A number of delivery startups in Europe and the US are in a race to provide zero-emission, electric last-mile deliveries in cities to retailers and consumers before major shipping companies do the same. These startups, including Liefergrun, Zedify, Packfleet, and DutchX, are capitalizing on retailers’ need to meet environmental and emission-reduction targets. They have collectively raised approximately $1 billion in funding. While industry leaders like FedEx, Deutsche Post DHL Group, Amazon, and United Parcel Service have set their own targets for zero-emission fleets, the startups aim to capture market share during the lead-up to these goals.
These small but rapidly growing startups are using their own routing technology for urban and suburban deliveries. However, they face the challenge of scaling up while keeping prices competitive in a crowded market. Additionally, they may become acquisition targets as they expand. Niklas Tauch, CEO of Liefergrun, emphasized the importance of not increasing prices for sustainable delivery, as customers are unwilling to pay more. Liefergrun has seen significant growth and expects its revenue to increase sevenfold this year.
Delivery giants are also investing heavily in electrifying their fleets. DHL plans to switch to 100% zero-emission last-mile e-commerce deliveries in the Netherlands by the end of this year, with other markets to follow. Packfleet, a UK startup, has experienced tenfold revenue growth and plans to expand its fleet to 400 electric vans in London by 2024. The company aims to be present in the top 20 UK cities within two years.
Europe has proven to be a more fertile ground for zero-emission package deliveries, but DutchX is launching a new service in New York to bring loaded containers into Manhattan by ferry and then use electric cargo bikes for city deliveries. The company’s revenue is expected to rise by more than a third this year, and it plans to expand to Philadelphia and other US cities.
Logistics companies and customers are facing increasing pressure to reduce emissions, with some retailers setting ambitious targets for zero-emission deliveries. Startups in the industry face challenges in scaling up, as they often use smaller vehicles that squeeze profit margins. However, regional companies can still succeed in the market. Established carriers like FedEx, UPS, and DHL are closely monitoring these startups and may consider acquiring them for their innovative services.
Zedify, a UK electric cargo-bike delivery startup, operates in multiple cities and delivers packages for large firms like FedEx. The company plans to expand to more cities, which will result in national contracts from retailers and a significant increase in deliveries. Zedify aims to be present in nearly 50 UK cities with 100,000 or more residents within four years.
In conclusion, the zero-emission delivery startup sector is rapidly growing as companies strive to meet environmental targets. These startups face the challenge of scaling up while keeping prices competitive, but they have the potential to disrupt the market and attract the attention of established carriers.
