Which is Greenest? Home deliveries or traditional shopping?

As a Government committee recommends imposing a ‘green tax’ on home deliveries, ParcelHero’s Head of Consumer Research, David Jinks MILT, reveals most research finds home deliveries are considerably more environmentally friendly than traditional shopping.

The Government has become trapped in a circle of increasing business rates: the tax paid on commercial properties such as High Street shops. Britain has the highest business rates in Europe, higher than France and Germany combined. A decade or so ago this was just about sustainable, but the collapse of the High Street has seen many businesses close under the weight of these rates.

But the Government can’t afford to abandon them, as it uses the income to prop up local authorities. Scrapping, or even significantly reducing, business rates would cost the Government millions of pounds.

It’s solution: a new tax on retailers in addition to business rates. A new Government report is recommending new ‘green taxes’ on home deliveries. It would then use the revenues from the new e-commerce taxes to cut business rates, without having to find the extra money from elsewhere.

But is this a viable solution? It means Britain’s hard-pressed consumers will pay yet more taxes on goods, in order to subsidize local authorities that the Government is unwilling to fund by fairer means. And the whole premise of the argument that home deliveries are bad for the environment, and should be hit by a green tax, is highly debatable. In fact, there is strong evidence that, far from being less green, home deliveries are significantly more environmentally friendly than traditional visits to the High Street.

This new Study examines whether home deliveries are the greenest solution, and whether a ‘green’ tax on home deliveries is the best way for Government to continue to subsidise local authorities.

High Streets and Town Centres in 2030

Currently half of all business rate income goes directly to local authorities, and half to central government. The central share is then distributed to councils in the form of revenue support grants. While the High Street was booming this was a sustainable model; but with the advent of e-commerce, exorbitant business rates are no longer affordable for many businesses. The business rate revisions of 2017 were the final straw for many valued local businesses.

Examining the plight of the High Street, the Government’s Housing, Communities and Local Government (HCLG) Committee has released a key report on the future of the High Street: High Streets and Town Centres in 2030.

The report echoes the many of the findings of ParcelHero’s own influential report 2030: Death of the High Street. Put simply: time is running out for the High Street in its current form.

ParcelHero’s report was discussed in Parliament last summer with Rebecca Long Bailey, the Shadow Secretary for Business, revealing : ‘A worrying report by David Jinks called “The Death of the High Street” argues that, unless we see radical change within 13 years, the impact of online shopping and home deliveries will “destroy” over half of today’s town centre stores. His report also argues that between 2020 and 2030 half of the UK’s existing shop premises will disappear; 100,000 stores will close, leaving just 120,000 shops on our high streets.’

The new Government committee report agrees that e-commerce has had a big impact on town centres: ‘The traditional pattern of making purchases in physical stores, both in and out-of-town, has been profoundly disrupted by the growth of online shopping. The impact of this on our high streets and town centres in the form of store closures, persistently empty shops and declining footfall is clear for all to see.’

But whereas ParcelHero’s influential report found a reduction in business rates, together with and a new focus for brick and mortar stores on making shopping an event, by improving customer experience and staff expertise, is the clear path for a fightback for the High Street; the Government’s HCLG committee report summary has a different solution.

It says that the solution to the woes of the High Street is to penalise online sales by creating an entirely new tax for Britain’s hard-pressed shoppers. It says the Government should urgently assess proposals such as an online sales tax and ‘green taxes’ on deliveries and packaging.

It recommends the money raised from such a tax could then be spent on a future high street fund and a reduction in business rates.

How green are home deliveries?

While we agree that bold steps are needed to save the High Street, our findings strongly disagree with the claim that a ‘green’ tax on deliveries is needed. A number of key reports in recent years have found home deliveries are significantly more environmentally friendly than traditional visits to the High Street.

For some years after the emergence of e-commerce a debate raged whether home deliveries or traditional shopping trips by car were greener. Opponents of the new era of online shopping argued that our roads were becoming clogged up by delivery vans and that this was causing increased congestion and pollution. Supporters of the new form of shopping, on the other hand, claimed that home deliveries stopped people making wasteful journeys by car into city centres or out of town shopping malls.

For some years after the emergence of e-commerce a debate raged whether home deliveries or traditional shopping trips by car were greener. Opponents of the new era of online shopping argued that our roads were becoming clogged up by delivery vans and that this was causing increased congestion and pollution. Supporters of the new form of shopping, on the other hand, claimed that home deliveries stopped people making wasteful journeys by car into city centres or out of town shopping malls.

