The world adores online shopping. More and more shoppers around the world are falling in love with it. In 2021, retail e-commerce sales amounted to approximately $5.2 trillion. This figure is forecast to grow by 56% over the next years, reaching about $8.1 trillion dollars by 2026. One big growth area is international, or ‘cross-border’ parcel shipping, as savvy consumers seek out new products and better prices from websites beyond their own shores.
How can businesses make processes much greener?
But the reality facing us all is that every parcel sent and received impacts the planet. As the climate catastrophe unfolds, retailers are working hard to reduce their emissions and offer transparency around the carbon impact of e-commerce, while at the same time offering outstanding service. What progress is being made in carbon-neutral and reduced-carbon shipping, and how much greener can the industry hope to go, while still operating profitably?
Eco-shipping options in high demand
Consumers want action. The International Post Corporation (IPC), found that 44% of online shoppers have changed their purchasing behaviour to be more sustainable. Nearly half (49%) stated they would prefer their cross-border parcels to be carbon neutral. Similarly, a recent ParcelLab survey of US consumers found that 64% are frustrated by unsustainable shipping practices, and 18% said there were no instructions for how to recycle their packaging.
Last year, Sendcloud research found that green delivery plays an important part in the purchase decision for 74% of UK online consumers, with 15% revealing they’d use a brand that offers green delivery over one that doesn’t. That said, cost-cautions consumers see additional costs for environmentally friendly shipping as unfavourable and would rather opt for the standard ‘free shipping’ option, research – and our own experience – repeatedly finds.
A German survey revealed that one in five Germans is willing to pay more if it helps protect the environment. Respondents said the surcharge should not exceed 5%, however. There are limits on the amount e-commerce customers will pay for green delivery. Retailers are asking themselves if they are willing to take a hit to profits, as part of their eco-delivery strategies.
Coupled with this high consumer demand for greener shipping, is the likelihood of carbon reporting legislation being passed in the years ahead, so it’s not surprising retailers, their couriers and shipping partners are currently innovating at breakneck speed.
From Asendia’s everyday conversations with e-commerce brands both big and small, we know the pioneers see offering green delivery as essential for building trust and loyalty with their growing customer bases, while potentially leapfrogging the competition.
‘Carbon conscious’ delivery partners
A good starting point is minimising packaging and choosing eco-friendly materials for parcels, labels, and void fill. Electric delivery vans and e-bicycles are widely used by last-mile couriers around the world. Sustainable aviation fuel (SAF) is coming, the airline industry assures us.
Environmentally-conscious route optimization is much talked about in logistics circles, with artificial intelligence and data analytics now really beginning to have an impact on carbon emissions reduction in the transportation of inventory and e-commerce parcels. A major eco-option in recent years has been carbon offsetting in the supply chain, which means retailers can offer carbon-neutral delivery, even when sending orders to international clients.
Like many players in the industry, Asendia has set an ambitious target to neutralise our environmental impacts, and pass that benefit onto our retail clients and their customers around the world. One big challenge we face is that Asendia does not own transport assets and infrastructure – trucks, airplanes, and ships. Instead, we buy services from the transport providers for our shipping routes, and 95% of our emissions come from these vehicles.
This makes it hard for us to manage carbon reduction ourselves, beyond partnering with ‘carbon conscious’ partners. So, we have focused on offsetting to achieve carbon neutrality.
Offsetting can be the best option
As of January 2022, Asendia offsets 100% of its global transport emissions, including those by our delivery partners (air freight), parcel returns, and building and machinery emissions. This includes those by our delivery partners, parcel returns, building and machinery emissions, and corporate administration such as business travel. Our carbon neutrality milestone has been achieved by supporting EcoAct verified wind farm projects in India and China.
These wind projects have many positive impacts, from promoting renewable energies to creating jobs and economic stability in local communities. For example, the Gaolin project in China involves the construction and maintenance of 88 wind turbines with the goal of injecting more clean, renewable energy into the electricity mix.
This will reduce the negative effects of air pollution, and lower Greenhouse Gas emissions. We are also able to report the amount of carbon we are offsetting in our regular corporate updates, which is powerful information to share both internally and with all stakeholders.
Green shipping means slower delivery
Despite unprecedented levels of supply chain disruption in recent years, logistics professionals are finding time to fathom out greener ways to ship parcels around the world. Several of the big shipping suppliers are now offering carbon-neutral delivery options in some form, and most report regularly on their reduced carbon emissions. Brands from Aveda to Zalando are using their websites and social channels to promote commitment to greener supply chains.
There’s an understanding among consumers that express delivery is a high-carbon option, while slower delivery is kinder to the environment. Asendia’s retail clients are increasingly requesting data on the carbon value of parcel journeys, and are eager for special ‘green delivery’ options, all our shipping is offset, and every parcel delivery is carbon neutral.
Carbon offsetting is just one step on the journey
Offsetting may not be the perfect solution, but while the world awaits innovations such as Sustainable Aviation Fuel and other carbon-cutting developments, we believe it’s a worthwhile way to progress toward our ESG goals. Businesses need to have a detailed knowledge of their carbon footprint and find long-term solutions to reduce this. So, we have a pipeline of new innovations that will be launching in 2022 and 2023 for our retail customers.
These include a customer-level carbon calculator, green-label delivery products, and alternative last-mile delivery methods. Green logistics goes beyond trucks and aircraft, I believe. At Asendia we work hard to offer free advice and waste-saving services such as data cleaning and digitised returns to the retailers we work with, in the knowledge that the more collaborative support we give, the sooner benefits to the environment will filter through.
It’s a work in progress for all of us, and there is a great deal of discussion about the best certification programmes to commit to, and which scientific calculation is the most reliable and accurate for reporting emissions per shipment. I’m conscious that providing end-customers with total visibility is the real value of these calculations. By informing and educating the shopper at home, we’ll empower them to take more climate-friendly decisions.
Cost is an ongoing challenge
Of course, challenges lie ahead for the cross-border e-commerce industry. Cost is a big issue, with a question hanging over whether or not shoppers would be willing to pay a premium for carbon neutral delivery, or whether retailers and 3PLs are willing to take a hit to profits.
Some brands are toying with the idea of charging shoppers a token amount to compensate for the emissions caused by their parcel delivery, and no doubt others will follow suit. I would urge retailers to educate consumers on the reality of international shipping, encouraging the take-up of slower delivery, and explaining that green delivery is unlikely to be free delivery.
Creative ideas will be required from marketing departments, weaving environmental values into the brand messaging. One option is for retailers to offer incentives like loyalty points and discounts for shoppers who choose the low-carbon shipping service. What’s certain is the shift to green commerce is an absolute must in 2022. No one’s nailed the full delivery impact yet, but with innovation and clear communication, we can get ahead of the curve.