As e-commerce packages zip across the country from warehouse to doorstep, the number of emissions continue to grow. The king of the genre, Amazon’s (NASDAQ: AMZN) Jeff Bezos, claims that e-commerce is more environmentally friendly than in-store shopping.
“Amazon’s sustainability scientists have spent more than three years developing the models, tools and metrics to measure our carbon footprint,” Bezos wrote in a shareholder letter in early 2020. “Their detailed analysis has found that shopping online consistently generates less carbon than driving to a store, since a single delivery van trip can take approximately 100 round-trip car journeys off the road on average.”
Even still, there is no question that many Americans are concerned about the impact their shopping habits are having on the environment. According to EcoCart, which provides a carbon offset option for online shoppers on the websites of hundreds of retailers, about 25% of those presented the option make the eco-friendly choice.
E-commerce platform Shopify (NYSE: SHOP) said greenhouse gas emissions in the atmosphere are at their highest levels in history, sitting at 400 parts per million (ppm). For comparison, CO2 sat at 280 ppm prior to the Industrial Revolution. The average e-commerce sale produces 1.4 kg of emissions, according to MIT.
Shopify has committed to investing at least $1 million each year into carbon sequestration, which is the “process of capturing and storing atmospheric carbon dioxide,” according to the U.S. Geological Survey. Etsy, similarly, announced in 2019 that it would pick up the tab on high-quality carbon offsets for consumers using its site. The e-commerce platform estimates that the cost to do so is less than 1 cent per package.
But there is more brands can do, and a new report from Accenture (NYSE: ACN) and Frontier Economics highlights how the use of micro-fulfillment centers (MFCs), more efficient vehicles and data can impact last-mile delivery emissions.
“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 and parcel practice. “It’s time to take action and make the last-mile supply chain more efficient, less expensive and more sustainable. Organizations with innovative local fulfilment strategies and that lead in digital adoption and sustainable business practices will become tomorrow’s industry leaders.”
The Accenture report, “The Sustainable Last Mile: Faster. Greener. Cheaper.,” studied the use of MFCs in Chicago, London and Sydney. It found that filling just half of the e-commerce orders from an MFC in those cities would significantly reduce traffic volume and delivery vehicle-related emissions between 16% and 25% by 2025.
The report noted that MFCs allow for forward positioning of inventory and enable in-person pickup options. They include in-store click and collect points, automated storage locker facilities and stand-alone micro-warehouse facilities.
London, the study found, would see the greatest reduction in delivery traffic at 13%, equal to about 320 million fewer miles driven per year. Chicago would see a 13% decrease, saving 127 million miles, and Sydney would see a 2% reduction or 16 million miles.
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).
If no actions are taken, Accenture said the world would see a 32% increase in carbon emissions from urban delivery by 2030.
When the company factored in route-optimization software, it found delivery traffic would decline an additional 3% to 4% in each city.
“The whole last-mile ecosystem — post and parcel organizations, retailers, delivery companies, governments and consumers — is at a tipping point. Go one way and it can create a truly sustainable last mile — faster, cheaper and greener. Go the other way and things worsen unchecked,” the report said.
“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.”
Accenture points to three “fundamentals” to create a more sustainable last mile. These include incentivizing greener choices, rethinking asset use and harnessing data and analytics.
The company suggested e-commerce retailers provide incentives and options to buyers to choose greener options. The report noted that 43% of consumers said they would choose a retailer that offered sustainable delivery options. In its modeling, Accenture determined that if all customers within sixth-tenths of a mile of a fulfillment center walked to pick up their packages, it would mean 14% of London’s deliveries would be zero emission on the last mile.
“Incentivizing greener choices doesn’t just extend to consumers. City and national governments and planners must weigh the trade-offs they can make to incentivize delivery companies to invest in greener fleets, enable the circular economy and develop greener route management practices,” the report said, adding that cities should invest in charging infrastructure to make it easier for delivery firms to adopt electric vehicles.
Accenture also said companies and cities should rethink how assets are used. For instance, in London, the city is planning to reuse underused spaces to aid Amazon fulfillment. Delivering packages from the new hubs to the local neighborhoods with pedestrians and bike couriers will remove 85 delivery vehicles from London’s streets each day, the report found.
The report also suggested delivery companies work together to consolidate packages for all carriers on city outskirts, enabling a single vehicle to enter the city to make all deliveries rather than multiple vehicles.
Finally, the report said freight planners need to better harness data to improve planning and routing. It noted a startup company funded by DHL that does this. Greenplan uses algorithms to factor in the carbon emissions of each vehicle type as well as range limitations of electric vehicles to create the most efficient vehicle and route for that delivery.
“The ecosystem accelerated sustainable last-mile practices during the pandemic out of necessity. Now is the time to drive more meaningful and lasting change by design,” the report concluded. “There’s no turning back from the changes that the pandemic made to the last mile. Consumers’ shopping habits are different. Supply chains are different. Retail footprints are different. The last mile can be different too — much, much greener — if the ecosystem comes together to act on sustainable last-mile practices.”