Yahoo Finance E-commerce brings 'opportunities for greener solutions,' DHL Express US CEO says
The growth of e-commerce could make it easier for supply chains to lower their carbon footprint, according to a new report by DHL (DPSGY) and FINN Partners’ Global Supply Chain, Logistics & Transportation Practice.
“We started to dig in and look at a couple of key areas in the paper where we think the trends in e-commerce would have an impact on sustainability,” Greg Hewitt, CEO of DHL Express USA, told Yahoo Finance Live (video above). “That was the last-mile delivery, first and mid mile, warehousing, packaging, and returns. All of those areas have opportunities for greener solutions.”
E-commerce makes up a small but growing part of the retail landscape. In Q4 of 2019, online sales accounted for 11% of all retail sales. That number rose to 13.6% by Q4 of 2020, when the pandemic led more consumers to look online for goods they once bought in-store.
These online buying trends “advanced five to seven years,” Hewitt said, adding that there is no sign of online retail slowing down anytime soon. “What the paper showed was it's not all pessimistic. This big growth for e-commerce doesn't mean a tragedy to the planet.”
The three Es
The greatest opportunities for greener order fulfillment and delivery can be summed up as the “three Es” — energy, efficiency, and eco-materials — according to Hewitt.
“Better use of energy, so the electrification of last-mile, green electricity in warehouses, sustainable alternate fuels; efficiency, looking at things like routing optimization, capacity, and packaging reductions; and then the introduction of new eco-materials that are better from a sustainability standpoint around packaging," he said.
But building sustainable supply chains comes with challenges as well. The report cited the high cost of alternative jet fuels, the lack of charging infrastructure for electric vehicles, and the availability of batteries as barriers to reducing emissions.
And two areas that are crucial for e-commerce — packaging and returns — continue to raise concerns for their environmental cost.
As for returns, "if you have something in our world that's internationally shipped, there have been questions whether it would cost more and be more harmful to the environment to ship that all the way back to origin,” he said. “A lot of the returns focus has been on how do you find alternate locations that are closer to where the delivery was to return it back to.”
Another way retailers can limit the environmental toll of returns is by ensuring that customers don't want to send their purchases back in the first place.
“Ultimately, I think any e-tailer is looking at a way to minimize the need for a return by having accuracy up front and really making sure that the product that they're delivering to the consumer is what was requested and required, and doing so in the most efficient way,” Hewitt said, “and from a transportation side, getting it there as close as possible to minimize the use of any fossil fuels.”
Also helping to make an environmental impact is finding ways to reduce the amount of packaging.
“You're looking at ways of using different materials that are more sustainable in nature so, at the very least, you're doing less harm to the planet," Hewitt said.
Grace is an assistant editor for Yahoo Finance.
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