This month last year, Nitin Gadkari had announced the government’s mission to shift it’s public and logistics transportation to 100% clean and green sources of energy, including Electric Vehicles (EVs). Fast forward to present day, the country has witnessed a considerable jump in number of EVs being used commercially, and driving this jump is the e-commerce sector. I would say, and you may agree, that India is on the right path to electrify its logistics sector. Many e-commerce companies have made it a point to shift a large part of their last mile delivery, if not the entire fleet, on electric vehicles.
Last mile is considered the most energy consuming and carbon emitting phase of the entire logistics operations of any company. And with the e-commerce sector witnessing unprecedented boom, it becomes rather imperative for companies to not only keep a watch on, but to also reduce their carbon emissions. With fuel prices skyrocketing, and alternative fuels still under trials, adoption of EVs becomes the best alternative without the need to change the entire face of last mile logistics operations. As e-commerce companies transform their last mile fleets, they take a step closer to achieving their ESG (Environmental, Social, and Governance) goals – something that when seen in totality, helps in the overall sustainable economic development of a nation.
The last year has seen an increased reporting of prominent e-commerce companies partnering with EV manufacturers to transform their last mile delivery fleet. Big Basket plans to have a 90% electric fleet by 2024, and Amazon plans to add 10,000 EVs to its India delivery fleet. Flipkart plans to have over 25,000 EVs by 2030 and is investing in charging infrastructure at 1,400 supply-chain centres.
Earlier this year, Tata Motors (Commercial) announced the signing of a strategic MoU with leading e-commerce companies and logistics service providers – Amazon, BigBasket, City Link, DOT, Flipkart, LetsTransport, MoEVing and Yelo EV. the MoU includes delivering 39,000 units of their commercial bestseller Ace EVs, setting up dedicated EV Support Centres, and deployment of Tata Fleet Edge – the next-gen optimal fleet management solution.
Similarly, two wheeler EV manufactures like Mahindra Electric, Hero Electric, Okinawa, Zypp Electric and Omega Seiki Mobility (OSM) have sealed strategic partnerships with logistics aggregators and last mile delivery providers. Such partnerships not only save on emissions but also work a great deal towards reducing the time and cost overruns related to last mile delivery. After all, we are pretty familiar with the traffic situation and ‘gully‘ system of India.
Two Wheeler EVs are already modifying the last mile delivery space as they offer a huge potential for increasing per day shipment capacity and achieving cost optimisation for last mile service providers (LSPs) as compared to currently used ICE engine two wheelers. They are a highly cost-effective solution as they significantly lower the cost per litre of goods storage space. The segment is extremely popular already in hyperlocal delivery ecosystem.
With a broader perspective, one may notice that a reduction in last mile delivery cost is not only beneficial to the e-commerce company, but also to the entire economy. If the cost per shipment comes down by 30%, then the overall cost of moving the goods can be reduced by 15%. Imagine, with the number of e-commerce companies operating in India (including quick-commerce, hyperlocal and D2C), if each of them reduced their cost of moving goods by at least 15%, what is the kind of impact it will make on India’s overall logistics cost. Of course, for such an impact there needs to be a shift towards EVs in other segments of the economy as well.
EVs are supported by a diligently curated ecosystem and offer a holistic solution for e-cargo mobility. In addition to addressing the core need for timely yet cost-effective and efficient last-mile delivery, EVs also serve the future commitment and aspirations of its conscientious customers to achieve net zero carbon emissions. Additionally, in many cases, a high-tech app along with GPS and IoT-enabled vehicle tracking systems help organisations to manage logistics operations in a better, more productive manner.
With the EV sector witnessing a swift expansion on the back of gigantic volumes processed everyday by e-commerce companies, numerous startups have chosen to foray into the EV segment, generating widespread opportunities. B2B partnerships are becoming the spark to fire the change in dynamics of EV segment, especially in the case of e-commerce companies.