The massive growth of foreign trading and globalization has created a rapid expansion of the logistics market in recent years. It is now at an all-time high.
Virtually every country and state in the world has an import and export market, with the shipping of goods between continents more commonplace than ever.
Additionally, domestic deliveries have increased through internet e-commerce, with people expecting food and goods delivered quickly and efficiently. 1 to 2 days has become the expected delivery time, but many logistic services struggle to keep up with this demand. In response, many retailers are storing goods closer to their end destinations.
With these challenges, it’s no wonder that logistics companies are looking for alternative ways to become more efficient and cut costs. That’s why there is a growing interest in the electrification of trucks.
But how can electric vans and trucks help to improve customer experience?
This article will explore 3 ways in which the logistic supply chain benefits from electrification in middle-mile delivery and how to electrify fulfillment centers successfully.
1. The importance of middle-mile delivery rises
As a response to consumers demanding fast and punctual delivery, logistics companies focused most of their efforts on innovating new ways to optimise last-mile delivery.
Some of the innovations and new strategies included real-time tracking, SMS/email alerts, Sunday delivery, and more.
But, a significant part of any logistics operation is the transportation between warehouses and from storage to fulfillment centers - i.e. the middle-mile.
In fact, Amazon spent more than 13% of its revenue just on shipping costs to and from its warehouses.
In order to optimise middle-mile transportation and reduce delivery times for the end-customer, it is essential to store goods closer to their final destination. The demand has led to the opening of many new distributed warehouses and delivery centers in and around cities. These tend to be smaller facilities compared to the traditional large centralized warehouses.
The trend for smaller, more locally distributed warehouses and delivery centers is relatively new, and logistics firms are still trying to adjust. The main result in operations has been the reduction in the average length-of-haul, as drivers carry out shorter trips.
The logistics industry expects this trend to continue and grow, with forecasts of a large increase in short hauls and a decline in the number of long-haul trips. The statistics back this up, with the average length-of-haul being 62% of where it stood in 2005, decreasing from 800 miles to 500 miles.
2. Middle-mile as an opportunity to hit the company’s GHG reduction targets
All major logistic companies have set strict targets to reduce greenhouse gas (GHG) emissions to comply with local and international regulations. In fact, many companies have promised to achieve zero-emission fleets in the next 20-30 years. GHG emission reduction has become a new area of competition between logistics firms.
The biggest obstacle to achieving zero-emissions is that electric long-haul-trucks cannot drive 650 miles or more per day efficiently. The battery requirements are too large, and there would need to be an international or cross-state infrastructure of rapid charging points.
Although technology has advanced quickly in the last 5 years, and the market expects more important announcements next year, trucks designed for the middle-mile are already available today. Additionally, in 2021, we’ll see the release of many new middle-mile vehicles from Ford, Daimler, Mitsubishi, and Rivian.
The trend of decentralized warehouses helps to achieve the electrification goals of logistics companies. With an increase in deconsolidation centers and warehouses located closer to the end customer, there is an opportunity to include electric vehicles in both the middle-mile between warehouses and the last-mile delivery to customers.
The average middle-mile is around 200 to 400 miles. Here at Ampcontrol, we’ve identified that logistics within this range can easily be electrified with today’s technology. We’ve simulated various cases for charging at fulfillment centers and can ensure a smooth operation when things move beyond pilot projects.
3. Middle mile is a highly competitive market
The previous few years have seen an explosion of e-commerce sales, especially during the 2020 Covid-19 pandemic. In the US, daily e-commerce sales grew 49% in early April 2020 compared to the previous month.
To cope with the growing demand, companies such as Amazon, FedEx, UPS, and others are constantly hiring more drivers and warehouse employees. Amazon has announced plans to hire 100,000 new employees for the US operation this year.
The explosion of e-commerce and home deliveries, has caused a major disruption to the traditional supply chain of 10 years ago. The major disruption has been caused by the fact that ecommerce has created a highly competitive market.
Out of necessity, logistics companies have experimented with cost-cutting strategies and have realised that streamlining middle-mile logistics is the smartest option for two main reasons:
Companies don’t have to face the challenges associated with overcoming last-mile obstacles with customers.
Higher velocity and lower landed costs can be passed directly to the consumer without eating into profit margins. In fact, by optimizing transport during the middle-mile, margins remain more stable during the last-mile delivery.
Electric trucks provide the ideal way to optimize the middle-mile for logistics companies. By applying the latest in EV technology, companies can now complete 200 to 400 mile transfer of stock without the need for recharging.
By taking an innovative approach and applying intelligent fleet charging systems connected to state-of-the-art electric trucks, logistics companies are becoming ever more efficient while reducing costs at the same time.
Ampcontrol is a cloud-based optimization technology for EV charging networks to make charging cost-efficient and reliable. Logistic companies, fleet operators, and charging point operators use Ampcontrol to install more electric charging stations at lower costs.
The company is working with leading companies in Europe and the U.S. to enable more intelligent EV charging.