The pandemic has created a boom in home deliveries to fulfil online shopping. Data from the Office of National Statistics shows that online purchases as a percentage of total retail sales jumped hugely as the pandemic took hold – leaping from 19% in February 2020 to nearly 33% two months later. It then stabilised somewhat, but still stood at 29% in April 2021. As a result, the transport & logistics industries are experiencing record demand and their market caps are rocketing.
But there is a challenge behind all this that, increasingly urgently, they will need to deal with. Just as much as home delivery looks to be with us to stay, so too the national (and indeed international) drive towards Net Zero is irreversible. The UK government has pledged to meet Net Zero by 2050 – and, before that, to a 78% reduction in carbon emissions by 2035. Prior to that, sales of new petrol and diesel vehicles are set to be banned from 2030.
Even more immediately, a growing number of cities around the UK are introducing Clean Air Zones (CAZ). Those that are not yet planning them have to explain why not. Bath and Birmingham have already put Clean Air Zones live, while others are expected later this year in Bradford, Bristol, Leicester and Newcastle to name just a few. London will be expanding its Ultra Low Emission Zone (ULEZ) from October. There are a number of variants on the theme – CAZ, ULEZ, LEZ (Low Emission Zone) and even ZEZ (Zero Emission Zone) – but the principle behind them is the same: breach the limits, and you will have to pay an entry fee.
For delivery companies running fleets of delivery vans in urban areas every day, the cost of a ‘dirty’ fleet could rapidly escalate and make operations uneconomic. What’s more, flouting the limits could create damaging reputational issues and raise serious questions from shareholders, analysts and other stakeholders.
This leaves third party logistics (3PLs) companies with a tricky conundrum: how to balance the huge volume of home deliveries which, in the last mile, can be very carbon intensive as well as operationally already very expensive (accounting for as much as 50% of the total delivery cost), with the imperative to ‘green’ their operations and reduce their carbon emissions?
Technology has to be the answer. As well as the move to EV fleets, we’re already seeing plenty of experimentation with small autonomous electric delivery vehicles or bots, as well as drones. The last mile is being reimagined. This is true not only of the vehicles that perform the deliveries but the networks from which they operate, with the potential for a new network of micro-delivery centres situated within or near to local communities.
We could even see a new mini-marketplace as consumers and businesses rent out some of their own spaces – flat roof garages for example – from which delivery companies could launch their drones and delivery units. The future could look very different!
To enable the new delivery methods, software and data capture will be key. Critically, the software will need to be powered by advanced AI and ML in order to deliver a number of core capabilities:
Then there are returns, which is a whole industry in itself. Making returns easy is an important aspect of the quality of the customer experience so it’s vital to get it right. 3PLs will need a whole parallel process to deal with them. The technical challenges are even harder here – working out a process for the handover of an item that is easy for the customer, trackable and fraud-proof.
There are a few off-the-shelf software products that can cater for these needs today, and where they can, the match is likely to only be partial. A significant degree of bespoke development and customisation will be needed. As an industry, we need to push forward the frontiers of the possible to create new solutions.
At NashTech, we’re excited to be exploring the software development needs that next generation last mile logistics are creating . We have also published a report, in which we analyse these and other emerging logistics trends and technology issues in detail.
Please feel free to contact me via Stuart.Simpson@nashtechglobal.com if you’d like to discuss any aspect of this topic or share your views – I’d be delighted to hear from you.