THE

SUSTAINABLE
LAST MILE.
FASTER. CHEAPER. GREENER.
 Something unexpected happened to last- Out of sheer necessity, new consumer
mile delivery during the pandemic— behaviours and retailers’ responses to them
it got greener. With many people stuck at changed last mile delivery’s carbon footprint,
home, e-commerce sales skyrocketed.1 making it more sustainable. But these
When supply chains started moving again, sustainability gains are only the beginning of
the ecosystem adapted fast, as people a whole new opportunity for collaboration.
purchased more and different products One that could produce a remarkably more
online. Stores became fulfilment centres. sustainable last mile. But only with action and
Ship from store and curbside pickup smart investment.
emerged. Parcel drop density rose.

THE SUSTAINABLE LAST MILE 2

 So what
The carbon footprint of the last mile has long been an environmental and societal challenge. The sustainability gains that
came from the pandemic were unintentional. Yet they happened at an ideal time.

happens Now it’s time to get intentional and make the last mile more efficient, less expensive and more eco-friendly. The
imperative to act is clear.

next? Last-mile delivery accounts for 53% of the total cost of shipping—and 41% of total supply chain costs.2 With no
interventions, we can expect a 32% jump in carbon emissions from urban delivery traffic by 2030.3 Consumers are
watching. They have a tall order: convenience, speed and sustainability at the right price.

THE SUSTAINABLE LAST MILE 3

 A tipping Lasting change will require bold moves such as incentivising greener choices among consumers

point
and businesses, rethinking asset use, and harnessing data and analytics. The whole last-mile
ecosystem—post and parcel organisations, retailers, delivery companies, governments and
consumers—is at a tipping point. Go one way, and it can create a truly sustainable last mile—
faster, cheaper and greener. Go the other way, and things worsen unchecked.

No single entity can solve this problem alone. It will take all ecosystem players working
together in ways they never have before.

THE SUSTAINABLE LAST MILE 4

 The potential
of local fulfilment

The acceleration of local or market-based fulfilment is one stand-out impact of the pandemic. To understand this potential,
Amazon is a pioneer here. The company’s ability to meet its Prime delivery promises has always
hinged on its innovative local fulfilment strategy. And in March 2020, the e-commerce giant doubled in 2020 Accenture and Frontier
down on its local delivery strategy, investing in a network of new micro-fulfilment centres located Economics developed a robust
even closer to its customers that stock “need it today” items. The goal was to offer more speed and
convenience with a lower carbon footprint.4 economic model of the impact
of local fulfilment centres for
To respond to Amazon’s delivery speed and cost, brick-and-mortar retailers had already been
developing capabilities for omnichannel fulfilment using their stores or other local inventory
e-commerce using data from
options. The pandemic radically accelerated fulfil-from-store investments by about three to five London, Chicago, and Sydney.6
years,5 permanently altering supply chains where inventory is placed closer to customers than ever
before.
The model estimates the impact on outputs such as
emissions and traffic congestion, based on inputs
Retailers accelerated these investments as they scrambled to adapt. But these investments won’t be
including local fulfilment centre prevalence, population
rolled back post-pandemic. Now, many more items will come from market-based inventory, which
density, average distance travelled per parcel, delivery
creates an opportunity for new experiences around local fulfilment for consumers and exciting
vehicle mix and consumer demand projections.
potential for post and parcel and logistics organisations to create a more sustainable last mile.

THE SUSTAINABLE LAST MILE 5

 The potential
of local fulfilment

Chicago London Sydney

The analysis is revealing.

The last-mile supply chain made 13% 13 % 2%

possible by local fulfilment centres
decrease in delivery decrease in delivery decrease in delivery
could lower last-mile emissions traffic, saving traffic, saving traffic, saving
between 17 and 26% by 2025. 68k tonnes in carbon 144k tonnes in carbon 52k tonnes in carbon
emissions (approximately emissions (approximately emissions (approximately
This improvement is broadly consistent across all three 20% of delivery van 17% of delivery van 16% of delivery van
cities. Using local fulfilment for even half of e-commerce emissions) emissions) emissions)
orders between 2020 and 2025 could lead to significant
impacts:

THE SUSTAINABLE LAST MILE 6

 Local fulfilment: Same distance. Smaller footprint.
The last-mile supply chain made possible by local fulfilment centres could lower last-mile emissions between 17 and 26% by 2025. Using local fulfilment for even half
of ecommerce orders between 2020 and 2025 could lead to significant impacts.

Central distribution centre

THE SUSTAINABLE LAST MILE 7

 Going the
extra mile
for a greener
last mile
The last mile is not going to get greener with more investments in traditional
processing and distribution infrastructure and delivery fleets.

