Logistics

Electric Vehicles: Is Electric Last-Mile Delivery the Key to Sustainable eCommerce?

It's become clear we need to move away from petrol engines and create new forms of delivery vehicle that are more sustainable, cleaner, and ideally - cheaper. Are electric vehicles the answer to sustainable eCommerce deliveries?

Last year alone, more than 35 billion eCommerce orders were placed with online retailers around the world. What effect could electric vehicles have for these last-mile deliveries?

The overwhelming majority of the 35 billion eCommerce orders were delivered by vehicles containing internal combustions engines – or ICEs for short. Each of these cars, vans, and trucks releases additional carbon dioxide into our atmosphere, reduces the quality of our air, and creates more noise in our cities.

Environmental sustainability is a hot topic in the business world, and logistics companies are feeling the pressure more than most to raise their green credentials. 

And as online retailers assess the environmental impacts of the entire supply chain, many are placing a sharp focus on the vehicles that deliver their goods to the consumer.

DHL Electric Vehicle with Fuel Cell
DHL investing in electric vehicles with added fuel cell. Source: dpdhl.com

In 2019, eCommerce stores generated a staggering US$3.5 trillion in sales, and by just next year, this figure is expected to almost double to just under US$5 trillion

“If the eCommerce industry were a country, it would soon boast the world’s 3rd largest GDP.”

Source: investopedia.com and statista.com

But as online sales are surging, so is the amount of carbon dioxide that delivery vans and trucks are releasing into the atmosphere. As we reported in a recent article, continued eCommerce growth will add 36% more delivery vehicles onto our roads by 2030, and create 32% more CO2 than they do today. 

In the US, the transportation sector is the single biggest producer of greenhouse gasses, with vans and trucks pumping out almost a quarter of the country’s entire emissions. Across the Atlantic, it’s a similar story, with road transport vehicles responsible for around 20% of the UK’s entire carbon footprint. With growing online retail competition and a shift towards one-day delivery, vehicle pollution is increasing, and roads are becoming even more congested.

Graph showing US Greenhouse Gas emissions split by sector
US Greenhouse Gas emissions by sector. Source: epa.gov

With a global focus on atmospheric CO2 levels, it’s become clear that we need to move away from ICEs and create new forms of transport that are more sustainable, cleaner, and ideally – cheaper.

And with every day that passes, it’s looking more and more like electric vehicles – or EVs – are the solution to these problems.

Some of the Big Players Are Starting to Lead the Way with Electric Vehicles

While eCommerce and transport companies are increasingly contributing to CO2 levels, several industry titans are working hard to reverse the trend. 

With Tesla thrusting electric vehicles into the mainstream, and every major auto manufacturer launching new EVs of their own in the next two years, 2020 is looking like the year when petrol engines finally start to take a back seat.

UPS Announces Its First All-Electric Fleet

Earlier this year, the American multinational logistics company announced it had ordered 10,000 delivery vans from UK electric van maker Arrival, a business in which UPS also holds a minority investment. 

UPS Electric Delivery Vehicle
UPS New Electric Delivery Vehicle. Source: fastcompany.com

Formed in 2015, Arrival also received a USD$110 million investment from Hyundai (which also co-owns Kia), launching the relatively unknown British start-up into the public spotlight. 

UPS intends to roll out the first EVs this year, with the full fleet operational by 2024 – as well as the option to order an additional 10,000 units along the way. The delivery trucks will be deployed across the UK, Europe, and the US – the country where UPS already has a fleet of 85,000 vehicles. 

Arrival, which uses a ‘skateboard’ wheelbase and a customised manufacturing platform, claims that its electric vans will cost the same as diesel equivalents, a price rumoured to be around US$44,000. Arrival produces vehicles in unique ‘micro-factories’ which it can set up in just three months within the areas of highest demand.

With a substantial investment in Arrival, followed by an order rumoured to be worth around half a billion US dollars, UPS clearly sees electric vehicles as a path to both environmental and financial security.

