Green Goods: Electrifying the road to final-mile delivery in Delhi

The delivery market in India is booming. Until a few years ago, the only items that were delivered at home through mail were letters, bills, and long-distance packages, but as time has passed, online orders have joined them. Electronics, fashion, books, consumer goods, groceries, cooked food—anything we could possibly want—can now be ordered online and delivered to our doorsteps. E-commerce has revolutionised the way people buy goods.

Delhi is a prime example. The city is home to a population of 20 million and has demand for 80,000 tons of goods daily. Furthermore, Delhi’s population and goods demand are both expected to grow by 1.5 times over the next decade. And due to the COVID-19 pandemic, people have started opting for home deliveries instead of in-store shopping.

The rise in demand for goods transport has made the final-mile delivery industry a critical pillar of economic activity. However, the vehicular movement generated due to the final mile deliveries has also resulted in high pollution levels.

Delhi has been recognised as one of the world’s most polluted cities, its toxic air creating extremely hazardous conditions for human health and wellbeing. Freight vehicles—both light-duty and heavy-duty—contribute around 45 percent of NO_x pollution, 41 percent of PM₁₀, and a similarly large portion of PM_2.5 pollution in the city. This high concentration of pollutants has extreme adverse effects. For example, every third child in Delhi has been estimated to have reduced respiratory capacity due to air pollution.

Beyond its public health risks, the urban freight sector also represents a high carbon footprint. In 2019 alone, registered delivery vehicles in Delhi emitted 700,000 tons of CO₂ that directly contributed to climate change. Furthermore, these vehicles are economically inefficient—final-mile delivery typically accounts for more than 50 percent of the total logistics costs of a product.

This trifecta of high air pollution, carbon emissions and costs due to final-mile delivery is concerning. However, this also represents a unique opportunity where innovative approaches can flourish, providing optimal environmental, social, and economic returns.

A key prospect that simultaneously addresses all three challenges is electric vehicles (EVs). EVs have the potential to eliminate all tailpipe emissions. They emit 35 percent less CO₂ and consume around 80 percent less energy per kilometre (km) as compared to internal combustion engine (ICE) vehicles. EVs also present a strong opportunity to reduce operational costs in the medium term. Currently, EVs have a higher purchase price as compared to their ICE counterparts. However, with falling costs of purchasing vehicles and battery packs, this is likely to change soon.

Delhi’s new 2019 EV policy seeks to enhance the value proposition of EVs further and sets a target of a 25 percent share of electric vehicles in new registrations by 2024. By outlining incentives for both demand and supply, it is an excellent intervention to improve the sale and use of EVs, especially for urban freight.

In combination with the central government’s existing FAME II incentives, the Delhi EV policy would bring the total cost of ownership of most urban delivery EVs below that of ICE vehicles. For example, running a CNG three-wheeler used for final-mile delivery in Delhi costs Rs 2.5/km, as compared to Rs 3/km for an unsubsidised electric three-wheeler. The Delhi EV policy would bring the cost of ownership of that EV down to Rs 2.3/km.

The benefits of electrifying urban freight are substantial and growing every year. A robust public-private partnership has the potential to create a roadmap to improve this uptake of EVs further.

A pilot focused on final-mile electric delivery vehicles represents an effective approach to implementing such a partnership, and engaging multi-stakeholder groups can give a whole-systems perspective on the risks and opportunities of electrification. DISCOMs and charging and swapping providers can work with fleet aggregators to optimally locate charging infrastructure. E-commerce firms and vehicle manufacturers can work together to make fit-to-purpose vehicles. The public and private sector can work together to enhance the policies, plan better incentives and resolve concerns regarding EV adoption faced on the ground.

Assessing the effectiveness of EVs is likewise essential. How EVs perform as opposed to conventional ICE vehicles will help understand where potential improvements can be made on the technical, operational, and strategic fronts. Quantifying the environmental impact of deployment within the pilot can help to measure the social results of the significant public investment in EVs. Documenting the behaviour of EVs and charging infrastructure can help stakeholders iterate their services and policies to accelerate future EV deployment in final-mile delivery. Overall, a well-designed and well-documented pilot can serve as a model for cities to follow.

COVID-19 has given a significant boost to e-commerce in Indian cities, and availing of online services has made life easier for many during these challenging times. By creating a replicable and scalable roadmap for 100 percent electrification of urban freight, a pilot project might just be the first step in the next e-commerce revolution. Perhaps sooner rather than later, we can return home to find the usual pile of packages at our doorsteps with a key difference: not a single pollutant will have entered the air in the process.