At the time I was publisher for The Chartered Institute of Logistics & Transport. The research paper itself was, as you can imagine, something of a dry read; so I commissioned Professor McKinnon to write a kind of edited highlights package for the Institute’s magazine, Focus.

The findings were fascinating. The main conclusion was that successful first-time home deliveries of non-food products generate significantly less grammes of CO2 per kilometre than a dedicated car shopping trip. The paper found that a typical urban shop by car generates 1,069 grammes of CO2 per km per item, and a dedicated car trip for a specific item 4,274 grammes of CO2 per km.

In contrast a successful first-time final mile home delivery creates just 181 grammes of CO2 per km per parcel.

In fact, the research found that a customer shopping by car would have to buy 24 non-food items to reduce their equivalent emissions to those of a home delivery.

A typical van-based drop produced 181g CO2, compared with 4,274g CO2 for an average trip to the shops by car and 1,265g CO2 for an average bus passenger heading for the shops.

Now of course the devil is in the detail. The findings required several qualifications, as the figures assume that:

  • the conventional shopping trip is a single-purpose trip
  • the online purchase is delivered successfully first time
  • is not subsequently returned;
  • and the shopping trips and home deliveries are exposed to similar traffic conditions.

Nonetheless the finding of this exhaustive carbon audit of the final mile was so convincing, it became widely acknowledged that in most circumstances home deliveries reduced greenhouse emissions significantly.

However, since the paper was released, we have all become more aware that carbon dioxide (CO2) is not the only key measure of pollution that impacts on urban areas. Diesel vans, the kind of vehicle most used for home deliveries, are more economical than passenger cars and produce less cO2; but we now know they produce higher levels of nitrogen oxide (NOx) and diesel particulates.

NOx impacts on respiratory conditions, high levels cause inflammation of the airways. As long ago as 2012 campaigners were arguing that it should be considered as being just as important an issue for public health and the environment as CO2 emissions. Then came ‘Dieselgate’, the revelation that some VW Group vehicles allegedly emit up to 40 times more NOx in real-world driving than in laboratory tests, which brought the issue to the forefront of public attention.

So, can we still claim home deliveries are the greenest retail option; and what can retailers and couriers do to ensure that in the future they become even more environmentally friendly?

Green is the new black

Responding to growing public concern, the latest Euro 6 diesel van engine regulations have reduced not only CO2 emissions but also taken significant steps to reduce NOx and particulates:

  • Nitrogen oxide – reduced by 55% from 180mg/km to just 80mg/km. (In contrast, the NOx limit for petrol engines has not been altered from the Euro 5 standards)
  • Sulphur oxide
  • Carbon monoxide,
  • Hydrocarbon
  • And diesel particulate matter emissions.

The new engines are more expensive to produce, and therefore buy, However, it’s a price the industry has been willing to pay as it means the latest diesel delivery vans on our roads produce significantly less harmful emissions than their predecessors.

In the longer term, however, there is no doubt that the Government is increasing the push towards reducing the number of diesel vans and trucks on the road considerably: it’s already said there will be no more new diesel vans for sale in the UK by 2040 and its new Road to Zero strategy says at least 40&percent; of new van sales will be Ultra Low Emission by 2030 – a little over a decade from now.

And the home delivery industry is already taking steps to ensure it is moving to even greener power for home deliveries; for this reason, we are seeing the arrival of products such as Banbury-based Arrival’s electric vans.

Purpose-designed for urban delivery work, Royal Mail announced it was trialling the ultra-lightweight trucks in 2017. It says that they optimized the maximum range-to-weight ratio for inner-city deliveries with battery packs enabling up to 100 miles of range on 3.5, 6 and 7.5 tonne trucks. Royal Mail now has nine on the road with the prospect of hundreds more orders. It has additionally recently ordered a fleet of 100 more Peugeot electric vans.

UPS has been working with Arrival since 2016 and has 35 similar vehicles on order. These vans have a range of over 150 miles and, of course, zero exhaust emissions.

UPS has also been working with other automotive manufacturers such as Fuso, developing heavier duty electric trucks, and has just fitted its central London depot with extensive new recharging facilities ready for a significant increase in its electric fleet.

