By Aditya Munjal| Jun 22, 2021

Paucity Of Purpose-Built Cargo Vehicles Hampering Efficiency In Last Mile Delivery Segment In India: Cargo E-Bikes May Be The Way Ahead

E-commerce delivery agents are a widely seen phenomenon in urban India today with online orders becoming an almost daily exercise in urban households. However, despite a rapidly increasing delivery load, an overwhelming majority of delivery agents ride motorcycles carrying multiple packages in their tow. Unfortunately, despite their widespread usage, motorcycles are not suitable for last mile delivery and restrict the delivery providers’ ability to increase their shipment capacity per day. This is where the Indian last mile delivery segment experiences a major paucity of purpose-built vehicles that are designed to increase efficiency and lower the costs of delivery.

In many parts of the world, particularly in Europe, custom-built e-vehicles are increasingly becoming a preferred choice for last mile delivery operators, thanks to growing environmental concerns posed by ICE vehicles. At the same time, introduction of purpose-built cost-effective products has further helped increase penetration of e-mobility in the last mile delivery space. A study estimated a 50 percent jump in cargo bike sales in Europe last year with commercial sales growing parallel to private sales. The Indian delivery segment has the potential to replicate this trend if the market offers suitable cost-effective products.

In India, many e-commerce and retail giants have in recent times pledged to convert their delivery fleets to e-mobility. Simultaneously, the electric two- and three-wheeler categories have also witnessed the introduction of multiple products. Yet, the overall adoption of the same in the last mile category remains low with higher costs of e-vehicles and the accompanying range anxiety posing major roadblocks. What most EV players have overlooked is the fact that the last mile segment needs purpose-built lighter vehicles that offer cost-effective solutions for short distance delivery trips.

Being lightweight yet robust, economical and free of range anxiety, e-cycles are a highly credible alternative to motorcycles for last mile delivery. Union Minister for Road Transport and Highways Shri Nitin Gadkari has also pitched for the use of e-cycles as a cost-effective and emission-free mode of goods delivery. Speaking in the parliament recently, the minister underlined that promoting the use of e-cycles for cargo delivery will not only lower expenditure but also reduce pollution, besides addressing road congestion.

Evolving last mile delivery segment in India

Thanks to evolving consumer behaviour and increasing penetration of Internet, the Indian e-commerce industry has witnessed tremendous growth in recent years. It is expected to surpass the US to become the second largest e-commerce market over the next 10-15 years.

The Covid-19 pandemic has further accentuated this trend by propelling the rise of a large number of first time buyers as well as new online sellers. Consequently, e-commerce selling has witnessed a dramatic rise over the last year not just in top tier cities but also from relatively untapped smaller towns. This shift has also marked an inflection point for last mile delivery. Increasing density of orders across cities implies that last mile delivery providers face the economic pressure for optimising resources and increasing delivery capacity per trip by improving capacity utilisation. However, our motorcycle-riding delivery agents are saddled with limited volumetric space and payload capacity on their improvised delivery vehicles. Resultantly, riders are forced to undertake multiple trips within a short distance radius while adopting inconvenient and potentially unsafe practice of carrying heavy backpacks.

What if low-cost purpose-built vehicles are made available to them that augment their payload capacity significantly while lowering operational costs? Purpose-built e-cycles can do exactly this!

Why cargo e-cycles fit the bill

Being light-engineered vehicles, purpose-built cargo e-cycles – be it two-wheelers or three-wheelers – can bring with them a series of advantages for short distance trips. Firstly, priced much below both ICE vehicles as well as heavily engineered electric vehicles, they have a much lower cost of ownership (Sample the fact that Hero Lectro’s cargo e-cycle Lectro WINN is priced at INR 40,000 only). Secondly, with augmented space for carrying parcels, purpose-built cargo e-cycles can allow riders to significantly increase their shipment per trip capacity, thereby lowering the cost per litre of goods storage space and allowing greater cost optimisation with much higher productivity. Thirdly, by ridding riders of the pressures of high fuel costs and high maintenance, e-cycles can significantly lower operational costs. Human hybrid power or pedal assist features further allow users to overcome the issue of range anxiety or torque on demand that is commonly associated with other EVs. Not to forget the fact that riding an e-cycle requires neither a license nor any legal permit (much like a bicycle). In other words, cargo e-cycles are probably the only exception that enhance efficiency and productivity with a significant reduction in cost (generally higher efficiency always comes at a higher cost).

Cargo e-cycles can therefore fill a major void in the e-commerce logistics space by offering enhanced storage and payload capacity perfectly suited to the needs of short distance high-density delivery trips. A switch to a cargo e-cycle implies considerable savings in capital expenditure as well as in operational costs along with greater resource optimisation. For example, for a delivery agent who currently delivers an average 40 shipments a day, a purpose-built cargo e-vehicle can enable to take this number up to 70 to 75, leading to greater productivity and enhanced income. At the same time, it improves both convenience and safety by eliminating the need for delivery agents to carry heavily loaded backpacks on their shoulder while riding since these cargo e-cycles have company-fitted delivery bags.

With a series of e-commerce and retail giants including IKEA, Flipkart, etc. having pledged to convert a significant part of their mobility needs to e-mobility, the need for purpose-built low-cost electric vehicles will further be felt in the coming years. A study by the World Economic Forum estimates that the demand for last mile delivery is expected to increase by a whopping 78 percent by 2030 across the world. Not only will this increase congestion on roads manifold, but will also increase carbon emissions by 30 percent (if ICE engines continue to be used). Shifting to e-mobility therefore not only makes economic sense but also environmental sense. (MT)

*Aditya Munjal, Director, Hero Cycles and CEO Hero Lectro

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