This is about thinking outside the box to deliver the box. It’s critical to work across
the ecosystem to understand the unseen costs of last-mile delivery and pursue
change. This means investing smartly in innovative technologies and balancing high-
and low-impact opportunities. Three fundamentals are key to any plan, and success
involves coordinated investment and creative—even unconventional—ecosystem
cooperation.

THE SUSTAINABLE LAST MILE 8

 3 fundamentals
for the last-mile
ecosystem to create
a more sustainable
last mile

01 02 03
Incentivise Rethink Harness
greener asset data and
choices use analytics

THE SUSTAINABLE LAST MILE 9

 01
Incentivise Develop incentives and “choice
architectures” that encourage
greener consumers to receive deliveries in more
sustainable—yet convenient—ways,
choices and ecosystem players to make green
investments.

THE SUSTAINABLE LAST MILE 10

 01 Incentivise
greener choices Getting to green

Making purchases online can be as easy as clicking a button and finding the
package at your front door an hour later. It’s so easy that people don’t think about
Shopify’s Carbon
how the shipping option they select, the size of their basket or where, when and Checkout App
how their order is fulfilled impacts the environment. allows consumers to make choices based on their values. They
can balance the carbon footprint of their orders by rounding
The root issue here is lack of buyer awareness. It’s why the last-mile ecosystem up purchases to the nearest dollar. The difference is pooled to
must make consumers more aware of the environmental impact of delivery fund projects that reduce global carbon emissions. It happens
options and be more transparent by offering greener delivery choices at seamlessly at checkout—for every dollar contributed, 245 lbs.
checkout. Many people would choose these greener options—43% of of carbon emissions are offset.7
consumers are more likely to choose retailers that offer more sustainable
delivery options.9 These “choice architectures” run the gamut from green
shipping buttons to GHG calculators to consolidating multiple individual
deliveries into one. There are also options to incentivise consumers to pick up Cainiao Smart
parcels at local fulfilment centres by offering value-add experiences or discounts.
In our model, if all customers within 1 kilometer of a fulfilment centre were to Logistics Network
collect their deliveries on foot, 14% of London’s deliveries would have a zero- — which is Alibaba Group’s logistics unit—is locating 30,000
emission last mile. The message is clear: sustainability doesn’t have to come at new postal stations in convenient spots across 100 cities
the cost of customer experience, or with a in China. The posts support easy, contactless mailing and
higher price tag. parcel collection, have services for consumers to track their
packages in real time, and use autonomous vehicles to bring
parcels to the door step.8

THE SUSTAINABLE LAST MILE 11

 01
Incentivise
greener choices
Incentivising greener choices action by investing in electric
doesn’t just extend to consumers. vehicle charging infrastructure,
City and national governments making them convenient for
and planners must weigh the delivery companies. They can
trade-offs they can make to also offer GOV (green occupancy
incentivise delivery companies vehicle) driving lanes, express
to invest in greener fleets, enable parking, ticketing and toll
the circular economy and develop exemptions, or carbon credits for
greener route management green vehicles.
practices. In our model, the
use of low-emissions vehicles All of these are appealing
accounted for 51% of the total because in a delivery company’s
decrease in London’s delivery calculus, the inherent efficiency
van emissions from 2020 to gains of fast, easy access to
2025. urban addresses could offset the
incremental cost increases of
Delivery companies are already investing in green vehicles.
investing in electric vehicles.
Cities can incentivise further

THE SUSTAINABLE LAST MILE 12

 02
Rethink Repurpose, retrofit and share
assets like stores, infrastructure
asset and fleets—while investing in
green technology and evolving
use regulations to support these
innovative approaches.

THE SUSTAINABLE LAST MILE 13

 02 Rethink
asset use Getting to green

Assets have a fixed role in the traditional last mile. Warehouses and fulfilment The 2020 holiday season looked
centres store the inventory. Delivery fleets run the routes. Every delivery
organisation invests in its own infrastructure, technology, people and vehicles.
very different for US retailer Target.
The retail giant had already reconfigured its entire supply chain
But as the context of the last mile changes—more volume, more velocity and new
to focus on store fulfilment pre-pandemic, but when it hit, the
consumer expectations—it’s time to stop building redundant networks and start
same-day services that this model enabled became essential
repurposing assets with sustainability as a priority.
for consumers. In fact, 95% of Target’s sales in November and
December were fulfilled through its brick-and-mortar store
Retailers have been reinventing their best asset—the physical store—for years amid network thanks to sales originated in stores, same-day order
the e-commerce boom. Pandemic lockdowns that kept shoppers at home created and ship-from-store options.10
new challenges, closing stores. But retailers have and continue to repurpose stores
into local fulfilment centres, transforming them into omnichannel fulfilment hubs.
These are hybrid spaces for shopping, collecting and returning deliveries. In a
shared use model, dying shopping malls—and other unused or underused urban
spaces—can become multi-tenant fulfilment hubs. Bringing new life to such spaces The City of London is set to launch
can generate income for towns, cities and local authorities while enabling the its first last-mile logistics hub.
sustainable last mile. Making it a reality demands supportive zoning, tax incentives The plan is to repurpose under-used spaces at the London
and creative city planning. Wall Car Park with Amazon Logistics as the operator.
Delivering packages from the hub using pedestrian porters
and bikes is projected to take 85 delivery vehicles off
London’s streets each day. That’s 23,000 trips eliminated in
central London annually.11

