news? Listen to today's daily briefing below or go here for more info: