Last-mile logistics – five years ahead. Where is sustainability?

2 March, 21

Last-mile delivery and sustainability – an iconic Tom & Jerry duet in modern logistics. Volumes of deliveries are growing as fast as Jerry is running away from Tom, held back by environmental awareness.

On the road from an item’s manufacturer to a buyer, last-mile delivery is the final stage of the entire logistics process. The aim of the last-mile service – to reach an end-user as quickly as possible.

The World Economic Forum study on the “Future of Last Mile Services“ (January 2020) estimated that worldwide demand for last-mile delivery would grow by 78% until 2030.

Wondering what drivers stand behind the explosion? Some of the key ones:

● increase in urban density,
● more users going into online shopping,
● e-grocery growth,
● same-day delivery growth,
● electric vehicles’ share increase.

But what about the knock-on effects of the COVID-19 pandemic?

IBM’s U.S. Retail Index provides that the pandemic has accelerated the global transition towards e-commerce by approximately five years. It means that in the last-mile logistics, we have even less time to come up with solutions to move goods within cities efficiently and in line with sustainability challenges.

36% more delivery vehicles. Actions wanted!

Of course, there are two sides of the same coin. On the positive side, we see a phenomenal growth of e-commerce and exponential demand for fast urban deliveries. On the other, rather practical, side, we face a potential thread – traffic congestion and heavy air and noise pollution. According to a smart mobility booster generation.e, transportation of goods accounts for one-fifth of all types of urban trips!

The logic is simple. The more deliveries are in demand; the more delivery vehicles are in need. The more cars or vans come onto roads, the heavier problems we have. Even if the vehicles are eco-friendly, the traffic becomes hardly possible to move quickly.

The WEF study reveals that if no immediate intervention is made, by 2030, we will have 36% more delivery vehicles and 6 million tonnes of additionally emitted CO2 in the cities.

Usually, a tonne of carbon dioxide sounds like an abstract notion. Imagine that one tonne of CO2 is the average emission of driving 6,000 km with a diesel car. Now calculate it for 6 million tonnes…

Finally, if you are the one who hates getting up early and stuck in a traffic jam, no good news for you, too. With more traffic participants, the average commute time would increase by 21%, meaning that we will experience 11 minutes longer travel to/from work.

Most importantly, all these increases could result in cities’ structural problems. Cities also have limited areas of expansion.
ZITICITY challenges traditional delivery providers

ZITICITY is an urban logistics pioneer in the Baltics, France and Poland; thus, the topic of sustainable and effective deliveries in cities lies at the core of its business mindset.

“In terms of last-mile deliveries, I firmly believe that it is up to us to mitigate possible negative effects on the environment and cities. We have developed a completely different business model to bring the change and challenge traditional parcel delivery companies. And sustainability is an integral part of it,” comments Laimonas Noreika, CEO and co-founder of ZITICITY.

Unlike the standard legacy carriers, which process parcels at the logistics centres outside the city, ZITICITY stays within it, at the urban hubs located in the densely populated areas of a city.

“We do not need 3-5 days to pick the item from a seller’s place, process it on the outskirts of a city and hand it to a buyer. Our urban hubs come as an organisational innovation to the entire last-mile chain,” adds L. Noreika.

Urban hubs’ convenient location enables ZITICITY to stay close to customers, reduce delivery time and distance, and utilise eco-friendly means of transport, for example, scooters or bicycles.
Offering shoppers appealing delivery services

In January 2021, ZITICITY introduced a new delivery vehicle to its fleet – electric cargo bikes. According to L. Noreika, this option is way more efficient than cars or vans in urban environments. Mainly because of better parking capabilities and alternative modes of navigating busy streets.

“Planet protection, business efficiency and customer satisfaction are inter-related fields. In many cases, shoppers’ satisfaction and delivery choice depend on how their goods will be delivered. If you can offer delivery on an electric cargo bike, there is a high probability that the buyer will go for you,” says Noreika.

“These are just first months, but we can already confirm that delivery with electric bikes is very much appealing to both business clients and buyers. While a large cargo compartment allows us to increase volumes without damaging the surrounding area effectively, we have also begun building a stronger emotional connection with the end-users. We are curious to see better-defined outcomes soon,” Noreika does not hide the excitement.
Railways for last-mile deliveries. YES to multimodal connectivity

In Lithuania, ZITICITY currently offers the broadest range of services for its clients from across e-commerce. One of the on-demand features is same-day or next-day home delivery between the three biggest cities.

To avoid environmentally damaging journeys with vans, reduce operating costs and better allocate courier resources within the city, ZITICITY partnered with LTG Link, a Lithuanian passenger train operator.

On the global scale, road transportation covers the most significant part of global CO2 emissions from transport (74.5%) while rail is among the minor contributors (only 1%). At a European level, urban freight accounts for 25% of the carbon emissions. Thus, collaboration between the two polar transportations sectors could make a positive impact on the environment.

“The WEF report provides that delivery vans are drastically increasing emissions within last-mile logistics. In terms of cargo transported by railways, we have a good network for heavy logistics, whereas last-mile logistics still leaves significant economic and environmental value on the table. Keeping this in mind, we came up with an idea to build multimodal connectivity infrastructure for last-mile deliveries between major cities in Lithuania. It is the first initiative of this kind not only in Lithuania, but all Baltic states,” recalls Noreika.

The railway supports ZITICITY logistics four times a week, carrying parcels from/to Vilnius to/from Kaunas. For example, a courier in Kaunas brings the parcels to the railway station and loads them on board, while a courier in Vilnius picks them up and begins deliveries.

Worth highlighting that such a solution is also a great green initiative. Although the distance between the two cities is around 100 km, the van doing a round trip four times a week passes over 800 km. On a daily scale, the impact on the environment seems to be minimal. However, the bigger picture on the annual level demonstrates that together with a partner, ZITICITY reduces a significant amount of gas emissions and makes last-mile deliveries friendlier to nature. Passenger journeys and transportation of parcels between Vilnius and Kaunas on the electric train leaves no carbon footprint. All LTG Link electric trains are powered by electricity produced from renewable energy sources.

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