Cross-utilization of EVs is transforming last-mile logistics in India, enhancing efficiency and sustainability amidst the e-commerce boom, writes Saumya Ranjan Rout, Entrepreneur in Residence, Log9 Materials.
The e-commerce boom in India has accelerated the deployment of Electric Vehicles (EVs) in last-mile logistics, driven by the need for sustainable and cost-efficient delivery solutions. Rising consumer demand has pressured companies to explore greener logistics. Under its commitment to reducing carbon emissions as per the Paris Agreement, India’s government has introduced stricter norms for businesses to cut their carbon footprint. Major e-commerce players like Amazon and Flipkart have pledged to reduce emissions as part of their sustainability goals. Moreover, using EVs enhances brand reputation and aligns with the sustainability goals of businesses, appealing to eco-conscious consumers.
EVs, with zero tailpipe emissions, align with corporate emissions standards and help companies meet these norms while reducing fuel costs. Additionally, urban congestion and pollution concerns, coupled with government support for EV infrastructure, have made EVs ideal for short-range, last-mile deliveries in densely populated cities. This synergy between regulatory norms and e-commerce growth is driving EV deployment in India’s logistics sector.
The exponential growth in e-commerce has significantly increased the demand for last-mile deliveries in India. To meet this growing demand, companies have been transitioning from traditional internal combustion engine (ICE) vehicles to EVs. However, many logistics providers have simply extended the same delivery models used for ICE vehicles to EVs, without making the necessary adjustments to accommodate the unique characteristics and capabilities of EVs.
This approach of continuing with legacy systems, processes and archaic infrastructure which has created several challenges that are hindering sustainable growth in the value chain and impeding the scalability of EV platforms like L5N, and N1 cargo vehicles, which are designed for last-mile delivery.
What challenges exist with the current CVs deployed in the Last mile?
Low margins for fleet operators are a primary concern, as intense competition drives prices down, leading to razor-thin profit margins. Rising operational costs, including fluctuating manpower, charging prices, and maintenance, further squeeze profits. Additionally, e-commerce companies often arm-twist these fleet operators to get the best rates further risking the unit economics.
Long ROI periods and uncertainty pose significant challenges in adopting cargo EVs for last-mile delivery. Unlike older ICE commercial vehicles like Tata Ace, Piaggio, and Bajaj cargo vehicles, which can remain operational for over 10 years, EVs typically have a shorter lifespan. Moreover, EVs are competing with heavily depreciated ICE vehicles that are over 8 years old, and whose vehicle EMIs are no longer a financial burden.
Market fluctuations further complicate demand forecasting, increasing uncertainty about the return on investment. Additionally, rapid advancements in EV battery technology and vehicle performance risk making existing EVs outdated, which discourages long-term investment in current models. This makes the initial investment for EVs harder to justify, as it can take years to recoup, especially in a dynamic market where last-mile delivery behaviour is evolving, and quick commerce is gaining popularity.
Increased urban congestion and emissions are also critical issues. The growing number of delivery vehicles adds to traffic congestion, particularly during peak hours, leading to slower delivery times and reduced operational efficiency. Traditional fossil fuel-powered vehicles continue to contribute heavily to air pollution and greenhouse gas emissions, resulting in restrictions such as “no entry” timings in many cities.
Lastly, low vehicle utilization hampers efficiency. Inefficient routing & infrastructure leads to underutilization, with many vehicles sitting idle during non-peak hours. Fixed delivery windows further misalign vehicle capacity with demand, resulting in unutilized potential.
How will Crossdok platform solve inefficiencies?
Aggregation of Demand
One of the foundational elements of Crossdok’s solution is the aggregation of demand, which synchronizes fulfillment across different time slots for various use cases. For example, companies like Ninjacart utilize vehicles for early morning deliveries of fruits and vegetables, while Flipkart might require vehicles in the afternoon and evening for e-commerce deliveries. By breaking down vehicle utilization into operational hours, Crossdok can ensure that each vehicle is used efficiently throughout the day, minimizing idle time. This aggregated approach allows for better planning and utilization of the fleet, leading to enhanced operational efficiency and reduced costs.
Peer-to-Peer and Fleet Sharing
Crossdok also introduces innovative sharing models to further enhance vehicle utilization:
- Peer-to-Peer Sharing: This model allows individual owners or delivery captains/operators (DCOs) to rent out their EVs to others. This flexible and affordable option caters to short-term transportation needs, ensuring that vehicles are continuously in use rather than sitting idle.
- Fleet Sharing: In this framework, fleet owners can share their underutilized vehicles with other fleets or individuals. This collaborative approach maximizes the use of existing assets, reducing the need for new vehicle purchases and promoting efficient resource allocation.
