The pandemic instigated a boom in online ordering, yet contrary to popular assumption, the carbon footprint of last mile delivery got smaller, despite the increase in delivery vehicles. Why? Because the pandemic radically accelerated local fulfilment – the strategy of storing stock as close as possible to consumers. To achieve this, companies utilised real-time insights into consumer preferences and purchasing patterns to innovate and optimise inventory and route management – thus resulting in a smaller carbon footprint.
This surprising outcome, however unintentional, pays homage to the power of data – and its potential to create more sustainable practices across the entire freight and logistics industry.
With COP26 rapidly approaching and the IMO announcing its sustainable targets only a few months ago, this year is a turning point for the freight and logistics sector. With no interventions, we can expect an inevitable jump in carbon emissions (32% from urban delivery traffic alone by 2030). However, with collaborative action hinged around the power of data, the industry could implement faster, cheaper, and greener practices.
Across the sector, there are two key uses of data that can help boost sustainable activities:
- Data and Locations – Route Optimisation
As mentioned, data and analytics lie at the heart of local fulfilment. By predicting who will buy what, where and when, retailers can stock the right products locally. An economic model created by Accenture and Frontier Economics shows local fulfilment centres could reduce last-mile emissions by up to 26% by 2025 in Chicago, London and Sydney. The closer the fulfilment centre to the consumer, the more feasible alternative delivery modes, such as bicycle, become – much more sustainable than highly polluting air freight and shipping. In fact, our model shows that when route optimization is applied with local fulfilment, delivery vehicles drive 87 million miles less. Developing the necessary insight would require analysing a mix of internal and third-party data, social listening and monitoring local trends and events. Cross-ecosystem data sharing via the cloud is key to making it happen.
Data based algorithms can also help drive carbon reduction across ocean shipping and freight. When combined with enhanced tracking capabilities, these algorithms can be used to evaluate factors such as weather, bunker polluting level, and port congestion to guide operators on the optimal route and speed for their vessel/aircraft, thus enabling the most energy efficient mode of transportation possible. We’re already seeing leading shipping groups starting to do this, following targets to cut millions of tonnes of CO2 annually.
- Data and Consumers – Incentivising Greener Choices
Research shows that nearly half of consumers are more likely to choose retailers that offer more sustainable delivery options. To capitalise on this, retailers should partner with logistics companies to provide information on delivery choices and transparently identify the environmental impact of each. By adding value or discounts to consumers who choose to pick up their own packages at nearby fulfilment centres, the industry could further incentivise more sustainable choices.
Incentivization should also go beyond the business to consumer route. Governments could offer tax benefits to shippers that use sustainable fuel, and companies that invest in greener fleets or develop greener route management practices. This kind of bigger change would play a significant role in making sustainable freight and delivery the norm.
Now is the time to commit to net zero, but ensuring positive progress is made requires a willingness to gather and share data in innovative ways.
Of course, there are other initiatives that are not simply hinged around data that will also help accelerate the route to net zero. One example is incentivising companies to share its assets (people, infrastructure, technology, and vehicles) with its competitors, in order to reduce the overall carbon footprint of the industry from redundant networks. While such initiatives are extremely important, it is data-based technology that has the potential to transform the industry at a large scale, with the least amount of manpower and human intervention.
I believe that harnessing data and analytics will characterise the future of the industry and ensure that freight and logistics – from first to last mile – will be able to deliver on its net-zero commitments.
by Sarah Banks, Managing Director, Global Freight & Logistics Lead, Accenture
 World Economic Forum, “The Future of the Last-Mile Ecosystem,” January 2020 at https://www.weforum.org/reports/the-future-of-the-last-mile-ecosystem