Skyrocketing demands for e-commerce have supply chains scrambling to adapt and transition to more sustainable operations. A DHL white paper released Thursday explores the technologies that need to be further developed and the ways that e-commerce has a net-positive impact on the environment.
“This research provides practical insights for those e-tailers that wish to lead on environmental issues on where they should focus their energies within their supply chain,” Greg Hewitt, CEO at DHL Express USA, said in a release.
While COVID-19 accelerated the rising demand for e-commerce, Hewitt said, “the last 18 months have also underscored the importance of resilience and sustainability in the global supply chain. Our e-commerce customers have already demonstrated their ability to build innovative, disruptive businesses and to be one step ahead of consumer expectations.”
The DHL paper, “ECO-mmerce: How online retail can build the sustainable supply chain of tomorrow,” highlights five key areas of importance: last-mile delivery, first- and middle-mile delivery, warehousing, packaging and returns.
“I think what’s first and foremost is we recognize at our highest levels that transportation and logistics have a big impact on the environment,” Hewitt said.
E-commerce generally increases demand for fast transportation, packaging, returns and warehouse space close to consumers, but it can also replace several personal trips to stores. “Sustainable e-commerce is not any oxymoron,” the paper noted.
A Prologis and MIT report released after the 2020 peak season estimated that one full standard delivery van could replace more than 100 individual trips to the store in terms of greenhouse gas emissions.
“We at DHL Supply Chain see this as a historic opportunity to build more sustainable supply chains from the bottom up, by reengineering processes with efficiency and emissions reductions in mind, taking advantage of new, greener technologies at all stages of the order cycle and exploring innovative ideas in areas such as packaging and the circular economy,” Kraig Foreman, president of e-commerce at DHL Supply Chain North America, said in a statement.
Electric vehicles, bikes and more to take over last-mile delivery
The paper said that electric vehicles (EVs) will become cleaner as the grid transitions to more renewable energy. It said that EVs are part of the sustainable e-commerce solution, noting that route optimization, load pooling, consolidated drop-off points and autonomous vehicle advancements could all help decarbonize the last mile.
The release said that 10% of the DHL Express last-mile delivery fleet runs on alternative fuel sources, including a fleet in Manhattan that is 100% green.
In a previous interview with FreightWaves, Hewitt said DHL Express was having success in a Miami pilot project, replacing delivery vans with electric-assist cargo bikes 1-for-1 in densely populated urban areas. E-cargo bikes provide many parking, air quality and emissions- and noise-reduction benefits for cities.
First- and middle-mile delivery
Advancements in EV technology and sustainable aviation fuel were listed as some of the major challenges in decarbonizing the first and middle mile. However, investments are growing, and the increase in parcel volumes allows aggregated networks to optimize freight efficiency.
As of Jan. 1, DHL Global Forwarding’s less-than-container load shipments in ocean freight have been decarbonized by switching to sustainable marine biofuels.
Automation and renewable energy to green warehousing operations
As the cost of renewable energy decreases, the shift to wind and solar energy “will be strengthened,” the paper said. DHL Supply Chain’s contract logistics unit runs its warehouses on 100% renewable energy in the U.S. and works to reduce emissions and implement green solutions where it’s feasible, according to the release.
Autonomous and electric forklifts and material-handling technology can increase the efficiency and decrease emissions of activities such as sorting and picking, the paper said. In addition, developing less energy-intensive construction materials such as cement would have major impacts in warehousing sustainability.
Sustainable packaging solutions
The paper said the increase in efficiency of combining deliveries compared to personal consumer trips to the store outweighs the impacts of increased packaging. However, there are still many initiatives to create a circular economy and use recyclable or reusable materials.
A common goal for logistics and retail companies is to minimize packaging and waste without sacrificing the safety of the products. Sustainable packaging is not a trend but a consumer expectation that supply chains are actively acting to address, according to the paper.
Adapting to increasing return rates
As online shopping surged in 2020, the rate of returns also increased. A 2020 Optoro Impact Report cited in the DHL paper said that $428 billion of inventory was returned in 2020 in the U.S., leading to 16 million metric tons of CO2 emissions from transporting the returns. It also said 5.8 billion tons of returned items ended up in landfills in 2020.
“While e-commerce is associated with a higher level of returns, more sophisticated sales interfaces, data analytics and other technologies can help to reduce the overall level of returns, while optimized transportation and recycling solutions can reduce emissions,” the paper noted.