Richard Alden, entrepreneur: “We need to reform the last mile of parcel delivery”

Richard Alden, entrepreneur: “We need to reform the last mile of parcel delivery”
Innovation

This year’s Black Friday is expected to have garnered record sales in France—but it’s also sparked considerable controversy. Parisian mayor Anne Hidalgo indicated last week that she is moving towards taxing major firms like Amazon for the environmental impact of their deliveries, while on Black Friday itself, environmental demonstrators around the country protested against the annual shopping bonanza.

Black Friday may have become synonymous with chaotic instore scenes, though it merely heralds a month-long frenzy of activity over the pre-Christmas shopping season. Increasingly, that commerce is taking place online. As entrepreneur Richard Alden told Rude Baguette, “E-commerce is only going one way: more people buying online and more online transactions per person”.

Internet shoppers are drawn to the convenience of the practice, especially when retailers offer discounted or free shipping. But a whole host of other problems have now popped up as a result of this habit. The increased traffic precipitated by more deliveries causes congestion and exacerbates pollution, as the public infrastructure is creaking under the weight of the daily avalanche of parcels. If the trend towards online consumerism continues as predicted, retailers and delivery companies must step up their game to solve the mounting problems.

The unseen cost of next day delivery

With the launch of Amazon Prime in 2006, the almost cult-like attraction of expedited delivery was born. Today, the service counts over 100 million members on its books, one-third of whom have been found to remove items from their purchase carts when they found that they did not qualify for the two-day delivery guarantee. Backed into a corner, other retailers have followed suit, making fast and free delivery almost a prerequisite for any online shopper.

New York City is a perfect example of how our craving for swift delivery has reshaped our cities all over the world. America’s largest metropolis handles 1.5 million packages daily, and 15% of NYC homes receive at least one every day. This has seen the number of shipments arriving into the city triple to 1.1 million since 2009, making the entryway into the city from New Jersey now the most congested interchange in the entire United States.

The situation is even worse downtown. Average speeds in traffic are barely above a mild jogging pace at 7mph, while delivery drivers constantly block streets by parking illegally to deposit their goods. Last year, the four major couriers serving New York (FedEx, Fresh Direct, Peapod and UPS) racked up over 500,000 parking violations totalling more than $27 million in fines. But with boroughs like Manhattan offering generous discounts to delivery drivers (a $35 fine instead of the usual hefty $115), companies rather take the financial than the reputational hit.

This congestion, contributing substantially to urban pollution, is a symptom of what Richard Alden identified to Rude Baguette as one of the most problematic aspects of today’s parcel delivery system. “Today the carriers can get parcels across the world in a day, but the last mile is still the most congested and unsophisticated part of the process,” Alden explained. “First time delivery is difficult to guarantee, and this results in frustrated consumers and repeated visits for the carriers, increasing congestion”.

Innovation in distribution

For Richard Alden, enabling carriers to guarantee first time delivery is key to making sure packages travel their last mile more sustainably. One of the companies on whose board Alden sits (and in which he has invested), Madrid-based Citibox, installs small mailboxes in apartment buildings where customers can drop off and return packages via their smartphones. The advantage of this type of model, according to Alden, is that carriers “know that delivery is guaranteed and there is no need to spend valuable time searching for an alternative delivery option when the customer is absent”.

Not having to make repeat trips naturally cuts down delivery vans’ emissions. Furthermore, as Alden noted, carriers can choose to “concentrate all Citibox deliveries at night when the streets are less congested and when parking restrictions do not apply”—simultaneously reducing ecological impact, the traffic jams and parking fines.

Couriers are also inventing more efficient and sustainable methods of managing distribution. 8% of UPS’ 120,000-strong fleet use alternative fuels, while the company are also trialling e-cargo bikes in Seattle, after pilot projects in Portland and Hamburg. The latter city has also benefited from rival company DPD pledging to only use zero-carbon vehicles in its service, while a similar initiative has been in place in Oslo for half a year, resulting in a 25% increase in employee productivity and a 40% decline in carbon emissions.

An e-cargo bike delivery system has been implemented in Paris since 2001, while the Netherlands have also enjoyed success with the idea. However, one Dutch expert claims that e-bikes only really pay dividends when the “last-mile” journey is under 5km in distance, making it unsuitable for over 90% of deliveries in Germany. One solution to this would be to move storage hubs closer to urban populations, as is happening in Oslo, Montreal and New York, but this could have detrimental consequences on air quality for nearby residents.

Delivering reform

Whether it arrives in the form of forward-thinking firms, cleaner forms of transportation or a shift in consumer habits, it’s clear that reform is an urgent necessity for the world of online retail. With 70% of the global population projected to live in urban epicentres by next year, and with online sales expected to surpass $6 trillion by 2024, the quality of life for over two-thirds of all humans may depend upon it.

Next day delivery might be attractive due to its convenience and practicality – but it dispenses with consideration about the day after tomorrow altogether. Instant gratification is all well and good for the consumers of today, but without drastic reform of the current setup, it can surely only be interpreted as an outrageous affront to those of the future.

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