Ecommerce and Fleet Management in the USA

Ecommerce has changed the way we live. But more importantly to us at SmarterFleet, the way we drive. The way we deliver.

In 2020 America, ecommerce transactions have increased by 18.5%, while retail sales have dropped by 10.5%. Of course this year is an outlier of sorts due to unforeseen viral circumstances, but Amazon’s previously unfathomable next day delivery surge has changed the way we consume products.

So as the number of packages is set to rise from 11 billion in 2018 to over 16 billion in 2020 it got us thinking – What does this really mean for fleet management within ecommerce?

Methodology

To understand the impact of the ecommerce boom is having on fleet management and GHG emissions, our highly in-depth study:

• Identified YoY change in ecommerce and retail orders
  • For 2020 overall
  • And for ecommerce and retail’s busiest time – the holiday season
• Predicted 2020 retail and ecommerce orders based on early 2020 data
• Determined the % of retail orders that will be made up by ecommerce
• Ascertained expected GHG emissions – for both retail and ecommerce – and how the online shopping boom is changing them
• Identified the total C02 emissions, how this has changed YoY and what we would need to do to offset those emissions

Fleet Management and Ecommerce in 2020 – a COVID-19 driven change

Sources

1. The USA is expecting an 18.5% increase in ecommerce orders in 2020
2. Ecommerce GHG emissions are actually 17% lower than brick-and-mortar retail
3. The average basket size is 2.54 items in the USA (for SMBs)
4. US’s total C02 emissions
5. 2019 retail ecommerce sales in the USA amounted to $135.35 billion
6. There were also $41.6 billion worth of goods returned

Retail vs Ecommerce Greenhouse Gas Emissions

Traditionally greenhouse gas emissions are 17% lower in the USA than the brick-and-mortar retail alternatives due to a number of factors:

• Transportation
  • This includes long distance freight, last mile delivery (for ecommerce), and customer travel (to bricks and mortar stores)

Ecommerce comes out around 140g CO2/unit above bricks and mortar for transport overall.

• Buildings
  • This includes warehouses (which are used for both ecommerce and bricks and mortar retail) as well as physical stores.

The key differentiating factor is the higher energy demand at bricks and mortar stores – for lighting, heating and cooling. Ecommerce uses more energy than bricks and mortar for warehousing, but only by a relatively small amount. This leaves ecommerce with an 800g CO2 lower emissions footprint from buildings overall.

• Data / HQ
  • This covers electricity use associated with the use of data centres and computing and headquarter operations.

Ecommerce is nearly 100g C02 / unit higher than retail

• Packaging
  • These are the GHG emissions associated with manufacturing the packaging material.

Ecommerce is over 200g C02 / unit higher than retail

But this doesn’t tell the full story…

Rapid deliveries – known as ‘rush shipments’ – tend to increase energy use per item. To get to the consumer at short notice, some products may need to be transported by air – and at the other end of the chain, last-mile delivery vehicles can be driving around half-empty.

So whilst the growth of last-mile delivery is cutting the average trucker’s trip length by 37 percent since 2000 and deliveries less than 50 miles in length are growing annually by 25% it’s not all good news. The extra pressure this is putting on empty deliveries adds to the spiralling fleet transportation emissions.

But what does this mean for Fleet Management and Ecommerce?

Well… (all things being equal), we now know roughly how many ecommerce orders there are going to be and we can breakdown how much of the industry emissions are fleet related.

On a per item basis in the USA we know that ecommerce creates 17% fewer emissions than brick-and-mortar. But on the transportation side, ecommerce is significantly worse. Over 15% worse in fact.

So whilst customer transport for retail shopping emits almost 900g C02 / item, ecommerce’s freight energy, last mile delivery delivery and customer transport (pickups etc) emits over 1050g per item.

So the fleet component of ecommerce related emissions equates to 60.7% of all emissions. That’s a huge proportion.

It means that of the expected (almost) 4 trillion grams of C02 emitted by ecommerce related ventures in 2020, over two trillion three hundred and thirty-nine billion grams of C02 (60.7%) comes from transportation – fleet management.

And what can we do about it?

Well, there are multiple opportunities available to us in the fleet industry:

• Electric vehicles: Well documented of course, but electric vehicles could reduce by up to −1.5 GtCO2 per year. This is 29% less then the total passenger road transport emissions without the use of EVs.
• Cargo bikes: Using bicycle couriers to deliver goods around cities is being tested globally at the minute. The use of them absolutely reduces GHGs, nitrous oxide emissions and particulate matter. Of course it depends on the vehicle used to ferry the goods to the city, but using cargo bikes is a sure-fire way to reduce emissions, congestion and provide additional employment opportunities.
• Drones: Small drones result in a 50% reduction in GHG emissions per package delivered compared to diesel trucks in California and 37% less carbon than diesel trucks across the whole USA

There are multiple opportunities available to us in the fleet industry when it comes to reducing emissions. But there’s no one silver bullet that will solve our emissions crisis.

As ecommerce drives further change, we need to look for meaningful opportunities to reduce the carbon footprint of all of our fleets.

As Amazon’s customer-first policy has driven a level of customer service never seen before, we need to consider how much damage our single item orders are doing. Even something as simple as grouping our orders together can have a significant impact.