THE SUSTAINABLE LAST MILE 14

 02 Rethink
asset use
Delivery companies can also can embrace greener practices
enhance co-operation and more economically by sharing
move to share assets in new delivery infrastructure, including
ways. Providing access to each fulfilment and open locker and
other’s networks can eliminate PickUp DropOff networks that
costly redundancies and reduce support interoperability.
emissions. The United States
Postal Services (USPS) is already At the same time, cities and
doing this through its Parcel regulators can encourage asset
Select® Service. Other delivery sharing. One way to do this is by
companies—including USPS creating points at the outskirts
competitors—can use this ground of cities where deliveries are
delivery service to get sorted concentrated for all carriers.
packages to their final stop at less
cost.12 Delivery companies and
post and parcel organisations

THE SUSTAINABLE LAST MILE 15

 03
Harness Act on real-time insights into
consumer preferences and
data and purchasing patterns to innovate
and optimise inventory and
analytics route management for a lower
last-mile carbon footprint.

THE SUSTAINABLE LAST MILE 16

 03 Harness data
and analytics Getting to green

The more that the ecosystem knows about who will buy what, where and when, Greenplan
the more successful local fulfilment can be—and the more that delivery companies —a startup company funded by DHL—has developed an
can plan greener routes. While local fulfilment makes a bigger impact on the last algorithm that supports green route planning. The algorithm
mile than route optimisation alone, together, they can further reduce emissions accounts for inputs like carbon emissions of each vehicle type
between 7 and 9% in the cities we studied. and range limits of electric vehicles. The focus is on creating
efficient routes that are aligned with traffic flow so that
Developing this insight goes beyond traditional customer segmentation and planned tours and stop sequences make sense to drivers.13
inventory optimisation. It is highly targeted. With contextual insights into what
specific customer groups in specific geographic areas need, retailers can stock the
right SKUs locally. Doing this well involves analysing a mix of internal and third-party
data, social listening and monitoring local trends and events.
Freight planners in the
District of Columbia
are using data to understand what’s happening at the curb
and change their approach to loading zones to accommo-
date the rise in on-demand deliveries. They are now allo-
cating curb usage differently depending on the time of day,
and exploring the optimal location for bikeshare stations and
micromobility hubs.14

THE SUSTAINABLE LAST MILE 17

 03
Harness data
and analytics
Such deep customer insight enables delivery typically see from traditional strategies.16 In
companies to pursue more proactive fact, our model shows that when route
delivery approaches that are kinder to the optimisation is applied with local fulfilment,
environment. Take anticipatory shipping, for delivery vehicles drive 140 million
example. Delivery companies use customer kilometers less. With more data, delivery
and geolocation data to ensure a package is companies can make routes more efficient,
delivered the first time. By using geolocation accounting for traffic and other real-time
to see that a customer isn’t home, the delivery conditions. They can personalise service
company can automatically leave the package level commitments, using longer timelines
in an alternative location per the recipient’s to accommodate greener routes. They can
known preference. This eliminates exceptions assess local traffic and weather patterns in
that add cost—and extra trips that increase real time. They can integrate route planning
the carbon footprint. Considering that every with the availability of smart charging stations.
failed delivery costs about $5—and that 5 to
10% of all last-mile deliveries fail15 —this is a All of these data inputs can optimise routes
much-needed improvement. One that is good with extraordinary precision, maximising
for business and good for the planet. drop density and reducing complexity and
downtime. Cross-ecosystem data sharing via
Data insight can also help delivery companies the cloud is key to making it happen.
get more value out of route optimisation
on top of the 7 to 15% efficiency gains they