- Marketplace-Based Sharing: Crossdok will create a centralized platform where fleet owners can list their vehicles for rent, enabling businesses or individuals to easily find and access suitable options. This marketplace fosters a dynamic sharing economy, allowing users to select vehicles based on their specific needs.
Dedicated Infrastructure for Night-Time Deliveries
To support efficient operations around the clock, Crossdok envisions dedicated infrastructure for night-time deliveries:
- Dedicated Hubs: These hubs will be strategically located to enable last-mile deliveries across specific pin codes at all hours. Equipped with charging stations and maintenance facilities, these hubs ensure that vehicles are ready for use whenever needed, enhancing operational reliability.
- Micro-Warehouses: The introduction of densely located micro-warehouses will allow parcels to be held closer to customers. This proximity helps mitigate the impact of traffic congestion during peak hours, significantly reducing delivery times and improving overall customer satisfaction.
What is the technological innovation behind it?
The technological innovations behind Crossdok’s cross-utilization model are pivotal in enhancing the efficiency and effectiveness of last-mile logistics. At the core are user-friendly mobile and web applications, which streamline the process of booking, payment, and management of shared vehicles. These platforms empower users to easily access and coordinate vehicle rentals, ensuring a seamless experience.
Fast-charging electric vehicles (EVs) play a crucial role in minimizing downtime. By incorporating quick charging technology, these EVs can quickly replenish their batteries, allowing for more deliveries within a shorter timeframe. This capability significantly enhances the operational efficiency of the fleet.
To facilitate secure and convenient deliveries, smart lockers are integrated into the system. These lockers enable customers to pick up their packages at their convenience, reducing the need for multiple delivery attempts and enhancing customer satisfaction.
The use of Internet of Things (IoT) technology is essential for optimizing logistics operations. IoT devices are employed for real-time tracking of vehicles, allowing for better route optimization and efficient fleet management. This connectivity helps reduce operational downtime and drive down logistics costs by ensuring that vehicles are utilized to their fullest potential.
Lastly, smart hubs equipped with charging stations are strategically located to support the operation of shared EV fleets. These hubs not only facilitate fast charging but also ensure the availability of vehicles when needed. By integrating these innovative technologies, Crossdok enhances the efficiency of last-mile logistics while promoting sustainable practices in the transportation sector.
Challenges and Opportunities
Trust and Safety are critical for the success of Crossdok’s asset-sharing platform. Building trust among stakeholders is essential for smooth operations, which can be achieved through damage tracking systems that monitor and report any damages or liabilities to the responsible parties. To further enhance safety and reduce risks, Crossdok will implement slot-wise freight insurance and conduct thorough background checks on all participants, ensuring a secure and reliable environment.
In terms of Infrastructure, Crossdok will establish smart hubs strategically located around demand hotspots. These hubs will enable at least two use cases per vehicle, ensuring around-the-clock operations and optimal asset utilization. Additionally, these hubs will be equipped with charging stations and vehicle maintenance facilities to support the smooth operation of shared electric vehicle (EV) fleets, minimizing downtime and maximizing efficiency.
For Economic Viability, Crossdok will implement carefully structured pricing models that account for factors such as driver costs, long hours of operation, and diversified revenue streams. These models will be essential for attracting enterprises and drivers while maintaining profitability. Effective cost management practices will also be employed to keep operational expenses under control, ensuring the financial sustainability of the platform.
Lastly, Market Adoption will be driven through active awareness promotion. Crossdok will focus on educating businesses and individuals about the advantages of cross-utilization, emphasizing benefits such as cost savings and environmental sustainability. Targeted marketing campaigns will further highlight the economic and environmental advantages of shared EVs, fostering greater acceptance and participation in the platform.
What is the current update and when will this come to market?
We have successfully executed pilot programs in Delhi and Bangalore with six enterprises, showcasing best practices in cross-utilization. This initiative has demonstrated the viability and effectiveness of our platform.
We are now preparing to launch the service, enabling enterprises to book assets in a slot-wise format. This will allow them to utilize verified drivers and make the most of idle vehicle hours throughout the month. The official rollout is imminent, and we are excited to bring this innovative solution to market.
Future Outlook
The future of EV cross-utilization is promising, as it offers a sustainable and efficient solution to the challenges faced by the last-mile industry. As technology continues to advance and regulatory frameworks evolve, we can expect to see further growth and innovation in this area.
In conclusion, cross-utilization of electric vehicles presents a significant opportunity to enhance the efficiency, sustainability, affordability and utilisation of EVs. By leveraging technology and fostering collaboration among stakeholders, we can create a more sustainable and equitable future for our cities.
Disclaimer: The views expressed by the author are his own and do not necessarily reflect the views of FMM magazine.
Saumya Ranjan Rout
Entrepreneur In Residence
Log9 Materials