Amazon is currently seeking 2,500 small businesses across the US to become part of their new local delivery service called “Amazon Hub delivery.” Amazon partners will receive packages each morning and have the flexibility to make that day’s deliveries at their convenience. Deliveries will occur seven days a week, except for major holidays. Businesses such as coffee shops, dry cleaners, and florists could bring in new income to their businesses by delivering packages for Amazon using existing staff and vehicles. Initially, the program will operate in 23 states and focus on rural areas. In a later phase, deliveries are targeted to expand to large, dense cities including Seattle, New York, Los Angeles, Boston, and Hoboken New jersey.
The exact pay has not been disclosed, but Amazon estimates a small business could earn up to $27,000 a year by making the deliveries. If a company delivers 30 packages a day — what Amazon says they will receive, on average — that works out to about $2.50 a package.
Today, there are 30,000 of Amazon’s ubiquitous blue and gray vans on the road. According to Amazon’s 2021 Sustainability Report, 12.1 million metric tons of the company’s CO2 emissions are attributed to fossil fuel emissions. The company is 7 years away from its pledge to deploy 100,000 electric vans. As the world’s largest corporate purchaser of renewable energy, Amazon is making progress in its goal to achieve net zero by 2040.
But for most companies, including Amazon, the least efficient and most complex part of the supply chain is the final segment – the “last mile delivery”. Emissions from this segment of the supply chain can be reduced by increasing the degree to which the vehicle is completely filled with goods to be delivered. A truck can weigh out – reach the maximum weight capacity it is allowed to carry – or it can cube out – all the truck’s storage capacity is taken up with goods to be delivered. When it comes to consumer deliveries, most trucks would cube out before they weigh out. Furniture and home goods deliveries would be the exception.
According to APQC research, the average vehicle departing for a last mile delivery is only 85% full. APQC is a nonprofit organization that conducts research in the areas of benchmarking, best practices, process and performance improvement, and knowledge management. But that 85% metric makes things sound better than they really are. Most last mile vehicles would return home empty. These empty miles increase emissions.
In dense cities such as New York and Paris, Amazon is experimenting with cargo bikes and electric vehicles. For rural America, those options are not practical.
The use of small businesses for last mile deliveries presents both opportunities and challenges. For rural areas in the US, using local businesses to get those last mile deliveries can allow those local vans to combine Amazon deliveries with their own and improve their trucks fill rates. Depending on where and when the trucks stop to pick up the Amazon packages, more legs of a partner’s trip would not count as empty miles. When Amazon calculates their scope 3 emissions from transport partners, the fuller the partner’s truck, the fewer empty miles, the lower the emissions associated with the Amazon deliveries will be.
Clearly, calculating these partner emissions and including them in their sustainability totals will not be easy. The math is not straightforward and getting the amount and quality of data that is required will be very difficult.
But the bigger issue is that smaller delivery partners are just not going to be as aggressive in transitioning to electric vehicles as Amazon. Most just won’t be able to afford the capital outlay.
The Amazon Delivery Hub program is not touted as a program that will contribute to sustainability. Nor should it be. This program can improve customer service while supporting businesses in rural communities. But this program shows that when it comes to the last mile, customer service currently trumps sustainability for Amazon. In the longer term, Amazon is going to have to continue to aggressively address the last mile problem to reach their sustainability goals. This program is a step backwards.