Turning Back the Clock on Two-Day Shipping: Enabling Sustainable Logistics

By Gregg Lanyard, director, product management/strategy – transportation and logistics, Manhattan Associates

 

Consumers’ shopping habits are constantly evolving, and they have increasingly shifted towards e-commerce purchases with speed and convenience. In the last decade alone, consumers have gone from willingly paying for one-week delivery to expecting free two-day shipping. This demand has forced retailers, despite size, to introduce a free shipping offer, no matter the logistics hurdles. Thus, doing so comes at a great cost to efficiency, as well as sustainability.

In addition to demanding fast and free delivery, consumers are increasingly looking to make purchases with brands that align with their values, and sustainability is top of mind. Recent research found that 50 percent of shoppers this past holiday season were willing to try delivery options that were greener and 47 percent of consumers wanted to shop at environmentally conscious retailers.

This poses a unique challenge for brands. Fast and free shipping are still the top requirements for consumers when selecting a retailer and they will lose out to competition if they cannot meet these needs. Yet, they must also balance the interests of sustainability-conscious shoppers and manage logistics margins.  

A possible solution? Incentivizing customers into more efficient shipping.

The State of Logistics

To understand how incentivizing customers into more efficient shipping will be beneficial for retailers, first we must look at the state of logistics. E-commerce throws all longstanding, traditional supply chain and fulfillment principles and strategies out the window because most logistics networks were never built to handle the high volume, direct-to-consumer (DTC) small packages and speed associated with e-commerce orders. Things like scale, consolidation and centralization don’t work in this new model, especially as shipment sizes shrink, frequency increases and delivery locations expand.

To accommodate this shift, brands have moved away from traditional distribution centers and have expanded their networks to add many different channels of fulfillment to support a range of sales channels such as marketplaces, making logistics more complex. For example, you may order four different items during a single transaction and that one order arrives from four different delivery trucks from four different service providers, all at different times during the same day. This is a logistical nightmare that is only made more complex when half of the order is returned, shifting inventory and adding transportation costs. With no signs of change on the horizon, retailers must implement new initiatives that encourage more sustainable shipping practices.

The Solution

Incentivizing customers into choosing more sustainable and efficient shipping options is the only mutually beneficial solution for both the customer and the retailer. Most companies do not have the capital to continue providing free and fast shipping at their current rate. Customers are not going to permanently change their ways, even those customers aware of the environmental toll, unless they are incentivized, or alternatively, penalized.

Offering an incentive, such as a discount for a slower order, can encourage customers to choose shipping timelines that are more aligned with a company’s logistics network. While it may seem like customers wouldn’t be interested in this because speed is a top priority, Deloitte found that 80% of the shoppers who prefer free shipping are willing to wait three days or more for delivery. Some brands have already found success doing this by offering store credit or gift cards for longer delivery windows. In high volume order periods, such as the holiday shopping season, this kind of incentive could be especially successful in helping to reduce stress on the logistics network. Often those making purchases around Black Friday for the holidays typically don’t need the items until at least a few weeks later.

 Additionally, if this concept is coupled with other fulfillment options, like locker pick-up or buy-online-pick-up-in-store, retailers can see costs savings from a logistics and supply chain perspective. Finding a mutually beneficial balance for both the customer and the retailer will be the only way to ensure long-term, sustainable shipping.  

Optimizing the Results

Even with more efficient e-commerce orders, logistics networks must modernize to become an integrated, omnichannel network that supports DTC and wholesale effectively. Brian Gibson, chair-elect to the Center for Supply Chain Innovation at Auburn University’s Harbert College of Business and vice chair of the Board of Directors of the Council of Supply Chain Management Professionals (CSCMP), says that companies must look toward more intelligent order management and transportation management systems to not only consolidate, but also optimize the network. An integrated intelligent network enables companies to prioritize and schedule to ensure maximum profitability while still meeting service line agreements. Then, with warehouse management systems, each of these technologies can be connected so that retailers can make better overall decisions to manage customer demand and move product in the most efficient way possible. If a retailer is able to alter consumer behavior by incentivizing more efficient fulfillment, as well as modernize its logistics network to better handle omnichannel commerce, they will be more likely positioned for scalable growth and success.

Propane Forklift Considerations in an Electrify-Everything Movement

By Jeremy Wishart, Propane Education & Research Council

“Electrify everything” is a movement gaining momentum across the country.

Driven by a growing concern for global warming, the movement is intended to encourage businesses to reduce emissions to near-zero carbon levels quickly. But electricity as an energy source with zero carbon emissions is misleading at best, given its upstream emissions and the fact that much of the country’s electricity is manufactured at coal-fired power plants. Fortunately, there is a clean energy alternative that can provide a solution for material handling professionals seeking a better emissions profile for their equipment: propane.

