May 18, 2023

Leverage aggregation to shorten last mile, improve sustainability efforts


By Adam Bryant, CEO of AxleHire

The views expressed here are solely those of the author and do not necessarily represent the views of FreightWaves or its affiliates.

Sustainability is a growing priority for last-mile delivery providers. However, while media coverage focuses on electrification, robots or other future technologies, we tend to ignore the underlying operational principles that will ultimately make those technologies successful. The real key to last-mile sustainability is efficient capacity utilization and demand aggregation.

To understand why, here’s a hypothetical. The average semi-truck gets roughly 6 miles per gallon. So over a 300-mile linehaul, the truck will burn 50 gallons of fuel, but it will also move packages in bulk — say, 1,500 packages for this example. That’s .03 gallons of fuel per package, or about 0.6 pounds of CO2 created to move each package 300 miles (19.3 pounds of CO2 per gallon of fuel burned).

Packages are then sorted and loaded onto delivery trucks. However, for residential deliveries, the truck’s volumetric capacity is usually underutilized — volume is constrained not by the truck’s capacity but by the number of deliveries a driver can complete in an eight-hour shift. For our example, let’s say 80 packages.

The standard delivery truck gets 9.6 mpg and uses over 9 gallons of fuel to cover a 90-mile route. That’s .12 gallons of fuel and 2.3 pounds of CO2 per package for just the last mile. Fuel/CO2 efficiency dramatically decreases once we break bulk and load packages onto that delivery vehicle. 

This illustration may be a bit oversimplified, but you get the point — the last mile is the least efficient step in the delivery process.

Creating more sustainable deliveries starts with aggregating demand, combining packages from multiple sources to increase delivery density and then allocating those packages to delivery routes that more effectively utilize the capacity of the delivery vehicles and reduce miles in transit. Aggregation is not a new concept; it’s standard procedure for most carriers. But there’s a catch — you can dramatically reduce CO2 creation by leveraging aggregation to shorten the last mile.

Instead of sorting and loading delivery trucks at large centralized facilities outside dense population centers, we can de-centralize the distribution network and migrate sortation/distribution closer to the end consumer. As volume aggregation and package density increase, we can use this micro-hub strategy to push distribution closer and closer to the most densely populated delivery zones. As a result, we extend the more efficient (on a per-package basis) linehaul and reduce the mileage, fuel consumption and CO2 emissions for the less efficient delivery vehicle.

You can make those micro-hubs dynamic and mobile to scale up and down or change location based on demand. And by using gig economy drivers rather than a static fleet, you can optimize the delivery team and vehicle capacity based on today’s demand. The post office can’t do that. Neither can traditional carriers. But the new generation of last-mile providers is already well down this pathway.

Back to the hypothetical scenario. This time a delivery driver is picking up 40 packages from one of our micro-hubs and loading them into a sedan that gets 25.7 mpg. The vehicle is sized for its load and leaves the hub at, or near, full volumetric capacity to drive a 40-mile route. It burns just 1.56 gallons of fuel, or .04 gallons per package, and creates .75 pounds of CO2 per package. That’s a 67% reduction in CO2. 

And while you didn’t need robots or drones or any other shiny new technology to make that happen, optimizing the last mile by moving distribution closer to the consumer will be critical to the success of future technologies.

There are a variety of other initiatives in e-commerce and last-mile delivery aimed at sustainability, from eco-friendly packaging to alternative vehicles to process and warehouse automation. Still, the most significant impact on the carbon footprint will come from our ability to drive more efficient utilization and aggregation processes in last-mile delivery. That’s not something we need to wait for in some far-off future — it’s something we are doing now.

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