Electrification and Revolutionization of last-mile logistics with EV

Sustainability is becoming a top mandate for industrialists across the world, with more than 80% of the 1,100 industry leaders surveyed saying sustainability is now an important issue, according to a report by MIT Centre for Transportation & Logistics on supply chain sustainability. India reportedly imports less than 1% of its total crude oil requirement from Russia. Even so, the energy crisis arising out of the Russia-Ukraine conflict will likely prompt the government and the private sector to push for non-fossil fuel-based transportation options such as electric vehicles (EVs), mainly four-wheelers and two-wheelers, and reduce the country’s dependence on global oil.

GROWTH OF LAST-MILE LOGISTICS

According to Brandessence Market Research the 9.29% CAGR, Last-mile delivery Market size is Expected to reach USD 200.42 Bn in 2027. The last mile delivery aspect of the supply chain has severe implications on the urban environment, contributing to congestion and pollution. Around a quarter of global CO2 emissions are due to fossil fuel combustion in the transport sector alone, according to the International Energy Association. The sector is working towards building a sustainable logistics system in order  to improve profitability and simultaneously reduce environmental impact for long-term performance.

DEPLOYMENT OF EV(Electric Vehicle) IN THE LAST-MILE SPACE

The massive growth and adoption in the EV(Electric Vehicle) segment have not only made them the future of mobility but also the future of the 100 smart Indian cities already in the works. And, that includes electrifying India’s $160 billion logistics sector. India is rapidly building infrastructure to promote EVs as the new means of transport in line with India’s pledge to reduce 40% of its fossil fuel consumption by 2030. One EV reduces upto 6 tonnes of CO₂ emission per year.

There is no more denying that the future of Indian mobility is electric.  The explosion of e-commerce following the pandemic has not only changed shopping habits in cities across the country, it has also redefined the concept of last mile delivery with the need to transport packages that are big in size rather than weight. And this has neutralized the advantage that diesel-powered vehicles had over e-vehicles by way of their haul more goods. The transition to electric mobility has emerged as one of the promising strategies to decarbonize the global ecommerce and logistics sector. India’s logistics sector has begun embracing EV and adopting it at a faster rate than expected. Many large OEMs are betting big on tech-enabled EVs to automate their supply chain.

NEED FOR DIFFERENT KIND OF EV IN THE LAST-MILE SPACE

While we talk about Last mile, we cannot confide it to just hyper-local. Last mile is not just the ecommerce but it also includes other large industries. Keeping this in mind we need multiple kinds of EV, not just 2 or 3 wheeler, in order to meet the growing demand of different industries. The sector is looking for large vehicles which can be deployed under last mile logistics. These vehicles are already present in the market which should now be deployed in the last-mile space and the major challenge of range doesn’t fall in the last-mile logistics as most of the last mile deliveries are within 100 kms which right now is suited with the current technology of EV, present in the market. 

ROADBLOCKS IN ELECTRIFICATION OF URBAN FREIGHT  MOVEMENT

In a growing economy, electrification of urban freight transport becomes increasingly important in order to suit various sorts of demand, in a cost effective way.  Last-mile is very well ready to move towards electrification. We should now look ahead at Commoditizing  expensive parts like charging station equipment and batteries. The sector can work on either expanding the longevity or creating more models where this charge doesn't come up on actual consumers. We do have companies working on swappable models, batteries with longer life because of which asset monthly cost can be brought down since the operating cost is already low with these new models. This will eventually lead to a larger adoption of EV in the sector.

There is also a sense of fear about how the technology is being panned out among end consumers, for which market players and aggregators should come out to support the adoption in order to bring down the fear mainly within the driver committee. Along with this entire electrification and revolutionization, since the EV market is still evolving every single day, working towards safety standards should be on priority which would help with both - ‘comfort of driving’ and ‘comfort of business’. Safety of drivers has to be taken into consideration, that is how EV will bring in a new dimension which would also make women drivers more confident while owning and driving an EV.

There are a lot of electric 2 wheelers in the market for quick delivery, also because of the recent 10 min grocery and food delivery hype but a much larger segment in the last mile which counts for around $10 billion can only be addressed with a  3-4 wheeler. Hence new models under this category would help in quick and efficient adoption of EV  in the segment. 

Because of much less total weight, these vehicles are able to carry higher volume and better weight.

NEXT STEP IN THE REVOLUTIONISATION OF LAST-MILE WITH EV

EV manufacturers and service providers should look at covering all sorts of last-mile using EV. We can adapt newer technologies like phase change cooling technology - which can drive through electric charge and can also help with vaccine distribution, pharmaceutical, and cold chain. The expansion of the EV sector, including related infrastructure such as charging stations and ancillary services like ACC (Advanced Chemistry Cell)  battery manufacturing will require specialised technical skills, focused training  on new-age technologies - including artificial intelligence, data analytics and design & development of applications.

Electrification and revolutionise of last-mile logistics with EV is not a far-fetch dream. The OEMs and the logistics players are all on ground trying to make easy adoption of EV possible.  No. of transactions in last-mile is huge - this can also be electrified in the coming decade with new advanced learning and AI algorithms which would also help route these vehicles accurately so that the charge is well utilised and deliveries are happening in much efficient fashion. The change from diesel-run vehicle to EV won’t be easy but the sector is all set to change into a 100% EV fleet sooner than we can think.

The author is Prasad Sreeram, CEO & Co-Founder, COGOS