2.2 Retailers and their customers Innovative delivery solutions Retailers are already adopting innovative solutions to improve efficiency and sustainability. A significant transition to EVs and micromobility is under way, especially among larger organizations. Companies such as Amazon and Ingka Group (IKEA’s largest retail franchise operator) are leading the decarbonization of last-mile deliveries by adopting EVs. IKEA is also investing in inner-city stores to reduce the distance of travel for customers. These stores serve as microhubs for fulfilling orders. Cargo bikes and on-foot deliveries are increasingly being used in densely populated areas where motorized vehicle access is challenging.17 For example, Ingka Group has already implemented small low-emission vehicles for city deliveries and is trialling the use of the River Seine for last-mile logistics.18 Quick-commerce delivery models have also surged and many journeys originate from inner- city dark stores, shops and restaurants, making up a growing proportion of traffic. In many cities, quick commerce uses two-wheel modes such as e-bikes and e-mopeds, which mitigate emissions but still contribute to traffic and can pose safety concerns. Large variations in action are evident between regions and companies. Some businesses are proactively driving the transition, while others are limiting their action to basic compliance with mandatory rules. Company culture, affordability and profitability are influencing retailers’ ability and willingness to enact change, particularly given the high upfront costs of developing and implementing new solutions. This demonstrates the importance of legal and regulatory frameworks to create incentives for change. Engaging the supply chain Many retailers rely heavily on third-party logistics operators for order and inventory management as well as deliveries. Therefore, retailers do not always control outcomes in terms of their impact on congestion and carbon emissions. However, many retailers are actively driving the sustainability agenda. Ingka Group, for example, is setting sustainability requirements for its delivery partners and is supporting its SME supply chain by providing electric vehicles. This is giving some smaller businesses the opportunity to deploy zero- emission vehicles without the need for large capital outlay, effectively providing a financing solution. Some quick-commerce businesses are also supporting their workers with competitive financing options for zero-emission vehicles. There are, however, challenges related to the short-term and part-time nature of many of the jobs created, which means investment decisions do not always prioritize long-term sustainability. The regulatory framework therefore plays a crucial role in creating incentives for the introduction of more sustainable delivery modes.19 A significant transition to EVs and micromobility is under way, especially among larger organizations. IKEA – supporting fleet electrification in its supply chain BOX 2 IKEA is exploring new business models to ensure all deliveries are zero-emission. One of these models involves investing in its own fleet and partnering with small and medium-sized enterprise (SME) transport providers to operate the vehicles. Without this investment, the SMEs could not make the transition to EVs themselves.20 12 Transforming Urban Logistics: Sustainable and Efficient Last-Mile Delivery in Cities

Transforming Urban Logistics 2024