Sustainable last-mile delivery: Is out-of-home the answer?

When assessing the environmental impact of delivery, the last mile is a crucial aspect to consider. It is imperative to analyze how we deliver packages to their final destination, as this can have significant implications for our ecological footprint. It is in this context that out-of-home delivery has become a growing consideration. Companies are actively seeking environmentally-friendly solutions to meet consumer demands while minimizing their impact on the planet.

In this article, we will delve deep into the sustainability of out-of-home delivery. We will examine various aspects of this crucial issue and evaluate to what extent out-of-home delivery can contribute to a greener and more sustainable future for last-mile logistics.

What is Out-Of-Home (OOH) delivery?

Out-of-home delivery, often abbreviated as OOH, is an innovative delivery method that is transforming the way parcels and goods reach consumers. Unlike traditional home delivery, where packages are delivered directly to the recipient’s residence, out-of-home delivery involves placing goods in a convenient location or machine for the customer, but outside their home. This approach provides greater flexibility to recipients, allowing them to retrieve their parcels at a time that suits them, whether it is on their way to shopping or when returning from work, for example.

Out-of-home delivery options include automatic lockers, also known as APM (Automatic Parcel Machines), and pick-up and drop-off points (PUDO). This delivery method offers numerous advantages, including enhanced operational efficiency, cost reduction, and potentially reduced environmental impact.

What is the environmental impact of road transportation?

The last-mile delivery, which refers to the final stretch of a parcel’s journey from a distribution center to the final customer, is particularly complex and environmentally costly. This phase contributes to approximately 30% of carbon dioxide (CO₂) emissions in the logistics sector.

Several factors play a role in shaping the environmental impact of last-mile logistics. These factors include the type of vehicles used for deliveries, the degree to which these vehicles are filled to capacity, the number of stops required to serve all customers, and the rate of product returns. Product returns, for instance, can be as high as 10% to 30% in certain sectors like textiles, leading to additional transportation and emissions.

Home delivery is very popular throughout Europe, with 79% of all respondents preferring this type of delivery, according to a YouGov Deutschland GmbH online survey in 2021, which included 8,602 participants across several European countries. However, this convenience comes at an environmental cost, as it often necessitates the delivery of only a single package at each stop.

livraison entre voisins - crowd logistics

In the European Union (EU), where road transportation is ubiquitous, the environmental challenges are significant. Approximately one-fifth of the EU’s total greenhouse gas (GHG) emissions stem from road transport, highlighting the need for more sustainable alternatives. It’s worth noting that almost all heavy-duty vehicles in the EU rely on internal combustion engines, and diesel-powered light commercial vehicles make up the majority of newly registered vehicles. These vehicles emit CO₂ and thus contribute to greenhouse gas emissions, which have a negative impact on the climate.

To reduce the environmental impact of last-mile delivery, alternative solutions are being explored. This includes the use of electric vehicles, the consolidation of deliveries to optimize routes, the experimentation with more sustainable delivery methods such as bicycle delivery, and the use of collection points and automated lockers.

Does out-of-home delivery reduce the carbon footprint of a delivery?

Out-of-home delivery offers significant potential to reduce the carbon footprint of deliveries. Unlike home delivery, which often involves individual delivery vehicles traveling to each address, out-of-home delivery consolidates multiple parcels at a single collection point, such as a pick-up point or an automated locker. This consolidation of deliveries reduces the number of trips required, thereby minimizing greenhouse gas emissions associated with road traffic.

With a failure rate ranging from 2% to 10% on the first delivery attempt, home delivery often requires rescheduling for the next day or a few days later. Apart from the additional costs and customer dissatisfaction, this results in additional CO2 emissions. This issue is avoided with out-of-home delivery, which succeeds on the first attempt in nearly 100% of cases in optimised networks.

As per the findings presented in Last Mile Experts’ Green Last Mile Europe report of 2023, shifting from traditional courier transport to the efficient out-of-home (OOH) delivery system can result in a significant decrease in CO2 emissions. This reduction can be as high as two-thirds in urban areas and even more in rural regions. Nevertheless, it’s crucial to note that this environmental benefit becomes fully realized when recipients opt for eco-friendly modes of transportation, such as walking or cycling, when collecting their parcels or incorporating parcel pick-up into other planned activities.

Studies on the environmental impact of out-of-home delivery versus home delivery have been conducted and presented in the document “A Greener Last Mile: Analyzing the Carbon Emission Impact of Pickup Points in Last-Mile Parcel Delivery” authored by Rudy Niemeijer and Paul Buijs in 2023. The text provides statistics on respondents’ mode of transport choice when going to a pickup point. Approximately 32.8% of trips to the pickup point were made by car, representing more than half of the total distance traveled (53.5%) by customers. Environmentally friendly modes of transport were chosen by a significant proportion of respondents (35.1% for walking, accounting for 18.2% of the total distance, and 32.2% for cycling, accounting for 28.3% of the total distance), especially for short-distance trips. There appears to be a correlation between the distance to the pickup point and the choice of mode of transport, with a strong preference for eco-friendly modes for short distances.

woman taking her parcel at a locker near apartments

Furthermore, the text highlights that the choice of mode of transport varies depending on urbanization, with more frequent car use in rural areas and a preference for walking and cycling in urban areas. This can be explained by the fact that pickup points are generally closer in urban areas, and it is more common not to own a personal car. The potential for a positive impact is therefore clearly greater in urban environments.

In contrast, in a city where transportation alternatives are limited or in peri-urban and rural areas, the outcome may not be as favorable. In such situations, an individual car trip can result in higher greenhouse gas emissions compared to a less optimized delivery route.

This was observed in a case study conducted in the Netherlands, where out-of-home delivery had a positive impact on CO2 emissions from 90% customer adoption in rural areas and 50% adoption in suburban areas.

While out-of-home delivery can significantly contribute to reducing the carbon footprint of deliveries, it is important to note that its effectiveness depends on several factors, including the location of collection points, the use of environmentally-friendly vehicles, and consumers’ willingness to choose sustainable transportation modes to retrieve their parcels. However, overall, out-of-home delivery offers a promising alternative to reduce the environmental impact of the last mile in delivery logistics.

Alongside the development of out-of-home delivery, carriers are transitioning their fleets from gasoline or diesel vehicles to electric vehicles or cargo bikes, which are much more environmentally friendly. Reductions in nuisances such as traffic and noise remain unchanged, as do the reductions in the carrier’s operational costs. This positions out-of-home delivery as a promising alternative to optimize operations, reduce costs, enhance the customer experience, and mitigate the environmental impact of the first and last mile.