Insight / Blog

Royal Mail: ‘Environment is the next battleground’ – why carriers need to act on sustainability

Posted on 21st June 2022

Summary: Environmental progress isn’t a far-away ambition or personal target – it’s becoming a crucial requirement for securing clients.

Royal Mail has announced a new environmental plan to achieve its Net Zero target 10 years earlier, in 2040. This plan includes ambitious targets, such as:

  • Reducing carbon emissions to 50g C02e per parcel, from current recorded rates of 205g C02e.

  • Investing more within its electrical fleet, bringing the total number up to 5,500 by Spring 2023.

  • Implementing 100% renewable electricity across its business locations.

The group also emphasises ‘embracing the circular economy’ and calls for a stand industry-wide reporting on C02 per parcel to educate consumers on the impact and choices available to them.

Simon Thompson, Chief Executive Officer at Royal Mail, said of the new targets: “Environment is the next battleground for businesses and we are determined to lead.”

It’s a powerful statement, not just for the vivid imagery, but for the change it recognises. For carriers and posts, environmental progress isn’t a far-away ambition or personal target – it’s becoming a crucial requirement for securing clients. If you haven’t got it in your arsenal, you will be left behind on that battlefield.

Sustainability action as a requirement 

Retailers increasingly ask about sustainability credentials when making carrier and postal partnering decisions. This was a key talking point of last month’s WMX EMEA conference. Several speakers noted that they are being asked about their sustainability programme as a prerequisite to doing business.

The increased retailer attention on sustainability is due to a simple factor: consumers care about it and are changing their shopping habits. Recent data reveals:

One survey found that 81% of online shoppers agree that the responsibility to make trade sustainable and climate-friendly lies with the retailers. Most consumers view carriers as an extension of the retail brand. When ordering an item online, there’s little differentiation between whom they order from and who delivers in a consumer’s eyes – it’s one continuous journey. Thus, it’s the retailer’s responsibility to ensure that sustainable delivery is at least an option for their customers, if not the default option.

If retailers promote their sustainability credentials to secure sales, they need sustainable delivery options and documented proof from their carriers. The major shift is that price is no longer the sole final arbiter of retail decision making in the logistics space (though of course it still has a huge influence in the conversation.) Sustainability is now a must-have in that buying decision as well as a competitive price and level of service.

For carriers and posts, it’s no longer enough to set and publicise “Net Carbon Neutral” targets, decades in the future. They need to demonstrate progress with quantifiable data.

Achieving progress in a challenging field

With global emissions rising by 5% in 2021,  sustainable action in the last mile needs to undergo real change.

One of the most popular ways that sustainability progress can be proven is fleet electrification. However, as we’ve covered before, electrification isn’t the only answer to last-mile sustainability, and carriers should not place all their eggs into this basket. Yes, the benefits and emission savings they provide over their petrol or diesel counterparts are genuine and important – but there are two big challenges to this solution.

Firstly, the pace of change is too slow. Electric vehicles are still being developed, and aren’t as widely available as their petrol or diesel counterparts. Carriers are struggling to purchase enough electric vehicles from suppliers. This is particularly true in the UK as European manufacturers are prioritising left-hand vehicles, not right hand. Additionally, in some cases, carriers must also persuade drivers who own their own vehicles to voluntarily switch – shifting this action (and sometimes cost!) onto their drivers.

Secondly, the infrastructure to facilitate this change isn’t there yet. Carriers will need to invest in enough charging points at depots and/or drivers’ homes (depending on the nature of their delivery network) in order to keep vehicles charged for their routes.

Overall, electrification is expensive, and prices are increasing thanks to shortages in the supply chain for battery components and other essential EV parts.

Will consumers help with the costs of sustainable delivery?

When asked if consumers would pay more for sustainable delivery, 44% said that they might consider a surcharge, depending on the amount. Our latest last mile sustainability report echoed these findings, showing that 43% of consumers would pay up to £1 more for eco-friendly delivery.

The other side of that 43% stat is that most consumers remain unwilling to pay more for sustainable delivery. However, consumers are willing to make other sacrifices to facilitate it. Metapack’s 2022 benchmark report shows that 58% of consumers are more inclined to delay delivery times than pay to offset the environmental impact on delivery.

This demand for sustainable delivery echoes how consumers began to demand faster delivery without extra costs after growing accustomed to free next-day services through Prime. This put pressure on carriers to invest in more localised delivery centres to speed up order fulfilment despite not making any extra money on the delivery. Fast delivery became a requirement for carriers to fill to stay relevant and competitive, now, the same is happening for sustainable delivery.

Leveraging existing sustainable solutions

So, sustainability is already a key requirement for posts and carriers. Retailers don’t have time to wait for long-term solutions, they’re making demands that carriers need to act on. But as we’ve discussed, many of the solutions that posts and carriers are focused on are cost-intensive and will take significant time to implement, and at least in the case of electric vehicles, it will then take longer to pay off the carbon debt incurred by their manufacture.

Luckily, there are ready-to-go solutions that carriers already have at their fingertips, in the form of out-of-home (OOH) delivery. As we delved into in our sustainability report, reducing emissions is achieved by reducing miles per parcel, which can be achieved through consolidating delivery at OOH locations. Rather than deliver each package to each home, carriers can deliver multiple parcels at one stop, increasing drop density and turning B2C deliveries into something more like efficient B2B drops.

Most carriers have already built out-of-home delivery networks; they just need to drive more volume into them to deliver more sustainable. To achieve this, carriers must work with retailers to ensure OOH delivery options are included in their checkouts. If consumers don’t have an opportunity to select OOH at the checkout, they’re going to default to home delivery, which is a less efficient and therefore less sustainable option.

That means when retailers are putting pressure on their delivery providers to see sustainability progress, one possible response is to ask the retailer whether they currently offer out-of-home delivery, and to create a marketing plan around their network as a way to offer affordable, sustainable and flexible deliveries for time-pressed and sustainability-conscious shoppers.

To make that credible and compelling, however, carriers need to be able to prove that OOH is more sustainable than home delivery, and by how much. Collecting data on the emissions associated with their last-mile deliveries is the first step, to compare per-parcel emissions between home and out-of-home delivery. Secondly, delivery providers must understand how consumers access their OOH network, and how their transport to and from collection points changes the balance of emissions per parcel.

Through increasing volume in consolidated out-of-home deliveries and capturing better data on emissions, carriers can build a credible and scientific case for their sustainability progress. In turn, this data can also be shared with consumers as well as prospective retail partners, giving shoppers more information about the most sustainable ways to receive their deliveries, encouraging more sustainable delivery choices at the checkout level.

Sustainable action = more business

Sustainability is becoming a crucial requirement for carriers and posts, and the onus is now on them to learn how to promote and turn their existing capabilities to their advantage. The easiest and lowest-cost solution most carriers have at their disposal is to increase the share of parcels being delivered into their existing OOH network, consolidating deliveries and reducing emissions.

Leveraging the sustainability benefits of OOH won’t just help secure partnerships with retailers – increasing delivery efficiency also drives down costs and helps to protect margins. That is a win-win situation that carriers can no longer afford to ignore.

Want to learn more about driving volume into your out-of-home delivery network? Talk to our team.

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