E-Commerce Contributes to Sustainability

E-Commerce Contributes to Sustainability

March 9, 2020
Research shows it increases transportation efficiency compared to in-store shopping.

It may strike some people as counterintuitive, but e-commerce is improving the sustainability of retail by creating supply chain efficiencies, recent academic studies have found.

This research was conducted by Massachusetts Institute of Technology Center for Transportation & Logistics, the Global Real Estate Sustainability Benchmark organization, Carbon Management and others.

“An end-to-end accounting of carbon footprints reveals e-commerce to be more sustainable than traditional brick-and-mortar retailing,” the global logistics real estate firm ProLogis explains in a recent report based on the current state of research. “The key to greater sustainability in retail is reducing the transportation impact – the largest source of emissions for the United States as a whole. Here, e-commerce is substantially more efficient.”

 By consolidating goods transportation into trucks and vans that make several deliveries on circular routes, instead of individual point-to-point trips made by consumer vehicles, the carbon footprint of transportation falls by more than 50% as measured by kg CO2e, the studies have shown.

 ProLogis also points to the faster pace of adoption of electric vehicles (EVs) by delivery companies (compared to the larger consumer vehicle fleet) which it says contributes to the widening the CO2 savings of online versus in-store shopping,

While packaging for e-commerce is greater, these studies have shown that it does not outweigh the transportation savings created by online shopping. In total, the end-to-end environmental impact is estimated to be roughly 15% lower for online versus in-store shopping.

 There are three aspects of today’s sustainability advantages that, when taken together, forge a significant sustainability advantage that is built in for the long term, ProLogis says. These apsects are location strategy, order consolidation and network optimization, and more effective deployment of technology.

 When it comes to location strategy, today’s supply chain is led by the need to place network operations closer to end consumers. Doing so in turn reduces carbon emissions, lowers total vehicle miles traveled and cuts operating costs.

 “Locating goods near end consumers creates environmental benefits by consolidating packages to maximize the load capacity of goods entering a city,” the company points out. “Not only do Last Touch and City Distribution facilities require proximity to consumers, they provide an opportunity to reduce overall transport emissions via more efficient distribution.”

 (Last Touch is the ProLogis proprietary term for properties located where they can reach large dense, affluent populations within a matter of hours. These buildings typically are the oldest and smallest, because they typically are located in very infill locations. City Distribution properties are what it terms facilities that can provide one- to two-day shipping to a large market. Tending to be small to mid-sized buildings, they are located in urban areas.)

Transportation Cut in Half

The company says this kind of location strategy is supported by analytics and technology which make it possible to choose the most efficient routes. Academic studies estimate that the transportation portion of the environmental impact for e-commerce is less than half that of in-store shopping, even after incorporating into the figuring a higher return rate

The second aspect -- more order consolidation and network optimization -- allows the concentration of goods movements into an aggregated and optimized network, ProLogis adds. “This means online shopping’s carbon footprint can be up to 50% less than that of traditional retail, making e-commerce more sustainable than its brick-and-mortar counterpart.”

However, different shopping patterns end up having different impacts on the environment, the company admits. For example, basket size, return rate and the number of trips all affect the carbon footprint of an individual purchase.

However, when consumers shop online, they are not making trips to the store to search for and purchase items. The order is instead consolidated with other consumers’ orders, then placed into a delivery truck which travels along a single delivery route.

This efficient method of product delivery significantly outweighs the carbon footprint that would be incurred were each individual consumer to travel to and from stores to make their purchases, MIT’s Transportation Center research found.

“In fact, as more goods are ordered online, efficiency also rises,” ProLogis says. While it is true that packaging levels are higher for e-commerce compared to traditional shopping methods -- they are estimated to contribute roughly 1.0 kg CO2e and comprise the majority of the environment impact of online shopping -- they are less than the transportation impact (roughly 25% less) of traditional in-store shopping.

The third way e-commerce helps the environment stems from ingenious applications of new technological solutions. “As logistics real estate owners and users increasingly embrace renewable energy and sustainable building technologies to reduce their overall carbon footprint, the near- and long-term benefits are very real,” ProLogis explains.

It also points to the growing number of deliveries that being made by electronic vehicles. More than 90% of the trips by parcel delivery vehicles are within a 100-mile range – which is a feasible distance for zero-emission vehicles, according to ProLogis. “Increasing adoption of EVs has the potential to more than halve the environmental impact from transportation for e-commerce,” it asserts.

“Looking ahead to the customer and investor side, the key is to place decision-making around sustainable commerce directly in the hands of logistics customers. Those customers who invest in green technologies will stay ahead of their competition and win the loyalty of consumers and investors whose concerns around sustainable commerce will only increase with time.”

For all of these reasons, logistics real estate is leading its commercial property peers whenit comes to energy efficiency, ProLogis claims. “Increasingly, well-located logistics real estate is a key component in optimizing supply chains and sustainability in the age of e-commerce.”

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