Is UPS Following AxleHire’s Lead on Sustainability?
last-mile delivery All Blogs
Nov 11, 2023
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Aggregation and optimized delivery vehicle utilization are the keys to reducing the carbon footprint of last-mile delivery in the near term. We’ve been saying that to anyone who would listen for the past few years. Based on recent news, it appears the concept may be catching on.
The story starts with media coverage of a UPS earnings call in mid-2022. On the call, UPS CEO Carol Tomé announced a pilot program to improve its package-per-delivery rate. The UPS scheme involves holding an order for a specified amount of time to try to match it with another parcel for the same address, reducing UPS’ cost of delivering the second parcel nearly tenfold, from $5.50 for the first package to $0.60 for the second. Given the apparent potential to boost profitability, you’d be correct in assuming this is not UPS’ first attempt at increasing its package-per-delivery rate, but it does represent a new approach.
Fast forward to late 2023, and UPS is singing a different tune about this delivery density scheme, as seen in the Supply Chain Dive headline, UPS Pursues Greater Delivery Density to Reduce Emissions. The message has shifted from cost-cutting to sustainability. Same program, same ten-fold cost and margin benefits, new marketing strategy.
So where did UPS get the idea that aggregation and density would help with carbon footprint? Well, maybe they’ve been reading Freight Waves or Supply Chain Brain, where AxleHire COO Adam Bryant covered the topic in detail earlier this year. Or perhaps they’ve been following the AxleHire blog, where this topic has been addressed multiple times over the past 18 months. Or maybe they downloaded our Why Sustainable Last Mile Deliveries Matter to Consumers ePaper that explains the science behind last-mile sustainability and highlights practical steps that shippers and carriers can take, leveraging existing technologies, to reduce their carbon footprint today.
At AxleHire, sustainability is not an afterthought or a new marketing strategy. It’s part of who we are and what we believe, and we applaud all efforts from all players in our industry (especially the big guys like UPS) to reduce the carbon footprint of last-mile delivery. With the right technology and operational practices, last-mile providers can significantly improve the carbon footprint of ecommerce deliveries, and we can do it today.
When you think about sustainability, the last mile is the least efficient step in any delivery. The math explaining why is here (and in more detail here). At a high level, the solution is simple—leverage aggregation and strategic positioning of resources to reduce the number of miles driven by the delivery vehicle and optimize vehicle capacity utilization. Reducing miles reduces fuel burned and CO2 created. Optimizing capacity ensures that whatever fuel is burned is used more efficiently.
It sounds simple in theory, but it takes a complex mix of technology and operational practices to make it work in the real world. AxleHire leverages leading-edge proprietary technology to create the most efficient possible dynamic routing based on the current day’s aggregate demand, reducing the number of miles our drivers must cover. We employ gig drivers and network partners using passenger vehicles that burn fuel much more efficiently than traditional delivery trucks. Those vehicles come in various shapes and sizes, allowing us to match each route/load against the optimal vehicle for maximum efficiency.
Wherever feasible, AxleHire positions flexible micro hubs closer to the heart of urban areas, pushing the final sortation/distribution process closer to where your customers live. Because the middle mile is more efficient than the last mile on a per-package basis (math here and here), breaking bulk closer to the end consumer helps reduce the carbon footprint of delivery even more.
Following these practices, we see the potential to reduce the carbon footprint of the average ecommerce delivery by 60% or more (again, you can find the math here and here), and it can be done today while the industry is still in the early stages of what will be a multi-decade transition to alternative fuel vehicles. We’re doing these things now, and unlike UPS, we won’t hold up your package waiting for a match.
We appreciate seeing our friends at UPS continue to make strides towards sustainable deliveries that benefit all of us. Seeing that they are now adopting part of our long-standing sustainability strategy, you’d think we’d at least get a thank you note from UPS for doing so much of the heavy lifting on this topic. We won’t hold our breath for that, but we would like to hear from you.
To find out how you can improve your ecommerce deliveries' carbon footprint today, connect with one of our logistics experts.