Rising operating and fuel costs are prompting increased efforts on fleet optimisation and electrification, new supply chain sector research reveals.
Carried out by DispatchTrack, a specialist in delivery solutions, the Last Mile Sustainability Perspective report explores how supply chain organisations are currently thinking about last-mile operations amid accelerating economic headwinds and driver shortages.
The research, conducted among 140 supply chain professionals across a variety of industries in October and November, found that 77% of companies say they are prioritising sustainability or have plans to do so in the coming year. despite growing inflation. That’s a notable jump from 69% in August. And eight in 10 supply chain organisations currently have sustainability efforts underway. But while many of those believe they are making progress, less than half (38%) of the companies surveyed can actually measure the results of their efforts.
Supply chain professionals are also considering adding electric or semi-electric CVs to the fleet, motivated by high fuel costs; 85% of companies would consider adding EVs to save on fuel costs. Far fewer (60%) would consider using EVs to reduce their fleet’s carbon emissions. And only 14% are using or have plans to use EVs in the near term, though nearly half acknowledged they don’t know enough about EVs to decide. Limited charging stations and worries about running out of miles top the list of their concerns.
The report also explored business outlook and found rising operating costs were far more concerning than demand reduction. Three-quarters ranked rising costs as their top concern while 37% pointed to reduced demand. The group identified several areas where last-mile operations can be better optimised for cost savings including delivery execution (42%), customer communication (41%), and routing (40%). The report also found most supply chain organisations (73%) still struggle with driver shortages, though not as significantly as the previous year.
Alex Buckley, general manager of EMEA and APAC Operations at DispatchTrack, said: “There’s no question the economy is having a major impact on all aspects of business and the supply chain certainly is no exception. Everyone is facing pressure to do more with less. At the same time, the C-suite recognises that the last-mile delivery experience is crucial to customer retention so they have to find a way to reduce costs without breaking their promise to customers. Fortunately, a superior delivery experience and cost efficiency aren’t an either/or. Route optimisation not only ensures deliveries are made on time but is also critical to cost savings by reducing miles driven and trucks on the road, which also happens to cut carbon emissions.”
Key findings from the report include:
Prioritising Sustainability
There’s a sharp rise in companies prioritising sustainability. 77% of companies are already prioritising sustainability or plan to in the next year, a jump from 69% in August 2022. 39% of companies are already prioritising sustainability, up from 22% in August, while 38% have plans to prioritise sustainability in the next year, down from 47% in August.
A total of eight in 10 companies have sustainability efforts well underway. The top sustainability strategies for companies include maximising truckload capacity (61%), improving routing efficiencies to limit emissions (54%), technology investments (17%), and offering delivery options to customers that limit emissions (16%).
Promoting sustainability efforts is mixed. A total of one in five are sharing their initiatives with both employees and customers; one in three companies are promoting sustainability initiatives internally, but not externally.
While most companies have implemented new ways to improve sustainability, the majority don’t have a way to measure progress. Only 39% of companies track their sustainability efforts and have the means to measure results while 61% do not track their sustainability efforts nor have the ability to measure them.
More than half acknowledge sustainability is important to their customers. 55% state that sustainability is somewhat (35%) or extremely (20%) important to their customers. 15% state that it’s not important to their customers.
Adding EVs to the fleet
A total of 14% are already using or have plans to add electric or semi-electric vehicles to their fleet within the next one or two years. 6 in 10 companies do not use EVs but would consider it in the future while 1 in 4 aren’t using EVs or don’t plan to in the future.
Supply chain leaders are hesitant about EVs. The top concerns with using EVs include not knowing enough (47%), not enough charging stations or running out of miles (44%), wanting to see how others are doing before investing (28%), cost restrictive (27%), and infrastructure limitations (26%).
Fuel costs are motivating companies to consider EVs, more so than environmental impact. The top motivating factors for companies to use EVs for deliveries include fuel cost savings (85%), better for the environment (61%), and customer importance (30%).
Economic Impact
The overwhelming majority consider supply chain logistics to be part of their company’s overall business strategy. 75% state that supply chain logistics is part of the overall business strategy while 25% state that it is not.
Companies worry there will be a dip in demand – but they are much more concerned about rising costs. Logistics professionals ranked rising costs (75%), decreased demand (37%), and reduced staff (11%) as the top ways the current economic climate has impacted their business. 18% stated it hasn’t had any impact.
Delivery execution and customer communication top list of areas for improvement. Companies ranked the following as the areas where they see opportunities for improvement for last-mile efficiency delivery execution (42%), customer communication (41%), routing (40%), return management (37%), and inventory management (35%).
Driver shortages remain a challenge. In total, 73% of companies are still struggling with driver shortages.
