U.S. e-commerce sales topped $1 trillion for the first time in 2022, representing 23.8% of all retail sales growth last year. But with all that online shopping — which saw a major spike during the COVID-19 pandemic — came a proportional surge in package deliveries.
According to data from Statista, Amazon delivered 4.75 billion packages in 2021. This is more than double its 2019 delivery volume, and six times the number of packages the online retailer delivered in 2018. Other major retailers are seeing similar growth. Target delivered 26 million packages in 2022 and aims to add six package sorting facilities by 2026 and increase deliveries to 50 million by the end of 2023.
Logic follows that more packages being delivered (26 billion in the U.S. in 2021) means more delivery vehicles on the road. Over the last few years, this increase has led environmental groups, consumers and manufacturers to give more attention to how e-commerce is contributing to carbon emissions and pollution.
Thankfully, solutions exist to help alleviate these issues, and crowdsourced delivery is leveraging many of them. From batched and routed deliveries to increased electric vehicle (EV) adoption, new approaches are helping logistics companies and their customers reduce the last mile’s disproportionate impact on the environment.
Consumers support businesses with ESG claims
As with most other retail business decisions, understanding the value of green logistics in general, and EVs in particular, starts with looking at consumer sentiment.
Consumers are showing a growing affinity for companies that support sustainability through environmental, social and governance (ESG) initiatives. In a 2020 McKinsey survey, more than 60% of American consumers said they’d pay more for products with sustainable packaging. Further, 78% of respondents to a NielsenIQ survey said that a sustainable lifestyle is important to them. The data bears out in actual consumer activity. In the last five years, products making ESG-related claims averaged 28% cumulative growth, compared with just 20% growth for products with no ESG claims.
Translating ESG demand to delivery
With these statistics, it stands to reason that consumers would be further inclined to support businesses that also offer environmentally friendly delivery methods. And retailers, ever poised to give their customers what they want, would presumably look for ways to add green logistics into their supply chains.
Many retailers have implemented other green options to reduce the number of overall parcels being delivered, the frequency of deliveries and the number vehicles used to transport them. These include financial incentives like dollar-off rewards for customers who agree to wait a few extra days to have multiple orders delivered all at once.
On the supply chain side, logistics providers are also making it easier for retailers and their customers to make a positive environmental impact. UPS, for example, uses fuel-reduction strategies for its 110,000-vehicle ground fleet and offers senders the opportunity to analyze their supply chain’s carbon footprint and look for ways to improve their environmental impact.
Crowdsourcing gives senders new ESG opportunities — including EVs
Logistics platforms like Roadie are also making inroads in sustainability. The company was honored in 2018 for its efforts to blend sustainability and commerce through crowdsourced delivery. As the brand has matured, so has its ability to enable its customers to complete their last-mile deliveries with greater environmental efficiencies. Roadie’s last-mile solutions like batched and routed deliveries reduce the number of vehicles on the road, along with their associated emissions. From a packaging materials standpoint, drivers on the Roadie platform can accommodate unpackaged orders (deliveries and returns), so both senders and customers can feel good about reduced packaging waste.
This spring, Roadie is unveiling new ways for retailers to minimize their carbon emissions by combining its consolidation and optimization capabilities with EVs for last-mile delivery. The new Roadie Green™ program lets senders reduce total miles driven while also allowing them to request an electric vehicle for their deliveries. Currently, Roadie Green™has signed-up and certified over 1,000 independent delivery drivers with electric and hybrid vehicles to handle these gigs. It is continuing to onboard even more EV drivers across the country for the pilot program.
Inspired by brands like Pilot customer Y that have corporate sustainability goals, the new Roadie Green™ solution lets senders request an EV for their deliveries. The platform then balances these requests by prioritizing EV drivers when available, while ensuring that senders’ deliverability standards are met. However, if choosing an EV would put the delivery window at risk, the platform will deprioritize the EV request. Additionally, some extra-large orders may require a non-EV vehicle. Since most drivers on the platform drive passenger-size vehicles, the order being delivered must first be able to fit inside the available EV vehicles.
Roadie Green™’s industry-verified reporting methodology and metrics also allow senders to track last-mile carbon emissions and better understand the impact of their reduction strategies. This makes it easier to measure and report progress toward ESG goals. Roadie Green™ senders can receive standard and customizable reporting based on what stakeholders want to see, leading to streamlined disclosure and more transparency.
EVs begin to overcome adoption objections
Roadie Green™ and the Roadie platform both have an opportunity for growth as EV adoption increases. Last-mile delivery accounts for as much as half of CO2 emissions from e-commerce delivery vehicles, according to a report by the Clean Mobility Collective, and EVs are an ideal option for reducing that figure.
Up to now though, the cost of EVs has been prohibitively expensive for both individual drivers and business fleets. According to the same report, last-mile logistics account for 40 to 50% of delivery costs. But adding expensive electric vehicles to existing fleets would only increase that percentage and drive up shipping fees. Retailers know this is a big no-no among consumers, more than half of whom abandon their carts when delivery fees exceed what they’re willing to pay. Add to this the inaccessibility of vehicle charging ports, and EV adoption has started out slow.
Thankfully, the opportunity for EV profitability is increasing. Recent insights from Kearney indicate a profitability tipping point in which EV prices are coming down, and logistics companies can help scale up their adoption more easily. According to the Kearney report, “With these price reductions, we have attained a point of parity where EVs are no longer a niche product, but rather one that can compete with traditional internal combustion engines vehicles on price and win.”
A deeper dive into EV profitability confirms this. The National Automobile Dealers Association indicates that EVs are about 15% more expensive to own and operate over the first five years. However, a recent life-cycle analysis of EVs in B2C e-commerce found that, within an eight-year time frame, EVs were both economically and environmentally beneficial. From an environmental standpoint, EVs decreased greenhouse gas emissions by 17% compared to ICEVs when driven 20 km per day (12.4 miles), and by 54% for 120 km per day use (74.4 miles).
Charging port accessibility is also increasing. As of 2020, the number of U.S. charging ports reached 32,000, and an additional 19,000 were added between 2021 and April of 2023.
Bringing EVs and sustainable shipping under the ESG umbrella
While electric vehicle adoption remains low (less than 10% in the U.S.), it’s certainly expanding among large business fleets. Amazon, Best Buy, IKEA and PepsiCo are among retailers already transitioning to electric fleets, alongside service providers like Comcast and Verizon. Roadie is excited about the unique opportunities Roadie Green™ brings to the table for both retailers and their customers. By leveraging route consolidation methods, unpackaged deliveries and returns, and specifying EVs more frequently in the last mile, retailers can make progress on their environmental goals without an expensive investment.
Even companies not heavily focused on sustainability will be participating in green logistics before long. By 2032, the Environmental Protection Agency’s proposed emissions standards would require 25% of heavy trucks, 46% of medium-duty vehicles and 67% of passenger vehicles sold in the U.S. to be all-electric. By 2055, the total projected benefits of these changes would help the country avoid 7.3 billion tons of CO2 emissions — equivalent to all the greenhouse gas emissions for the entire current U.S. transportation sector.
With consumer sentiment and affordability around green logistics both on the upswing, now may be the perfect time for businesses to bring shipping and delivery policies under their ESG umbrellas. From fleet-level implementation to fast, convenient and green crowdsourced delivery, EVs will play a big role in the future of retail delivery.
