Tackling the Environmental Cost of Booming eCommerce in the Region

Even before the pandemic struck, the MENA region’s logistics industry was the fastest-growing economy. The e-Commerce market growth within the GCC has been upscaling at a constant pace, with 64 percent of consumers in the region placing online orders at least once a week compared to 40 percent globally.

While pandemic-induced lockdowns affected cross-border logistics operations, the story within countries was different. The stay-home and social distancing mandates skyrocketed the need for home deliveries. For instance, supermarket operator Carrefour’s online orders spiked by 917 percent in Saudi Arabia.

Similarly, the UAE and Egypt experienced a surge of 257 percent and 747 percent, respectively. Hence, logistics emerged as an essential service itself during the pandemic.

Moreover, the pandemic encouraged several businesses across KSA to invest in eCommerce, especially as the market was expected to contribute 80% to the retail sector by 2030.

Carbon emissions and sustainability in the e-commerce space

The UAE transportation industry contributes significantly to GHG emissions. It accounts for nearly 20 percent of all carbon dioxide (CO2) emissions globally, with road transportation contributing to the bulk of those emissions. In addition to transportation, logistical procedures generate a high amount of waste.

For instance, shipping speed and rates have been largely driving customer experience. The rising popularity of faster order fulfillment models in the region is influencing trip volumes and adding to the emissions.

However, an IBM research indicates that 57 percent of customers are willing to change their purchasing habits to reduce their carbon footprint. As much as 65 percent of consumers in the Middle East have become more eco-friendly during the pandemic, engaging in sustainable behaviors. It will not be surprising to see customers buying into brands that focus on sustainability.

Hence, saying that environmentalism has gone mainstream would be an understatement. Not only the end consumers but relevant authorities are also weaving stringent policies around carbon emissions. Government laws and a growing need for transparency are prompting businesses to seek more sustainable logistics and supply chain options, such as embracing eco-friendly modes of transportation. It also aligns with the UAE and KSA’s vision 2030, which aims to explore alternative energy consumption methods to build an eco-friendly approach to transportation and logistics.

Sustainable logistics aims to mitigate the ill effects of increasing carbon footprint by introducing innovative solutions focused on reducing CO2 emissions, optimum utilization of resources, appropriate waste disposal, and optimization of transportation routes.

Recently, the UAE’s consistent transition to sustainable development has accelerated the logistics sector’s acceptance of the idea. It can be seen in the emergence of more environmentally friendly warehouses in the country and the industry’s ongoing application of globally recognized sustainable practices. On a grassroot level, it is also wise to:

• Invest in more fuel-efficient and environmentally-friendly vehicles
• Make use of all available storage space in deliveries
• Maintain the vehicle’s condition by minimizing wear and tear
• Leveraging eco-friendly packaging to ship parcels
• Invest in garbage recycling and reusing packaging

As we trudge forward, businesses must deploy smart logistics management solutions to lower their carbon impact and develop sustainable supply chain operations. Fortunately, rapid technological developments have helped multiple aspects of logistics, such as optimizing routes, improving resource productivity, reducing fuel consumption, and boosting overall logistical efficiency.

Technology can help logistics-powered businesses to achieve sustainability goals by reducing miles traveled, increasing first attempt deliveries, eliminating empty miles, decreasing trip volumes, preventing vehicle idling, improving resource utilization, and curbing paper usage by digitizing parcel journeys.

Let’s look at how smart logistics management platforms empower businesses to achieve their sustainability goals.

Optimising delivery results

AI and ML-powered route planning and optimization engines can chart out the most effective route to the customer locations, including multiple pickups and delivery points. It leverages real-time and historical data to fetch real-time traffic conditions to eliminate delays caused by congestion, diversions, and roadblocks that add up to the on-road time and increase fuel consumption and carbon emissions. Moreover, en route order clubbing and dynamic routing can increase driver productivity by 14 percent

Moreover, mobile-based sorting of shipments and automated alerts notifying hub managers in case of missed shipments during bag creation in the middle mile can bring down delivery misroutes by 64 percent.

Improving vehicle utilisation

An intelligent auto allocation engine leverages a predefined configurable logic to automatically assign the right vehicle based on delivery type, volume, distance, etc. It helps utilize vehicle capacity to the optimum levels, increasing vehicle utilization by 31%. Improved capacity translates to lesser trips and better delivery productivity.

Prioritising sustainable delivery modes

AI-powered delivery management tools allow delivery managers to prioritize eco-friendly modes of transportation, such as bicycles and electric vehicles, for shorter distances. The system automatically assigns the relevant vehicle type based on the delivery radius configured by the delivery manager.

Ensuring first attempt delivery success

Logistics management tools extend real-time information to the end customers through ETAs and tracking links that can be used to gauge the delivery progress. This real-time delivery information increases the chances of customer availability at the time of delivery, reducing reattempts.

Then using advanced geocoding capabilities, businesses can easily convert customer addresses into exact latitude and longitude-based coordinates. This resolves the concern of growing first-attempt delivery failures and shrinks the carbon footprint of last-mile delivery operations.

Enabling visual integrity checks to reduce returns

Enabling proof-based quality checks of products at the hub level can prove instrumental in avoiding further wastage of resources due to this reason. Mandating delivery executives to perform visual integrity checks on the package before a trip begins can go a long way in identifying orders that will lead to returns and curbing carbon footprint.

Enabling order consolidation

Faster shipping is repeatedly associated with a better customer experience. However, shoppers, especially the younger cohorts, are increasingly preferring to shop with brands that embrace green practices. Research says that customers are willing to wait for up to 4 days if their shipments arrive through greener modes of transport.

Order consolidation allows businesses to ship multiple orders headed for the same destination in a single carton. This means lesser use of packaging material, such as outer cardboard, tape, bubble wrap, peanut foam, etc., and lesser carbon emissions too by reducing the number of trips to deliver multiple packages. All these factors help businesses reduce emissions.

Tracking your carbon footprint

Awareness is the first step toward resolving a challenge. Knowing the overall environmental impact of your logistics operations can actually lead you to strategize better and identify pockets of improvement. Smart logistics tools empower enterprises to monitor their carbon emissions through sustainability dashboards and global shipping insights. It also enables intelligent decision-making to improve cross-border logistics planning.

Growing carbon emissions are not only an environmental issue but also a commercial one. As awareness around the environment increases, businesses that will be among the first ones to move up the sustainability ladder will reap multiple tangible benefits.

SHIPSY MEDIA CONTACT

arjun.alva@shipsy.io