Green Last Mile Home Delivery and Sustainable Logistics

E-commerce with longer delivery times as a solution for more sustainable and competitive logistics

In December 2020, the Paris Agreement (a global treaty aimed at reducing global warming) completes five years and all signatory countries, including Brazil, are presenting new versions of the commitments already assumed on December 12, 2015. In this context , and complementing the excellent text by Julia Bezerra published on the ILOS blog last month –“The importance of sustainable logistics during and after the pandemic” -, we will once again address the theme of sustainable logistics, so essential nowadays.

The goal now is to put a specific magnifying glass on Last Mile transport, bringing the results of an interesting survey carried out by MIT, specifically for online retailers.
The topic of sustainability of Last Mile logistics is becoming increasingly relevant for several reasons, among which we can mention:

• The huge emission of CO2 by the transport sector (which accounts for more than 23% of global emissions), and expected to grow at a faster rate than any other sector, posing a major challenge to carbon reduction commitments. global emissions. Furthermore, emission by the transport sector is specifically led by road, corresponding to 72% of global transport emissions, as we can see in the image below:

Figure 1: Evolution of direct CO2 emissions by different means of transport 1970 – 2010. Source: Climate Change 2014 – Fifth Assessment Report (AR5) of the Intergovernmental Panel on Climate Change (IPCC)

• The broad growth of e-commerce in 47% of sales in the first half of 2020, compared to the same half of the previous year, reaching BRL 38,8 billion, according to data from WebShopper report 42. This accelerated growth, greatly driven by the pandemic, is causing large retailers, in search of leadership in the sector, to offer increasingly shorter delivery times, such as, for example, the same day delivery offered free of charge to Amazon Prime subscribers, and also the Mercado Envios Flex service offered by Mercado Livre, with the option of same-day or next-day delivery.

Figure 2: Mercado Envios Flex – Mercado Livre

In this context, the team Sustainable Logistics Initiatives, by CTL – Centro de Transportes de Logística, by MIT released this week some results of the Green Last Mile Home Delivery pilot project. This project basically consists of offering the option of sustainable delivery, more specifically, the postponement of the delivery period, for online consumers.

MIT therefore conducted research in collaboration with Coppel, one of Mexico's leading retailers, analyzing how information about the environmental impact of purchasing decisions affects consumers' willingness to wait longer, from a faster delivery time. long, for home deliveries.

From the results of the first phase of the research, it could be concluded that the consumer's propensity to wait was strongly influenced by the way this incentive was presented. The most powerful way to frame the message was by specifying how many trees would be needed to offset the amount of carbon emissions released into the atmosphere due to the express delivery order. When presented with this breakdown, the probability that respondents were willing to wait was around 90%.

In this model of deferring shipments, the flexibility obtained with extended delivery windows can be used, systemically deciding which packages need to be delivered today, tomorrow or in a few days, according to the preferences of different customers. The system must use this information, combined with the expected demand and the distance traveled in each region, to maximize truck occupancy and minimize the number of stops, while ensuring the expected service level.

With that, the CTL – MIT Sustainable Logistics Initiatives team built a model to support this system, in a 34-day pilot around 700 zip codes. The results of the algorithm, compared to Coppel's existing system, are convincing, as shown in the image below:

Figure 3: Results of the model built by the MIT/CTL team. Source: MIT

Therefore, it is important to emphasize that presenting a “green button” as an option in which online buyers can choose to delay deliveries is not enough to guarantee a more sustainable logistics. The retailer's logistics network must deliver on this green promise of carbon reduction, while meeting the deadlines of those customers who still expect fast delivery.

We cannot fail to mention that the express delivery model is a service of great importance and essential for online retailers, especially in a world where consumers are increasingly demanding in relation to the services provided. However, this MIT pilot indicates that, with the right consumer awareness message, and the supporting logistics system, retailers can offer more sustainable shopping options that reinforce their brands and still reduce logistical costs.

For more information about MIT research, visit the link.

SOURCES:
1. https://ilos.com.br/web/a-importancia-de-uma-logistica-sustentavel-durante-e-apos-a-pandemia/
2. https://sustainablelogistics.mit.edu/research
3. https://wribrasil.org.br/pt/blog/2019/10/transporte-fonte-de-emissoes-que-mais-cresce-entenda-em-cinco-graficos#:~:text=As%20emiss%C3%B5es%20do%20setor%20de,da%20queima%20de%20combust%C3%ADveis%20f%C3%B3sseis.
4. https://noticias.uol.com.br/meio-ambiente/ultimas-noticias/redacao/2020/12/08/salles-anuncia-acordo-para-neutralizar-emissao-de-gases-estufa-ate-2060.htm
5. https://agenciabrasil.ebc.com.br/geral/noticia/2018-12/efeito-estufa-transporte-responde-por-25-das-emissoes-globais
6. https://www.ipcc.ch/site/assets/uploads/2018/02/ipcc_wg3_ar5_full.pdf
7. https://www.amazon.com/gp/help/customer/display.html?nodeId=202052960
8. https://vendedores.mercadolivre.com.br/nota/entregar-no-mesmo-dia-e-possivel-com-o-mercado-envios-flex/
9. https://sustainablelogistics.mit.edu/green-button-project-consumer-preference-for-green-last-mile-home-delivery/
10. http://ebit.com.br/webshoppers