How innovation in logistics can foster the co-existence of sustainability and eCommerce
This 11.11, we have witnessed yet another ground-breaking sales figure from Alibaba, raking in US$75 billion, a 26% increase from last year. This amounted to 2.32 billion delivery orders that were shipped globally into the hands of consumers.
However, what often goes unnoticed is the amount of paper and plastics used in the packaging of these parcels. According to Greenpeace, the volume of packaging waste generated in China alone was estimated to be at 9.4 million tonnes in 2018 and is projected to reach 41.3 million tonnes by 2025.
With increasing digital penetration, the eCommerce boom will be to stay. How can we best safeguard the environment while enjoying the convenience that eCommerce brings?
Thankfully, technology’s role in the future of logistics will make it a more sustainable one in the long run. Beyond the use of energy-efficient vehicles, here are the top trends which we anticipate will be instrumental in delivering a greener logistics for the world.
Smarter and More Innovative Packaging
It is inevitable that online purchases require some form of packaging before it can be shipped to consumers. But herein lies the crux of the matter — how can we deploy less packaging materials to pack the same item?
With smart packaging algorithm, logistics providers will be able to assess items based on their category, volume, weight and area, and then match them to the most space-efficient form of packaging.
This has helped Cainiao to improve packaging efficiency for about 290 million packages each year and reduces the waste stemming from over-packaging by 15 per cent in 2018. During the latest 11.11, the smart-packaging algorithm has helped to minimize waste from overpacking for over 12 million shipments.
But most importantly, whenever packaging materials are used, it is crucial that they are biodegradable to further minimize environmental impact. Today, nearly 100% of the packaging shipped from Cainiao warehouses are biodegradable, and close to 50% of the paper packaging are tape-free.
Machine Learning and Predictive Analytics for Demand Forecasting
Consumers today enjoy faster shipping thanks to demand forecasting. By accurately predicting consumer demand using machine learning and predictive analytics to make sense of large data sets, merchants are able to place their network operations or goods nearer to these end consumers to reduce delivery time.
Beyond the delivery efficiency, this also brings about a reduction in carbon emissions, lowering of miles travelled and operations cost. This location strategy also allows goods to be consolidated for shipping to maximise load capacity for maximum efficiency instead of sending them individually to consumers from a central warehouse, which is typically located further away.
Data Intelligent Network for Last Mile Route Management
Using IoT and big data, courier companies can become more data-driven to drive product and service expansion.
Using smart route management, they can also leverage algorithms to help courier personnel to select the most efficient routes to achieve maximum efficiency and greater savings. This translates to a reduction in delivery distance and fuel usage for each parcel delivery.
In the case of Cainiao, the use of AI algorithm for route planning has led to the reduction of miles travelled by 30% in rural areas in China benefiting 40,000 villages.
We are also witnessing the increasing adoption of electronic shipping labels, which are printed on smaller pieces of paper and allows the digitalization of the parcel delivery process.
The use of e-shipping labels on more than 80 billion parcels in China has helped to save over 2.2 billion pieces of paper!
Recycling Led by Private Partnerships
Cainiao’s updated green campaign reiterated its commitment to reducing its environmental impact.
As part of the green initiative, other Alibaba business units such as Tmall, Taobao and Hema (now also known for Freshippo) supermarket pledged to increase the use of recycled and biodegradable packaging, while millions of mom-and-pop stores that are part of Alibaba’s Ling Shou Tong initiative would commit to reusing sturdier delivery boxes.
Consumers were also encouraged to recycle their own packaging at Cainiao’s 80,000 recycling stations across China. They were enticed with rewards and the ability to redeem points in the “Cainiao Ocean” game, which translated into coastal clean-up efforts launched by the platform and partnering nonprofit organizations.
To further amplify the impact this 11.11, Cainiao has teamed up with nearly 500 brands — including Nestlé, Philips and P&G — to opt for reusable and tape-free packaging across its warehouses in order to amplify the impact. This has helped reduce over 86 million meters of plastic tape (which is about two times around the earth!).
Swiss food and beverage giant Nestlé also joined Cainiao’s National Cardboard Box Recycling Day campaign to promote recycling across communities, including rewarding plastic-recycling efforts with its products. The brand also inked an agreement with Cainiao to further co-innovate on sustainable packaging.
Government Initiatives and Regulations
On the national and global level, robust eCommerce laws and guidelines are also needed to curb packaging waste.
China is also building 100 “comprehensive resource utilization bases”, creating pilot “zero-waste” cities and pushing for mandatory trash sorting rules in major hubs, such as its commercial capital of Shanghai.
We Can Have Our Cake and Eat It Too
With some effort, there is a way for us to achieve a balance to allow the co-existence of sustainability and eCommerce.
By tapping on technology, we can uncover a more seamless and intelligent way to not just reduce consumption of paper and plastics, but also ensure whatever we use are done in a more sustainable manner.