Here are a few things warehouse and facility managers should take into consideration as the electrify-everything movement continues to grow:

Propane is a clean, low-emissions energy source

Since the 1990s, the industry has seen a shift toward cleaner business practices and a growing number of businesses are focused on a low-emissions operation. While this trend has helped give rise to electric forklifts, and the electrification movement, propane is managing to keep pace because of its low-emissions profile.

And the numbers back it up. The Propane Education & Research Council, in partnership with the Gas Technology Institute, conducted a comparative emissions analysis of targeted applications in key propane markets, including forklifts. We analyzed full fuel-cycle energy consumption, greenhouse gas, and criteria pollutant emissions (nitrogen oxide and sulfur oxide).

The study revealed that, when compared with electric forklifts, propane can reduce SOx emissions by 76 percent. When it comes to emissions, propane having an edge over electric may come as a surprise to some material handling professionals, as electric’s full emissions profile is often overlooked. While it’s true that electric equipment produces zero emissions during normal operation, it’s important to account for the emissions produced in the creation and transmission of electric batteries. That includes all of the emissions produced at coal-fired plants where electricity is generated, as well as the emissions during transportation to the facility. Not to mention, the disposal process of electric batteries. And when the battery goes dead, facility managers can’t simply dispose of them without severely impacting the environment. The Environmental Protection Agency (EPA) considers them a hazardous material, which means they have specific handling and disposal regulations attached.

As the trend toward clean, emissions-reducing alternative energy sources continues, companies should keep renewable propane on their radar. It’s estimated that by 2040, renewable propane will supply nearly half of our nation’s propane demand. The emerging energy source is a byproduct of the renewable diesel and jet fuel production process, which converts plant and vegetable oils, waste greases, and animal fat into energy. Because it’s produced from renewable, raw materials, renewable propane is even cleaner than conventional propane — and far cleaner than other energy sources. And considering its chemical structure and physical properties are the same as traditional propane, renewable propane can be used for all the same applications.

Propane has no hidden costs

When you do the math on the long-term costs of forklift energy options, propane takes top billing in a lot of ways. Propane-powered forklifts consistently cost less than other options, including electric, providing cost savings throughout ownership.

According to data from PERC, the capital costs of propane forklifts are almost 30 percent lower than electric. Unlike their propane counterparts, electric forklifts incur additional utility costs to keep them charged. Electric forklifts’ battery life and power output diminishes over time and can lead to future costs, including additional expensive batteries. Charging electric forklift batteries when the remaining charge is too high or too low can significantly reduce the battery’s lifespan, too. And in many cases, proper disposal or reconditioning of electric forklift batteries can be a costly proposition. The life expectancy of a propane cylinder, in contrast, is three times longer than an electric forklift battery and oftentimes extends beyond the typical lifespan of a forklift. Propane-powered forklifts can also be refilled at any time without impacting the lifespan of the cylinder.

Beyond the initial equipment purchase and the cost of propane itself, all that facility managers and business owners are responsible for is maintenance and storing the cylinders, which they can either purchase or lease from their propane supplier. Business owners may also be able to secure a contract with their local propane supplier, providing more financial peace of mind.

In addition, facility managers who make the move to electric oftentimes forget about the installation requirements that come with electric equipment — which can have a significant impact both financially and structurally. Electric forklifts often require the costly installation of battery charging stations, which must be located in a designated area of the facility. It’s important to note that charging stations may cause issues in some facilities and require costly service upgrades to accommodate the new power requirements. With propane forklifts, however, infrastructure requirements are minimal. Refueling infrastructure requires only storage space for the propane cylinders, freeing up valuable warehouse square footage that would otherwise be occupied by battery stations.

Propane doesn’t sacrifice performance

Lastly, propane keeps businesses operating around the clock. Propane-powered forklifts provide 100 percent power throughout operation, pushing heavy loads at full capacity faster and longer than electric forklifts. One cylinder typically covers an entire eight-hour shift. In addition, propane forklifts maintain more consistent travel speeds and acceleration throughout a shift compared to battery-powered forklifts, according to data from PERC.

Whether used in large operations or smaller fleets, propane provides the quick refueling necessary to keep material moving. Swapping out an empty propane cylinder for a full one takes just a few moments, and eliminates the need for additional expensive, heavy batteries, downtime spent recharging, or strict battery management by crews. Companies can also work with a propane retailer to ensure propane cylinder cages are always full by setting up a tailored refueling schedule.

Visit Propane.com/Material-Handling to learn more about the benefits of operating with propane forklifts.

Jeremy Wishart is director of off-road business development for the Propane Education & Research Council. He can be reached at [email protected].