GREEN AND SUSTAINABLE LOGISTICS NETWORK:MICRO MOBILITY IN THE FIRST - LAST MILE DURING PANDEMIC AND AFTERMATHDR. VARVARA KRECHETOVA, EXPERT CONSULTANT

REGIONAL CONFERENCE FOR LOGISTICS SERVICE PROVIDERS30 JUNE 2021, VIRTUAL EVENT

E-COMMERCE IN PANDEMIC

Increase of share of E-commerce in global retail sales 2020 (percent)

*ProjectedSource: calculated based on data of Statista.com

E-commerce share of retail sales by region in2020 (percent)

Source: based on Edge by Ascential, Statista.com

100%

80%

60%

40%

20%

Share of e-commerce

Economy 2019 2020

China 20.7 24.9

Republic of Korea 20.8 25.9

Singapore 5.9 11.7

Online retail sales share in total retail sales (% of retail sales)

Source: UNCTAD, 2021.

%

%

%

%

%

%

E-COMMERCE IN PANDEMICE-COMMERCE IN PANDEMIC

$ - United States dollarSource: UNCTAD, ‘Estimates of Global E-Commerce 2019 and Preliminary Assessment of COVID-19 Impact on Online Retail 2020’, 3 May 2021

Top B2C e-commerce companies by gross merchandize volume (GMV), 2020Web traffic of online shopping platforms in Southeast Asia, 2020

Singapore +35%Philippines +21%Vietnam +19%Malaysia +17%Thailand +15%Indonesia +6%

Source: iPrice Group.

Parcel deliveries business-to-consumer, 2020Globally ~+25%China +31.2%

Sources: World Economic Forum and McKinsey & Company, 2021;State Post Bureau of the People’s Republic of China.

Least efficient

Scattered delivery

Small size of orders

Up to 50% of logistics costs

Most challenging

Traffic congestion

Atmospheric pollution (at least 25% of GHG emissions of

transport)

Accidents-prone

─ Delivery to final location

─ Delivery to final consumer: Final step of order fulfilment and last delivery segment

Last mile logistics

Brings goods and materials into supply chain

First mile logistics

Challenges of last-mile logistics

More trips

Tiered distribution network: More levels of distribution points

Fulfilment centers as new distribution facilitiesCarrier services as part of e-

commerce companies

Delivery options are shaped by consumer preferences (speed,

timing, flexibility, price tag)

Growing warehousing network

Increase in scale of last-mile logistics

Crowdsourcing (Uberization)

More emissions

More congestion

Super fast deliveries

Scheduled deliveries

Delivery options with different price tag

Delivery to home, to parcel locker, to pick-

up point

More players at logistics market

Bigger labour demand

Recent trends in last-mile logistics

Types of nodes in distribution networks

Source: Jean-Paul Rodrigue, ‘The Distribution Network of Amazon and the Footprint of Freight Digitalization’, Journal of Transport Geography 88 (October 2020), https://doi.org/10.1016/j.jtrangeo.2020.102825

Initial points for last-mile delivery

More trips

Tiered distribution network: More levels of distribution points

Fulfilment centers as new distribution facilitiesCarrier services as part of e-

commerce companies

Delivery options are shaped by consumer preferences (speed,

timing, flexibility, price tag)

Growing warehousing network

Increase in scale of last-mile logistics

Crowdsourcing (Uberization)

More emissions

More congestion

Super fast deliveries

Scheduled deliveries

Delivery options with different price tag

Delivery to home, to parcel locker, to pick-

up point

More players at logistics market

Bigger labour demand

Recent trends in last-mile logistics

More trips

Tiered distribution network: More levels of distribution points

Fulfilment centers as new distribution facilities

Carrier services as part of e-

commerce companies

Delivery options are shaped by consumer preferences (speed,

timing, flexibility, price tag)

Growing warehousing

network

Increase in scale of last-mile logistics

Crowdsourcing (Uberization)

More emissions

More congestion

Super fast deliveries

Scheduled deliveries

Delivery options with different price tag

Delivery to home, to parcel locker, to pick-

up point

More players at logistics market

Bigger labour demand

Pandemic period aggravated problems in last-mile logistics In top 100 cities by 2030:

Number of delivery vehicles +36%Their emissions +32%Caused congestion +21%

(11 min)

Source: WEF, 2020

Labor issues in digitizing last-mile logistics

Digital platforms bring into labor market

Flexibility

For companies

Low costsWorkers

engaged for short-term

Wider pool of potential

workers

For workers

Working hours compatible with other

responsibilities

Innovation

New work organization modalities

Ways of engaging

the worker

Ways of payment

New jobs

Jobs can be picked up at wider area

People can access jobs not at the

local market

Concerns

Lack of social

security benefits

Widening economic

disparities in mid to long

term

Lack of training

Unclear long term

employment prospects

Congestion• Sustainable industry solutions:

• Real-time data

• Re-routing

• Capacity sharing

• Incentives for customers to use pick-up points: stationary or mobile, staffed or with parcels lockers

• Sustainable urban planning solutions:• Double-parking enforcement

• Express lane use

• Real-time traffic lights

• Delivery parking zones

Ways to mitigate impact/contingencies

Environmental impact• Sustainable industry solutions:

• Clean-vehicle technology (efficient gasoline/diesel vehicles)

• Biofuel

• Non-motorized bicycles/tricycles

• Electric vehicles

• Capacity utilization and parcels organization inside delivery truck

• Incentives for customers to select “green” delivery options

• Routes optimization

• Some solutions from regulators:• Regulations on autonomous vehicles, delivery drone

• Regulations on emissions and requiring low or zero-emission vehicles

Drone delivery: example of JD.COM

Source: JD.Com at https://jdcorporateblog.com/jd-coms-drone-delivery-program-takes-flight-in-rural-china/

Technology

7 types in use:

Load weight 5-30 kgReach 7-100 km per chargeMax speed 54-100 km/h

Implemented in China, tested in

Japan, Indonesia

Heavy-load drones tested

(800 kg, 500 kg)

Usage

Rural and less accessible areas (over 100 routes

across China)

Disaster relief (Beijing storm

2018)

Crisis relief (COVID-19 lockdowns across China)

Delivery station

DroneVillage

promoterVillage

consumers

Work flow

Autonomous/unmanned delivery vehicles

Source: JD.COM https://jdcorporateblog.com/in-depth-report-why-how-and-when-about-autonomous-delivery-vehicles/

Source: Xinhuanet http://www.xinhuanet.com/tech/2020-02/14/c_1125573586.htm

JD.COM JD.COM’s autonomous delivery vehicle delivers supplies to Hospital N9 in Wuhan, China

Source: Meituan blog https://mp.weixin.qq.com/s/o98z1A-q_FmGdppESiY4HA

Meituan tests autonomous delivery vehicle for groceries, small and light orders since 2018

Alibaba’s Cainiao autonomous delivery vehicles are rolled out at universities’ compounds China since 2020

Source: https://baijiahao.baidu.com/s?id=1667291170053966574&wfr=spider&for=pc

Source: https://rakuten.today/blog/rakuten-ugv-hits-yokosuka-streets.html

Ratuken’s first trial of autonomous delivery vehicles in open street

Korea Post’s vehicle tried at Korea University Sejong Campus in 2020

Source: http://www.koreaherald.com/view.php?ud=20201028000976