This article is the second in our four-part sustainability series exploring how modern logistics is evolving to meet environmental challenges. Having examined broad sustainability strategies across delivery networks in ‘Greening the delivery journey’, we now focus on the unique challenges and innovative solutions emerging in urban environments, where population density, traffic congestion and air quality concerns create both obstacles and opportunities for greener delivery methods.

As cities continue to grow and online shopping increases, the quest for sustainable urban delivery has never been more critical or more innovative.

Walking down most urban UK streets, you’ll see a delivery ecosystem in full swing. Couriers on electric cargo bikes weave through traffic. Electric vans quietly deliver packages to businesses. Customers pick up packages from automated lockers at train stations. This is more than just a transport system – it’s a dynamic ballet of goods moving through our increasingly congested cities.

As urbanisation accelerates, with 68% of the global population expected to live in cities by 2050 (United Nations, 2018), delivery companies face a critical challenge: how to expand service coverage while reducing environmental impact in spaces where every square metre counts.

The urban delivery puzzle

Cities present carriers with a multifaceted set of challenges. Traffic congestion causes unpredictable delays, parking is limited, air quality regulations tighten yearly, and consumers demand both rapid and sustainable services. Achieving harmony among these competing priorities necessitates a fundamental reevaluation of delivery methods.

According to a sustainability director at a major UK carrier: “Urban delivery stands as our most significant challenge and opportunity. We need to access more customers across various locations with minimal environmental impact. This situation is driving us to completely reevaluate our operations.”

The statistics paint a compelling picture. A typical diesel van delivery route in central London generates roughly 25 times more carbon emissions per parcel than equivalent deliveries completed by cargo bike (University of Westminster, ‘The Promise of Low-Carbon Freight’, 2017). Nonetheless, vans remain indispensable for larger items and specific delivery scenarios.

According to a white paper by Hitachi, the challenges are multiplying as ecommerce booms: “Nearly 20% of retail in 2025 will happen via online channels globally. And when it comes to more mature digital retail markets such as the UK and US… over 25% of retail will be online.” This transition means parcels are becoming “lighter, smaller, and more frequent, with average orders increasing weekly” – fundamentally altering delivery requirements in urban settings.

This transformation unfolds against a backdrop of escalating regulatory scrutiny. The European Commission notes that urban freight transport is “vital to enable urban economies and daily services to operate,” yet simultaneously “contributes to congestion, air pollution, and noise in cities.” This has resulted in stricter emissions regulations, vehicle access limitations, and congestion charging zones in numerous European cities.

DPD UK exemplifies this industry shift, aiming to be “the UK’s most sustainable delivery company” with fleet electrification, waste management and circular economy initiatives as central to its business strategy.

Reimagining the urban delivery model

The conventional method of urban delivery is fundamentally inefficient. A van departs from a depot located on the outskirts of a city, meandering through traffic to make numerous stops, and faces challenges in locating lawful parking at each destination. This leads to considerable environmental repercussions: engines idling, additional mileage in the quest for parking spots, and partially filled vehicles returning to the depot.

In reaction to these issues, the industry is transitioning to a hub-and-spoke structure using urban micro-fulfilment centres. As Fernhay points out, decentralising logistics with urban micro-hubs allows companies to effectively shorten the distance between warehouses and consumers. This strategic positioning not only curtails delivery times but also facilitates the use of smaller, more nimble delivery vehicles.

For instance, Evri operates in Edinburgh deploying electric cargo bikes for last-mile deliveries as a part of its eco-friendly strategy. These bikes adeptly navigate urban settings, significantly cutting down carbon emissions – by as much as 89% on trial routes – while enhancing delivery speed by up to 60% compared to vans in city centres.

Micro-fulfilment centres frequently occupy unoccupied retail spaces or repurposed buildings, revitalising urban spaces and simultaneously reducing transport distances. According to Hitachi, this shift creates “a hub-and-spoke model”, with major hubs being supported by regional distribution centres. This allows logistics providers to expand their coverage from the current 60-70% to a full 100%.

The growth of out-of-home delivery networks

Collection points have rapidly evolved from a fallback option to a preferred delivery choice for many consumers, offering environmental benefits, convenience and cost savings.

The environmental benefits are substantial. Royal Mail research shows that collection point deliveries can reduce carbon emissions by up to 90% compared to home delivery, as multiple parcels travel to a single destination rather than to scattered individual addresses.

Carriers have responded by rapidly expanding their networks. Evri now operates over 14,000 ParcelShops and lockers across the UK. InPost has installed more than 9,200 automated parcel machines (APMs). Amazon has expanded its locker network to supermarkets, petrol stations and transport hubs.

What makes these networks particularly effective is their integration into consumers’ daily routines. A locker at a train station or a collection point at a corner shop means people can collect parcels during journeys they’d make anyway, eliminating dedicated car trips.

The data supports this approach. According to a Centre for London report (2022), 83% of Londoners who chose Click & Collect stated they would use active travel (walking or cycling) to collect their parcel if the pick-up point was within a 10-minute walk.

(See also part one of this sustainability series, ‘Greening the delivery journey’.)

Electrification transforms urban delivery

Urban delivery systems are swiftly transitioning to electric power, with substantial investments being made across the industry to swap out fossil fuel vehicles for zero-emission options. What initially started as modest pilot programmes has now become a fundamental strategy for numerous carriers.

