Revolutionizing the Delivery Vehicle

May 29, 2019


The race for faster delivery times and to reduce last mile costs are on, as providers introduce fulfillment facilities closer to customers and robots, drones and crowd-sourcing strategies to reduce labor costs. But, what about the vehicle itself? For most providers, there’s still a need for the traditional vehicle in one form or another, whether it is a van, bicycle or package car (as UPS describes their classic brown trucks).

Electric vehicles are gaining traction but still have limited range. FedEx and UPS have incorporated these vehicles into their global fleets and both companies plan to add more. According to UPS, about 12% of its 123,000-vehicle fleet now runs on natural gas, ethanol or electricity. In fact, the company recently announced it would buy the equivalent of 170 million gallons of renewable natural gas from Clean Energy Fuels Corp. over the next seven years. UPS described this agreement as the biggest-ever deal involving the alternative fuel.

The contract, worth about $95 million based on current natural gas prices, runs through 2025, according to UPS. The company said renewable natural gas will ultimately make up 40% of its total fuel purchases for ground transportation. Let’s hope that the use of renewable natural gas will help lower, or even better, eliminate the high fuel surcharges imposed on customers.

Meanwhile, the U.S. Postal Service (USPS) has partnered with TuSimple, a self-driving truck company, for a two-week test for the transport of mail and packages between Phoenix and Dallas. A safety engineer and driver will be on board throughout the pilot.

Not only is the USPS testing long distance autonomous transportation but the postal service is planning to replace its iconic, but aging fleet of mail trucks. Maintenance costs of skyrocketed over the years for the fleet of about 140,000 delivery vehicles and fuel costs are high. The trucks achieve around 9 to 10 mpg, according to agency data. With the average age of the trucks being 27 years, perhaps it is time for a change.

Indeed, the agency plans to award a contract to produce about 12, 000 mail trucks a year for seven years by this fall. The contract could be worth up to $6.3 billion, a steep cost but a necessary one for the USPS to remain an option in the last mile delivery space.

As the last mile continues to change in terms of where the package is delivered and who delivers it, how it is delivered will also evolve and the result will be a make-over for the traditional vehicle. While upfront costs are typically high, the cost benefits are usually great for providers. One would expect that these benefits are passed on to their customers.

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Revolutionizing the Delivery Vehicle

May 29, 2019


The race for faster delivery times and to reduce last mile costs are on, as providers introduce fulfillment facilities closer to customers and robots, drones and crowd-sourcing strategies to reduce labor costs. But, what about the vehicle itself? For most providers, there’s still a need for the traditional vehicle in one form or another, whether it is a van, bicycle or package car (as UPS describes their classic brown trucks).

Electric vehicles are gaining traction but still have limited range. FedEx and UPS have incorporated these vehicles into their global fleets and both companies plan to add more. According to UPS, about 12% of its 123,000-vehicle fleet now runs on natural gas, ethanol or electricity. In fact, the company recently announced it would buy the equivalent of 170 million gallons of renewable natural gas from Clean Energy Fuels Corp. over the next seven years. UPS described this agreement as the biggest-ever deal involving the alternative fuel.

The contract, worth about $95 million based on current natural gas prices, runs through 2025, according to UPS. The company said renewable natural gas will ultimately make up 40% of its total fuel purchases for ground transportation. Let’s hope that the use of renewable natural gas will help lower, or even better, eliminate the high fuel surcharges imposed on customers.

Meanwhile, the U.S. Postal Service (USPS) has partnered with TuSimple, a self-driving truck company, for a two-week test for the transport of mail and packages between Phoenix and Dallas. A safety engineer and driver will be on board throughout the pilot.

Not only is the USPS testing long distance autonomous transportation but the postal service is planning to replace its iconic, but aging fleet of mail trucks. Maintenance costs of skyrocketed over the years for the fleet of about 140,000 delivery vehicles and fuel costs are high. The trucks achieve around 9 to 10 mpg, according to agency data. With the average age of the trucks being 27 years, perhaps it is time for a change.

Indeed, the agency plans to award a contract to produce about 12, 000 mail trucks a year for seven years by this fall. The contract could be worth up to $6.3 billion, a steep cost but a necessary one for the USPS to remain an option in the last mile delivery space.

As the last mile continues to change in terms of where the package is delivered and who delivers it, how it is delivered will also evolve and the result will be a make-over for the traditional vehicle. While upfront costs are typically high, the cost benefits are usually great for providers. One would expect that these benefits are passed on to their customers.

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