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Amazon Follows Through on Its Climate Pledge

Online retail giant Amazon has raised the stakes even further, announcing in September last year it has ordered 100,000 electric delivery vans from Rivian. A Michigan start-up company that has mostly flown under the radar until now, Rivian secured significant investments from Amazon, Ford Motors, and Cox Automotive last year, with the aim of developing new electric vans, pickup trucks, and SUVs. 

Amazon Electric Vehicle- Delivery Van
Amazon Electric Delivery Van. Source: theverge.com

Amazon expects its new electric vans to start hitting roads this year, with the entire fleet of 100,000 operational by 2024. The company also announced it is adding 50 new electric vehicles to its Munich operations, comprised of 40 ‘WorkBox’ vans from StreetScooter and ten eVito’s from Mercedes-Benz.  

Amazon has also ramped up its deployment of solar panels, with more than 50 fulfilment centres now boasting rooftop PV arrays. This transition to renewable energy is part of a broader effort by Amazon called The Climate Pledge, which aims to make the entire company carbon-neutral by 2040. 

And while Amazon is putting some impressive runs on the board, its goal remains an ambitious one. Even with new measures in place, the company’s 2018 carbon output totalled 44.4 million tons – more than that of entire countries such as Switzerland, New Zealand, and Ireland. 

Are Electric Delivery Vans More Sustainable?

While the transition from ICEs to electric vehicles is a move in the right direction, it isn’t an overnight fix to the carbon problem. 

EVs produce no tailpipe emissions – a big win for urban air quality – but they are still powered by electricity which, at least for now, comes primarily from burning fossil fuels.  

There are also CO2 emissions created during the manufacturing of electric vehicles – particularly their lithium batteries – which needs to be factored in when weighing up their overall environmental impact. 

According to the US Alternative Fuels Data Center, EVs create only around half the CO2 emissions of their ICE counterparts – even when taking the production of batteries into account. These figures include the current mix of renewable energy in the US electrical grid, which currently sits at just under 12%.

EVs Are Getting Cleaner Every Year

As companies source more of their electricity from renewables – either generated on-site or via agreements with retailers – the carbon footprint of electric delivery vehicles will only continue to shrink. 

Electric vehicle being charged
Electric vehicles are having a progressively smaller carbon footprint. Source: ivl.se

The manufacturing of lithium batteries is also improving, with recent data finding that the average CO2 emissions per kilowatt-hour (kWh) of battery capacity has halved in the last three years.

And as demand for lithium batteries is projected to increase 10-fold in the coming decade, the economies of scale alone will continue to push manufacturing efficiencies to new heights.

Graph showing increased demand for lithium-ion batteries until 2030
Graph showing increased demand for lithium-ion batteries until 2030

The Path to Zero-Carbon Logistics

Of course, the end-point of this journey is for entire fleets to be powered by renewable energy alone, making every kilometre completely emission-free. Many large transport companies are already investing heavily into renewables, in an effort to speed up the electric transition and save money at the same time. 

German powerhouse DHL recently announced a 1.7 megawatt PV array on the roof of a new Australian warehouse – its most extensive solar system to date. The investment forms part of DHL’s long-term plan to achieve net-zero emissions by 2050.

The global mix of green energy is also increasing, with the US electricity grid projected to be as much as 50% renewable by 2030. This exponential growth is occurring as utility-scale solar, wind, hydro, and battery storage systems come online all over the country.

As we move forward, it appears as though whether they’re charged from on-site sources or the electricity grid – more and more delivery vehicles will be powered by renewable energy.

The Economic Benefits of Electric Vehicles for Last-Mile Deliveries

While many companies are embracing EVs to help the environment, it’s no surprise that they’re also doing it for financial reasons. And the capital purchases they’re making now are already looking like smart investments in the long-term. 

“Battery prices, which were above $1,100 per kilowatt-hour in 2010, have fallen 87% in real terms to $156/kWh in 2019.”

Source: greencarcongress.com

Electric vehicles – at least for now – have come at a higher price than their ICE equivalents, but bring with them the promise of substantially lower running costs. In the UK, some EVs are already three times cheaper to run than ICEs over every 100 miles driven. 