THE SUSTAINABLE LAST MILE 18

 Driving the Retailers Delivery companies Governments Consumers

sustainable
last mile • Entice consumers
to choose in-store
• Put data at the
heart of operations
• Align sustainable
last-mile strategy with
• Choose the greenest
delivery option when
fulfilment. to prioritise new economic stimulus possible.
green practices. and jobs.
• Transform supply • Take advantage of
Real change toward a chains and store • Explore • Support and promote incentives to bundle
networks to include partnerships and green transport deliveries.
more sustainable last mile dark stores, partial dark ways to invest in initiatives.
takes coordination and stores, and/or market shared assets. • Consolidate trips to
fulfilment centres. • Encourage the pick up parcels at local
collaboration across the • Electrify the repurposing of urban fulfilment centres.
• Educate consumers delivery fleet with spaces for local
ecosystem. on the value of purpose-built, last- fulfilment.
consolidating mile vehicles.
deliveries.
Every player can start to
make a difference with
these priority actions.

THE SUSTAINABLE LAST MILE 19

 The ecosystem accelerated sustainable last mile practices during the pandemic
out of necessity. Now is the time to drive more meaningful and lasting change by
design. There’s no turning back from the changes that the pandemic made to the
last mile. Consumers’ shopping habits are different. Supply chains are different.
Retail footprints are different. The last mile can be different too—much, much
greener—if the ecosystem comes together to act on sustainable
last-mile practices. Now is the time to take advantage of the momentum we’re
seeing today and make it more meaningful and lasting.

IN A WORLD FOREVER CHANGED BY THE PANDEMIC, THE

OPPORTUNITY FOR A SUSTAINABLE LAST MILE HAS NEVER
BEEN GREATER—OR MORE URGENT. EVERYONE HAS
A PART TO PLAY. WHAT WILL YOURS BE?

THE SUSTAINABLE LAST MILE 20

 Contact

André Pharand
Managing Director – Consulting, Post and Parcel

[email protected] With thanks to Sarah Banks, Gemma Baker, Henry

Cartwright, Pierre-Olivier Desmurs, Alexander Holst,
Marius Peters, Juergen Reers, Simen Strøm Nordnes and
André Pharand is the Managing Director for Accenture’s Post and Parcel Industry. André
Sean Whitehouse for their contribution to this report.
has over 25 years of experience in the postal, express, logistics, retail, ecommerce and
fulfillment industries. He has worked with over 20 postal and parcel players globally to
develop new strategies, drive innovation, implement change and manage costs. André leads
our thought leadership and monitors trends and disruptions impacting the industry.

THE SUSTAINABLE LAST MILE 21

 About
the research
Accenture modeled the impact of fulfilling 50% of e-commerce orders via micro-fulfilment
centres, from a baseline of 0 now (based on our analysis of the market) in three cities—London,
Sydney and Chicago. These micro-fulfilment centres are used to make “fast” deliveries, defined
as same or next day. Model outputs included decreases in congestion (measured as kilometers
For information about
travelled by motor vehicles) and decreases in emissions (CO2, NOx and PM10). Model estimates the research, contact:
depend on five main drivers:

• The prevalence of micro-fulfilment currently, and the assumed increase Meghan Yurchisin
• Estimates of the number of deliveries through each delivery channel [email protected]
• The average distance travelled for each stage of package delivery
• The assumed vehicles mix for each channel, and the associated
emission rates Alexa Jaeger
• The demand and substitution effects which result from free, fast delivery
[email protected]
Outcomes were then calculated based on available data as well as estimated values for number
of deliveries, average distance per delivery, and impacts per kilometer travelled (i.e. emissions
rates for vehicle type). To estimate distance, the model assumes that central dispatch warehouses
are located near airports and micro-fulfilment centres are evenly spread throughout the city. The
distance from the micro-fulfilment centres to household varies by city due to population density.

THE SUSTAINABLE LAST MILE 22

 About
Accenture

Accenture is a global professional services company with leading capabilities Disclaimer: This document refers to marks owned by third
in digital, cloud and security. Combining unmatched experience and parties. All such third-party marks are the property of their
specialised skills across more than 40 industries, respective owners. No sponsorship, endorsement or approval
of this content by the owners of such marks is intended,
we offer Strategy and Consulting, Interactive, Technology and Operations
expressed or implied
services—all powered by the world’s largest network of Advanced Technology __
and Intelligent Operations centres. Our 514,000 people deliver on the promise This content is provided for general information purposes and
of technology and human ingenuity every day, serving clients in more than is not intended to be used in place of consultation with our
120 countries. We embrace the power of change to create value and shared professional advisors
__
success for our clients, people, shareholders, partners and communities.
Visit us at www.accenture.com. Copyright © 2021 Accenture. All rights reserved. Accenture
and its logo are registered trademarks

THE SUSTAINABLE LAST MILE 23

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THE SUSTAINABLE LAST MILE 24