The World Economic Forum last December published a white paper “Transforming Urban Logistics: Sustainable and Efficient Last-Mile Delivery in Cities”, which addressed the challenges and opportunities of increased demand for urban deliveries by businesses and consumers. The study focused on the stakeholders involved in urban deliveries including local governments, retailers and delivery companies and called to adopt greater sustainable practices, increase infrastructure investment and pioneer innovative solutions.
Online shopping and e-commerce have grown exponentially since 2020 where clothes, home supplies, groceries and takeaway food – virtually everything can be delivered to homes or businesses giving benefits of convenience and choice. Delivery vehicles with multiple operators visiting the same homes and businesses across cities are a common sight and with retail sales expected to grow 39% by 2027, reaching over $8 trillion annually according to the paper, it becomes imperative to manage the impact of delivery traffic.
However, there is a cost beyond the monetary associated with this convenience. Traditional delivery fleets generate emissions and contribute to congestion, which can also have negative impacts on health, community and economy. According to the report, speed of delivery is a key differentiator for e-commerce businesses. Consumers use delivery speed as a factor in choosing where to shop, with delivery to the home still widely preferred to the alternative out-of-home options. Given the current status, there is an expected 60% average increase globally in the number of delivery vehicles on urban roads by 2030.
While urban planners focus on creating more sustainable and liveable cities by reallocating road space to prioritize public transport and active travel, emerging cities with poor public transport and high car use are already struggling with severe congestion – set to worsen with the growing number of delivery vehicles. With number of delivery vehicles set to grow, the report finds that the current approach could add an additional five minutes to every daily commute and delivery vehicles could spend more than half an hour extra on the road every day.
Emissions from last mile deliveries are projected to rise by 60% by 2030, accounting for 13% of total carbon emissions in cities, resulting in reduced air quality directly affecting people’s health and causing additional stress. These trends could impact the world’s fastest-growing cities like Bengaluru in India with their still evolving public transport systems. In order to improve the liveability of cities, delivery and logistics operations need to be fully integrated into the urban ecosystem, says the report.
Collaboration across the stakeholder ecosystem will be crucial in minimizing the impact of last-mile deliveries on urban liveability. The report cites a number of innovative approaches being implemented by local governments and their stakeholders. One such approach emerging is a Pick-Up and Drop-Off (PUDO) network which includes parcel shops and lockers as an alternative to traditional front-door delivery. This approach reduces failed home deliveries where couriers must take a package back to the depot and attempt delivery the next day. It thus eliminates extra vehicle miles and helps to address emissions and congestion.
Another approach is White Label Deliveries where a single operator serves a neighbourhood, with other delivery companies handing off their consignments to this operator. In effect, rather than multiple retailers dispatching their vehicles to the same area, micro hubs can consolidate deliveries in specific neighbourhoods or street networks. This approach helps sidestep the typical replication of logistics infrastructure, including fleets and delivery journeys, where multiple couriers could visit a single home in the same day.
Combining electric vehicles with micromobility fleets like electric bikes, enabled by micro hubs, can reduce emissions by up to 93%, says the study. The smaller physical footprint of bikes also aids in using public spaces more efficiently. Ground-based and aerial drones also present opportunities to free up busy streets, potentially reducing congestion by up to 13% and helping to combat emissions.
Smart kerbsides are another option. Kerb space can be managed more effectively by deploying technology that dynamically allocates certain uses at different times to improve traffic flow, reduce congestion and improve user experience. Delivery vehicles spend an average of 30 seconds per delivery looking for parking spaces, according to the paper. Strategically planned parking zones for deliveries could therefore reduce congestion by 3% and carbon emissions by 9%.
While the challenges of last-mile logistics are significant, opportunities to create more efficient and sustainable delivery systems are within reach, says the study. The three strategic pillars of technology (with data), innovation and collaboration need to be adopted by stakeholders to enable change and ensure that urban logistics contribute to the liveability and sustainability of cities.
The study assigns initiatives to local bodies and private players. Local bodies need to play a pivotal role in promoting sustainable last-mile deliveries and their responsibilities include strategic planning to ensure the logistics industry are an important consideration in urban planning. They also need to regulate the use of public infrastructure by last-mile operators, promote innovation by developing shared infrastructure and making space available to pilot logistics projects. The study recommends this can be achieved with dedicated logistics functions and streamlining of regulations and policies that support their rapid adoption. Facilitating data and knowledge-sharing is another local body initiative.
Private sector players should focus on adopting initiatives and operating models such as rescheduling deliveries to balance demand for road space, using cross-docking, collaborating with environmentally responsible logistics providers and sharing resources with other businesses recommends the paper. Data integration with public sector organisations, innovation and infrastructure development, investing in micro hubs and parcel lockers to streamline operations and reduce congestion and carbon emissions are other initiatives. Private players need also to collaborate with OEMs in the supply chain to develop electric fleets for the purpose of urban last mile deliveries.