Yamato Transport Company Japan Electric Vehicles
Yamato Transport, Tokyo Japan, electric vehicle investment. Source: japantimes.co.jp

Of course, electric vehicles are even cheaper when powered by on-site renewable energy, providing a strong incentive for logistics companies to install large scale solar, wind, and battery storage. Similar to the vehicles themselves, these clean energy investments will play a key role in reducing operational costs in the long-term.

EVs Require Very Little Attention

There’s also the question of ongoing maintenance, in which electric vehicles are already light-years ahead. To put things in perspective: the average ICE vehicle has 2,000 moving parts – while an EV has just 20. 

It is true that electric vehicles need some regular maintenance, but even the most common areas of attention pale in comparison to traditional petrol and diesel vehicles. Studies have shown that an all-electric vehicle can be up to 70% cheaper to maintain than an ICE equivalent.

Most EV servicing focusses on tires and brakes, which are also prolonged due to regenerative braking. The battery packs are largely self-sufficient, and typically have a usable life of well over 300,000 km. Tesla Motors already has a roadmap to produce batteries with a range of over one million kilometres – which is well beyond the life of most vehicles.

More Logistics Companies That Are Going into Electric

As online retailers look for ways to be more sustainable, thankfully there’s a growing list of logistics companies adding electric delivery vehicles to their fleets. 

DPD Electric Delivery Vehicles UK
DPD Electric Vehicles to equal 10% of the fleet in 2020. Source: airqualitynews.com

If you’re an eCommerce store searching for greener delivery options – or you simply want to support companies doing the right thing – here are more of the leading players making significant EV investments: 

  • The UK’s Royal Mail has announced it is adding 190 electric vans to its fleet, produced by Mercedes and Peugeot. The new vans will be painted green, a departure from the iconic red colour scheme. 
  • FedEx is adding 1,000 electric delivery vans to its Californian operations in an effort to meet strict new emissions restrictions. The fleet is being produced by Chinese EV manufacturer Chanje Energy and should be operational by the end of 2020.
  • Indian eCommerce giant Flipkart is rolling out more than 140 electric vans and plans to replace at least 40% of its fleet with EV’s by the end of the year. The Bangalore company – which is owned by Walmart – is in a fierce battle with Amazon to become India’s largest online retailer. 
  • UK parcel delivery company DPD is aiming to have 500 electric vans on the road by the end of 2020, which would equal 10% of its total fleet. DPD has partnered with Nissan to supply e-NV200 vehicles, each with a 300km range.
  • England’s ‘Milk & More’ now has more than 500 electric vans in operation, making it the largest electric vehicle fleet in the UK. The British company makes daily milk deliveries to 1.5 million households. 
  • Germany’s DHL is adding 100 StreetScooter electric delivery vans to its Munich operations in 2020 and 2021. They feature an electric motor combined with a fuel cell which extends the driving range up to 500 kilometres. 
  • Japan’s Yamato Transport is rolling out 500 StreetScooter vans in Toyko by the end of this year. The company is aiming to have 5,000 electric vehicles – around half its current fleet – on the road by 2030. 

The Future of Parcel Deliveries Is Looking Green

With companies and governments all over the world aiming for carbon-neutrality within the next three decades, we’re witnessing the dawn of the electric transport industry. With lower emissions, cheaper running cost, and less ongoing maintenance, EVs deliver big wins in virtually every category. 

And as impressive as the technology is today, it’s evident that there are still significant advancements to come in terms of range, efficiency, and cost. It’s not inconceivable to think that within just ten years, petrol and diesel-powered vehicles will not only be unpopular – they’ll be irrelevant. 

And as global eCommerce surges towards becoming a ten trillion-dollar industry – we think the era of electric transport can’t come soon enough.

Matthew Devitt is an eco-copywriter specialising in technology, renewable energy, and sustainability. For more information visit www.matthewdevitt.com

Further Reading: Future of Last-Mile Delivery: Preparing cities for eCommerce growth. Read More

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