Logistics companies face mounting pressure to balance operational efficiency with environmental responsibility. While the transition to green last-mile logistics requires upfront investment, the return on investment (ROI) extends far beyond cost savings, encompassing brand value, regulatory compliance, and long-term market positioning. Here’s how green last-mile delivery can improve your entire supply chain.
Understanding green last-mile delivery
Green last-mile logistics encompasses sustainable practices in the final leg of the delivery journey, from distribution centres to forward warehouse locations or even customers’ doorsteps. Green logistics operations aim to reduce the carbon emissions of deliveries in various ways, including:
- Electric delivery vehicles
- Optimised routing
- Consolidated deliveries
- Alternative delivery methods
- Packaging innovations
Even a partial adoption of green logistics services (committing to a fleet comprised of 50% electric delivery vehicles or aiming for 50% of deliveries to go to pickup drop-off points, for example) could see emissions cut by 2.2 million tonnes.
The goal is to minimise environmental impact and reduce greenhouse gas emissions while maintaining or improving service quality and operational efficiency. However, along with reducing the carbon footprint of the logistics sector, transitioning to eco-friendly logistics operations can provide other benefits.
The financial case for green logistics
Immediate cost reductions
Fuel savings: Electric vehicles eliminate fuel costs entirely, while hybrid vehicles can reduce fuel consumption by 30-50%. With commercial fuel prices averaging 138.4p per litre, fleet operators can achieve substantial savings. A typical delivery van travelling 20,000 miles annually can save 1,800-2,400 euros in fuel costs when switching to electric.
Maintenance cost reduction: Electric vehicles have fewer moving parts, requiring less frequent maintenance. Studies show electric commercial vehicles can reduce maintenance costs by 40-60% compared to traditional diesel vehicles. This translates to savings of 0.07-0.12 euros per mile for commercial fleets.
Route optimisation benefits: Advanced routing software can reduce delivery distances by 10-30%, directly impacting fuel consumption and labour costs. Companies implementing AI-driven route optimisation typically see immediate improvements in delivery efficiency and cost per package.
Long-term financial advantages
Incentives and tax benefits: From market-based incentives like preferential treatment in government contracts to tax breaks and grants, there is a big push on greener business practices, and so implementing green logistics solutions into your supply chain management processes means your business will likely qualify for some environmental tax breaks.
Regulatory compliance: Cities worldwide are implementing low-emission zones and delivery restrictions. London’s Ultra Low Emission Zone charges 115 euros daily for non-compliant vehicles, while similar initiatives in Paris, Amsterdam, and other major cities create ongoing operational costs for traditional fleets. Green logistics investments today prevent future regulatory penalties.
Residual value protection: As environmental regulations tighten, traditional commercial vehicles face accelerated depreciation. Electric and hybrid vehicles maintain stronger resale values, protecting long-term asset value.
Beyond direct cost savings
Brand value and customer loyalty
Modern consumers increasingly factor environmental responsibility into purchasing decisions. In fact, 70% of consumers in this survey stated that they value sustainable delivery options. While 62% of consumers in this survey prioritise buying from eco-conscious companies. So, if your company proves that you’re taking steps to improve your entire logistics process and make it more green, this can translate into:
- Higher customer retention rates
- Premium pricing opportunities
- Competitive differentiation
- Enhanced brand reputation
Operational efficiency gains
Delivery density improvements: Consolidation strategies and delivery hubs can increase delivery density by 15-35%, reducing per-package costs while improving service levels.
Technology integration: Green logistics initiatives often drive technology adoption, including telematics, route optimisation, supply chain automation and customer communication platforms. These technologies improve overall operational efficiency beyond environmental benefits.
Employee satisfaction: Workers increasingly value employers with strong environmental commitments. Green logistics initiatives can improve recruitment, retention, and productivity while reducing hiring costs.
Calculating your green logistics ROI
Key metrics to track
Direct cost savings
- Fuel cost reduction
- Maintenance savings
- Incentive utilisation
- Insurance premium changes
Operational improvements
- Delivery efficiency gains
- Route optimisation benefits
- Vehicle utilisation rates
- Delivery success rates
Strategic value
- Customer satisfaction scores
- Brand perception metrics
- Regulatory compliance costs avoided
- Employee engagement levels
The shared investment in a carbon-neutral future
The UN has called for emissions to reach net zero by 2050. To achieve this, many countries have aimed to reduce emissions by 45% by 2030. For the logistics sector, this means a reduction of 20% of current emissions.
While optimising routes and consolidating deliveries can significantly improve efficiency, these strategies alone won’t get the industry to its mandated CO2 reduction goals. Achieving a truly carbon-poor or carbon-neutral logistics network requires a fundamental shift away from fossil fuels.
This transition, however, is not a responsibility for logistics companies to bear alone. It requires significant investment in new fleets, charging infrastructure, and alternative fuel technologies. Shippers, consignees, and customers must also contribute. This shared responsibility might include carriers passing on the cost of greener transport, or customers accepting slight price adjustments for sustainable delivery options.
Ultimately, this collective investment isn’t just about meeting regulations; it’s about building a resilient, future-proof supply chain that can thrive in a world with diminishing fossil fuels and increasing environmental demands.
In conclusion
The ROI of green last-mile logistics extends far beyond simple cost calculations. Direct savings from fuel, maintenance, and incentives provide compelling financial returns. However, the broader benefits, including brand value, regulatory compliance, operational efficiency, and competitive positioning, make green logistics investments strategically essential.
Companies that embrace sustainable delivery practices will not only enjoy immediate financial and operational advantages but will also contribute to a resilient, future-proof logistics ecosystem. The transition to a carbon-neutral future requires a collective investment from all sides of the marketplace, from logistics providers to shippers and customers.
The question isn’t whether to invest in green last-mile logistics, but how quickly the industry as a whole can embrace these strategies to build a competitive advantage and a sustainable future. The ROI of sustainable logistics is clear, the technology is ready, and the time to act is now.