Hermes is another familiar name in parcel deliveries that is adopting electric power. It’s been running a fleet of 32 Nissan eNV200 electric vans in Central London and says there may well be a demand for such vehicles in cities such as Manchester, Southampton and Leeds as city councils tighten their emissions controls. Hermes delivers on average 6,500 parcels per day in London, rising to 11,000 per day during peak.

One of the most high-profile electric vehicle operators, Gnewt Cargo, operates over 100 electric vehicles from its distribution centre in Bow, London. Gnewt says it delivered 3 million parcels last year with a cut of 67&percent; in CO2 emissions per parcel compared to normal deliveries.

Meanwhile DHL, one of the largest logistics firms in the world, is not only building its own electric vehicles (EVs) for its fleet but is also now emerging as EV supplier for other companies. Its StreetScooter range is expanding from producing mainly for DHL’s own fleet to now selling vehicles to other logistics companies.

And as well as courier companies, many other organisations that make regular deliveries, such as Tesco, have committed to the widespread adoption of electric vans by 2020. Sixteen of the UK’s largest van fleet operators, including the Environment Agency, Network Rail and Tesco, have committed to adopting electric vans by 2020 under a new government-backed scheme intended to drive air quality improvements.

Launched by the Global Action Plan environment charity, in partnership with utility firm Engie, the Clean Van Commitment initiative sees participating firms commit to switching a proportion of their fleet to electric vans to 2020, equating to some 2,400 vehicles.

It’s a significant commitment for companies such as Tesco, which incidentally was the company that carried out the first ever ‘online’ shopping order in 1984.

Ocado, the online grocer, is also introducing a fleet of electric vans throughout 2019.

Alternative fuels

For long distance heavy loads, however, electricity is not necessarily the best form of power. For battery powered EVs, once batteries run out, they take some time to charge. The heavier the load and the longer the journey the less effective a battery powered vehicle is. With this in mind Hermes has placed the largest ever initial order of Compressed Natural Gas (CNG) vehicles in the UK. It has ordered 30 CNG IVECO Stralis trucks after a successful six-month trial.

The fleet will be running on biomethane and the parcels firm said each truck is expected to reduce the fleet’s greenhouse gas emissions by around 80&percent; compared with a conventional diesel counterpart. This equates to around 4,500 tonnes of CO2 per year. Making the move to CNG tractor units forms part of Hermes’ wider strategy to reduce CO2 emissions across the business by 50&percent; by 2020.

Biogas, similar to natural gas, but a renewable resource derived from food waste, is also being used for other companies’ HGV vehicles. B&Q, Sainsbury’s, Tesco, Waitrose, John Lewis, Argos and Brit European are among many already using the fuel which is approved under the Department for Transport’s Renewable Transport Fuel Obligation (RTFO) scheme.

But home delivery operators are not resting on their laurels. There are several more radical delivery schemes underway – some of which involve going back to the future!

Organisations such as Zedify supply pedal powered bike and trike delivery services for many local retailers in several cities across the UK. And Sainsbury’s is trialling a new fleet of electric grocery delivery bikes in south London – the first of their kind in the UK.

Five zero emission bikes will deliver up to 100 orders a day from the Streatham Common store as part of the supermarket’s new initiative. The electric cargo bikes are provided by e-cargobikes.com and have the capacity to carry several customer orders at a time.

And this is just the tip of tip of the iceberg it seems. The Government has pledged £2m in funding for e-cargo bikes grants to help provide a zero-emission alternative to traditional last-mile delivery vehicles.

Home delivery tax: ‘Green’ or just opportunistic?

Whatever their final evolution, it looks as if home deliveries will continue to hold the crown as a significantly greener option than traditional shopping trips in the family car, as technology evolves and delivery choices grow ever wider.

With home deliveries becoming ever greener, a new ‘green’ tax on home deliveries looks increasingly to be either based on misinformation, or a deliberate attempt to divert attention from the obvious problem of prohibitively high business rates.

A new tax to counteract the effect of an existing tax is disingenuous to say the least – and could severely impact on those enterprising businesses that have

developed a multichannel approach to retail, by imposing a new tax on their e-commerce sales to add to the high business rates they already pay.

The Government must be cautious not to believe shoppers are this ‘green’. Consumers will recognise that claims so-called green taxes on home deliveries are needed for environmental reasons are false. While everyone is agreed business rates must come down, proposing another tax on online purchases to pay for this looks like an unconvincing attempt to fund the reductions by making shoppers pay taxes twice.