- New report finds high fuel cost is motivating supply chain professionals to consider adding electric or semi-electric vehicles to the fleet
- Fear of cost increases continues; Driver shortages remain a challenge.
DispatchTrack released a new report, the Last Mile Sustainability Perspective, which explores how supply chain organisations are currently thinking about last mile operations amid accelerating economic headwinds.
The study pays particular attention to how organisations are thinking about sustainability and optimisation today as well as other factors impacted by the current economic climate including rising costs and driver shortages. Findings are based on a survey of over 140 supply chain professionals from a variety of industries conducted in October and November.
Despite growing inflation, 77% of companies claim to be prioritising sustainability or have plans to do so in the coming year, a notable jump from 69% in August. Even more, 8 in 10 supply chain organisations currently have sustainability efforts underway. And, while many of those believe they are making progress, less than half (38%) of the companies surveyed are able to actually measure the results of their efforts.
It appears electric or semi-electric trucks (EVs) aren’t among the sustainability strategies underway. Findings signal supply chain professionals are hesitant to add EVs to their fleets. 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 make a decision. Limited charging stations and worries about running out of miles top the list of their concerns. Strikingly, the report found 85% of companies would consider adding EVs in order to save on fuel costs. Far fewer (60%) would consider using EVs to reduce their fleet’s carbon emissions.
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 a number of 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 the vast majority of supply chain organisations (73%) still struggle with driver shortages, though not as significantly as the previous year.
“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,” said Alex Buckley, General Manager of EMEA and APAC Operations at DispatchTrack. “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:
- 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.
- 8 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. 1 in 5 are sharing their initiatives with both employees and customers; 1 in 3 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
- 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%).
- 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. 73% of companies are still struggling with driver shortages.