Originally Posted At Parcel Industry
Urban areas are densely populated, negatively impacting delivery efficiency due to traffic and parking limitations. In fact, in New York City, 2019, FedEx paid $9.8 million for 146,019 parking violations, while UPS paid $23 million for 348,890 parking violations. However, urban residents can also reduce emissions because they are more likely to use bicycles or other low-emission transportation to pick up packages in a centralized location, a.k.a out-of-home (OOH) delivery locations. In addition, the use of community mailboxes (drop-off locations consolidating volume deliveries) in urban and suburban areas also help to cut emissions and drastically reduce courier delivery times. The challenge to establishing effective community mailboxes is finding a convenient location centrally located along common consumer routes, e.g., shopping and schools. The convenience of any OOH network location dramatically impacts the consumer utilization rate. In total, three main areas impact urban package delivery and sustainability:
- Delivery truck emissions contribute to greenhouse gases and global warming.
- Traffic congestion, with some cities implementing fees for couriers entering downtown areas.
- Limited parking for delivery vehicles.
In addition to urban areas, rural areas also create significant courier delivery challenges. According to the U.S. Census Bureau, “29.8 million people, or about 9.3 percent of the country’s population, moved homes in 2019. Those who moved tended to move into suburban or rural locations versus into cities.” Exacerbating this relocation, Bookings reports, “there was a huge exodus out of metro areas during the pandemic, and 42 major metro areas registered their lowest growth or greatest decline in any year since 2010. Those with the greatest numeric losses are New York (-327,955), Los Angeles (-175,913), San Francisco (-116,385), and Chicago (-91,671).”
All these individuals moving to rural environments present a big challenge for couriers because their delivery locations are now significantly spread out, as opposed to their urban counterparts that are densely populated. This migration impacts last-mile costs in the form of additional Delivery Area Surcharges (DAS), longer delivery times, and a limited number of last-mile delivery providers. According to the Journal of Commerce (JOC), “On average, the DAS fee increased 5 percent year over year from 2019 to 2020 and again from 2020 to 2021 for FedEx and UPS. USPS does not charge an extra fee for suburban and rural deliveries.”
In addition, rural areas are also a much more significant contributor to greenhouse gas emissions because of the distance couriers need to cover to deliver individual packages. Therefore, investing in OOH networks (a more substantial number of parcels to deliver to one location) in rural areas becomes a plausible solution to these issues, as couriers need to traverse fewer miles to deliver the same packages.
Sustainability, Holding Couriers Accountable
In March 2022, The Washington Post reported that a House panel announced plans to “question senior U.S. Postal Service officials about the agency’s decision to buy as many as 148,000 gas-guzzling mail delivery trucks despite directives from the Biden administration to green the federal fleet and opposition from top environmental regulators.” The panel points out that the U.S. Postal Service is falling short of the White House’s goals to migrate all government civilian vehicles to electric vehicles by 2035. The mail agency’s 217,000 vehicles make up the largest share of the government’s civilian vehicles.
The U.S. Postal Service must follow suit with other courier services and replace gas-powered vehicles with more efficient electric ones. NPR has reported a notable amount of sustainability progress from just about every other courier:
- UPS has already placed an order for 10,000 electric delivery vehicles.
- Amazon is buying 100,000 from the start-up Rivian.
- DHL says zero-emission vehicles make up a fifth of its fleet, with more to come.
- FedEx pledged to replace 100 percent of its pickup and delivery fleet with battery-powered vehicles by 2040.
Although these good faith sustainability efforts are to be applauded, all couriers must participate, or delivering packages could be causing more harm to the environment, especially in rural areas. Because the rural drivers can only cover so many miles in a day, their volume of deliveries is much lower than even their suburban counterparts. Companies like Amazon are handing packages to the U.S. Postal Service to perform last-mile deliveries. However, the U.S. Postal Service is the most significant sustainability offender and operates the largest fleet of gas-powered vehicles. Even though Amazon is finding innovative ways to meet consumer demands, the net result is unnecessary pollution from a government agency refusing to follow suit with their delivery counterparts.
In addition, Amazon is enlisting small businesses to conduct last-mile deliveries and paying them $2.50 to $3.00 per package. According to recode, “Amazon has quietly been recruiting mom-and-pop shops in rural America to join an experimental delivery program. The company is paying participating small businesses a per-package fee to deliver Amazon orders within a 10-mile radius to their neighbors’ homes in states like Nebraska, Mississippi, and Alabama.” These local businesses range from florists to restaurants. Although this is an innovative method for adhering to consumer expectations, most of these mom-and-pop shops are transporting packages via gas-powered vehicles, which is counterproductive to any sustainability measure.
PickUp-DropOff (PUDO) Always Sustainable
Establishing PUDO areas is one of the best ways to promote sustainable delivery practices. For example, FedEx has partnered with Dollar General to deliver packages to stores for customer pickup or dropoff. This PUDO network is a win-win for FedEx and Dollar General because customers make purchases while retrieving their packages. According to Dollar General’s website, the company has 14,000 stores in 44 states, mostly in small to mid-size communities.
Not to be outdone, UPS has retail PUDO partnerships with Michael’s, CVS, and Advance Auto Parts. In addition, according to Agriculture.com, UPS is adding 1,500 Package Express Centers in rural cities and towns. The expansion will ensure a convenient PUDO location for 92% of the U.S. population.
Conclusion
Shifting populations force couriers to innovate with their delivery methods and the government to be assertive in establishing sustainability mandates. But these good faith efforts are falling short if last-mile deliveries are conducted by gas-powered vehicles and couriers pass along additional Delivery Area Surcharges as a penalty for living in urban areas.
The best solution to this sustainability conundrum is to establish more PUDO networks. Given the current gas price, it stands to reason that couriers and consumers want to make as few trips as possible. By consolidating packages in a central and secure location, consumers have the opportunity to pick up or drop off packages while conducting typical shopping routines, and couriers experience lower operational costs. Of course, sustainability alone is not enough to make a dramatic difference in consumer or business behavior. However, the prospect of convenience and cost savings are attractive elements that can initiate a positive, environmentally-friendly change in process and behavior. Establishing more PUDO networks will bring about this desired sustainability change.
Dan O’Connor is Vice President of Pickup and Delivery Options at Position Imaging. Prior to Position Imaging, O’Connor spent 30 years working for UPS in a variety of engineering, marketing and new product development leadership roles, including for their pickup and delivery options program where he designed, built and managed a nationwide network of retail locations acting as UPS Access Point shops.