Nishith Rastogi is a Founder & CEO of Locus, a leading-edge technology company helping 300+ global enterprises achieve last-mile excellence.
In the sprawling domain of logistics and transportation, a sector that contributes to more than a third of global carbon dioxide emissions, transitioning toward sustainability is not a mere altruistic pursuit; it’s a strategic essential. A future-oriented perspective reveals enormous potential: Businesses aligned with the United Nations’ sustainable development goals could unlock up to $12 trillion in market opportunities by 2030.
Our ability to create a positive environmental impact is matched only by our capacity to drive change. Understanding this dynamic is crucial in crafting a transformative sustainability strategy—one that not only mitigates climate change challenges but also leverages them as a catalyst for innovative growth and differentiation.
Through leading a last-mile delivery technology company, I’ve seen that high-energy sectors such as production and transportation can transform a daunting task into an operational advantage by embracing sustainable practices. This shift isn’t about merely weathering the storm of climate change; it’s about evolving and actively shaping a sustainable future.
Gleaned from my company’s journey and the industry’s collective wisdom, these are five insights for building an effective sustainability strategy. These steps aim to inspire and guide leaders in creating a robust roadmap to environmental stewardship.
Sustainable distribution is the new norm.
Imagine a future where a robust sustainable manufacturing ecosystem exists, created as a result of both public and private sector cooperation. In this collaborative model, and with the proper interventions, I believe it’s plausible to expect a reduction in delivery emissions and congestion.
This is because the green technology and sustainability market are on the brink of incredible growth. Current projections foresee this market burgeoning to a sizable $417.35 billion by 2030, demonstrating a substantial compound annual growth rate of 21.6% from 2022 to 2030.
Simultaneously, the appetite for urban last-mile delivery is anticipated to rise sharply by 78% by 2030, according to the World Economic Forum. This burgeoning demand will introduce a 36% increase in delivery vehicles across the world’s top 100 cities. As a consequence, emissions from deliveries are projected to escalate by almost a third, contributing an additional 11 minutes to each individual’s commute.
The way forward involves the selection of a sustainable distribution channel that not only guarantees economic efficiency but also helps minimize costs and ecological impact, all while satisfying consumer expectations.
Embracing sustainability is critical to thriving in today’s market.
A report by McKinsey highlights the shifting customer preference for sustainable products, indicating that “green” continues to gain momentum. Despite challenges posed by inflation, consumers continue to show a strong willingness to invest in environmentally friendly products, even if they come at a higher price.
For businesses aiming to succeed in this evolving landscape, integrating sustainability into their core operations is crucial. Companies that prioritize and incorporate sustainable practices are more likely to attract and retain customers, thus gaining a competitive edge in the market.
Implementing sustainable practices in the last-mile delivery models can have a profound impact on a company’s financial performance. Not only does it drive operational efficiencies, but it also enhances a brand’s image by showcasing a commitment to eco-friendly practices.
Foster last-mile supply chain sustainability.
The roadmap to a more sustainable last-mile supply chain isn’t a solitary journey but a collaborative venture. Many multinational corporations now choose to collaborate exclusively with suppliers that uphold stringent social and environmental sustainability standards. Implementing green logistics from beginning to end becomes feasible when each activity is meticulously optimized to minimize environmental impact. Below are some strategies that can help businesses pave the way for a sustainable future:
1. Determine your carbon footprint.
The initial stride toward a sustainable supply chain is understanding your carbon footprint. This metric depends on multiple factors, such as the energy used for shipping (based on weight and distance), the packaging materials employed and even your shopping habits. A consolidated approach to shopping—buying multiple items in a single trip—can help reduce the carbon footprint per item. Thus, how and what you purchase, coupled with its transportation, influences your carbon footprint significantly.
2. Rethink your packaging approach.
E-commerce, third-party logistics and courier service providers grapple with the challenge of managing waste generated from packaging. Modern, eco-conscious customers want deliveries in environmentally friendly packages that minimize the use of plastic and nonbiodegradable materials. In fact, a survey of 1,500 U.S. adults by SK Group found that 72% of respondents prefer products packaged in recyclable or reusable materials. Forward-thinking companies can respond to this demand by incorporating recycled cardboard, plastic and eco-friendly fillers into their packaging strategies.
3. Enhance warehouse energy efficiency.
Warehouses, though often neglected, are significant energy consumers within supply chains. To adopt greener practices, sustainable warehouse management is crucial. Companies can invest in lighting and equipment that is energy efficient. This can help reduce both energy consumption and maintenance costs without compromising productivity. Moreover, strategically locating warehouses closer to urban areas can decrease the need for additional infrastructure while improving customer proximity.
4. Embrace eco-friendly transportation.
Adopting greener transportation alternatives, such as hybrid vehicles, drones or delivery robots, can help reduce environmental impact. CitySprint, for example, uses an electric fleet for same-day deliveries, including push bikes, cargo bikes and electric vans. DHL’s Cubicycle, a solar-powered, four-wheeled cargo bicycle, is another example. (Full disclosure: BlueDart-DHL is a client of my company.) By investing in zero-emission fleets, businesses can contribute significantly to sustainability.
5. Streamline your delivery routes.
The complex logistics of daily route planning and timely deliveries can be simplified with route optimization. Through my own company’s route-optimization solutions, I’ve found that if companies are considering a route-optimization tool, it can be helpful to evaluate whether it can account for real-world constraints like zone-based restrictions, traffic conditions and rider preferences.
Implementing these strategies can bring businesses one step closer to last-mile supply chain sustainability. I believe the push for a sustainable logistics industry isn’t a distant dream but a tangible and strategic shift unfolding now. With many consumers favoring eco-friendly practices and the green technology market burgeoning, the time is ripe to transition from conventional methods to a sustainable strategy. Our actions today are a decisive investment in this industry’s tomorrow, carving the way for innovative growth, competitive advantage and environmental stewardship.
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