Traditional diesel vans are being gradually supplanted by electric versions, with notable success. Evri has electrified around 36% of its primary van fleet and intends to increase this figure, significantly advancing the electrification of its fleet. DPD reports that over 94% of its van deliveries within London’s North and South Circular roads are all-electric, and 95% of deliveries in other major cities like Birmingham and Manchester use EVs. With 80 million parcels delivered by electric vehicles in 2024 alone, DPD has cut carbon emissions by 47.5% since 2020. These transitions are occurring most rapidly in metropolitan regions where charging infrastructure is more established.

A particularly promising development is Hived’s announcement in February 2025 that it’s expanding “the UK’s only end-to-end electric delivery network, covering middle and final mile, with the Mercedes-Benz eActros”. The company has ordered 11 trucks with battery capacities exceeding 600 kWh, capable of travelling up to 310 miles on a single charge. Hived plans to set up megawatt chargers at hubs in East and West London, the Midlands and Manchester – a move that could create parity between diesel and electric heavy goods vehicles.

As Mathias Krieger, Hived’s co-founder and chief product officer, notes: “This is a major moment for the logistics industry. In an industry where the status quo is to run a mixed fleet at best, Hived is the first delivery company to operate an all-electric delivery network across the middle and final delivery mile.”

Other major carriers are following suit. DPD recently partnered with MAN Truck & Bus UK to trial the MAN eTGX electric HGV, which offers a range of up to 800 kilometres and charging capacity of up to 750 kW. This significant development signals that even the heaviest elements of delivery fleets are now entering the electrification phase.

For congested city centres, electric cargo bikes often outperform any type of van. These bikes combine bicycle elements with electric motors and specialised cargo sections. They manoeuvre through traffic more effectively than vans, require no parking spaces, produce zero emissions and are exempt from congestion charges in cities like London.

In dense urban settings, cargo bikes are not only an eco-friendly option but also an efficient one. Riders using these bikes can complete an average of 15-20 deliveries per hour in central London, compared to the 8-12 deliveries managed by van drivers who face parking and traffic dilemmas.  (This insight is based on observations from sustainable last-mile delivery providers.)

The statistics reinforce this approach. Yodel delivered over a million parcels using pedal power in 2023, and Evri expanded its e-cargo bike fleet to five UK cities. These initiatives are not mere symbolic environmental acts but are integral to delivery strategies within urban centres.

DPD demonstrates this commitment with over 3,800 electric vehicles (35% of their final-mile fleet), complemented by hydrotreated vegetable oil across 84% of its HGV fleet, reducing emissions by up to 90% compared to diesel.

Some companies are pushing innovation even further. In 2022, Norwegian carrier Posten led the way by using autonomous sidewalk robots for first-mile package transport in Oslo. These compact, wheeled robots, known as Ottobots, collected goods from restaurants and transported them to Posten’s distribution hub at Filipstad, where human couriers managed the final delivery.

Optimising delivery timing and urban night logistics

Time serves as an additional facet in the complex framework of urban deliveries. Shifting deliveries to off-peak periods diminishes time lost in traffic jams and curtails emissions from vehicles idling amid gridlocks. Morning deliveries, usually scheduled between 5–7am, along with evening routes, are gaining traction for business-to-business shipments, especially in metropolitan areas.

As early as 2003, Barcelona broke new ground with its silent night-time delivery pilots, starting with Mercadona’s supermarket on Valencia Street. These initiatives employed modified trucks and noise-reducing unloading techniques to substitute numerous daytime deliveries with fewer, quieter night-time journeys, resulting in heightened efficiency and less congestion. Within a span of 18 months, the scheme expanded to encompass 137 locations across Spain. More recently, Barcelona has sustained its commitment to urban mobility issues through its Innova Lab Mobility programme.

The third phase of this initiative, unveiled in January 2025, seeks to address noise pollution and inefficiencies in urban freight logistics by harnessing AI and acoustic sensors to fine-tune delivery systems while reclaiming public spaces for pedestrians. This strategy isn’t without its hurdles. Residential deliveries are subject to time restrictions due to noise considerations and customer availability. Drivers may face security concerns when working during unconventional hours. Nevertheless, for business deliveries to retail outlets, restaurants and offices, the advantages are considerable.

For carriers using electric vehicles, night-time operations offer an additional benefit: the ability to charge vehicles overnight at reduced electricity rates. This lowers operating costs while also alleviating pressure on power grids during peak daytime periods.

Carriers are also greening their facilities. DPD has installed over 21,000 solar panels network-wide and targets BREEAM “excellent” ratings for new buildings, integrating sustainability from vehicles to infrastructure.

Collaborative models transforming urban logistics

One of the most exciting advancements in sustainable urban delivery is the rise of collaborative models that dismantle traditional competitive barriers. In the past, multiple delivery services would send their vehicles to the same locations, leading to duplicated routes and increased congestion. Today, several innovative strategies are beginning to disrupt this inefficient system.

What’s needed is greater interoperability between carrier networks. Currently, different carriers cover the same areas with overlapping routes, resulting in multiple vehicles travelling identical streets. The London 2012 Olympics provided a compelling case study when UPS became the designated logistics provider for the Olympic Village, requiring all carriers to consolidate parcels through UPS for final delivery. This coordinated collaboration dramatically reduced vehicle traffic while maintaining efficient deliveries.

Technologies that aggregate shipping data across multiple carriers could play a crucial role in facilitating this transition, identifying overlapping delivery patterns and opportunities for consolidation. With advanced tracking capabilities and data intelligence now available, similar models of coordinated urban logistics could significantly reduce emissions while improving delivery density and driver productivity.

Urban consolidation centres are emerging as a solution, bringing together shipments from multiple carriers on the outskirts of a city. From these hubs, a single operator takes charge of the final delivery using eco-friendly transport methods. For instance, Bristol’s freight consolidation centre once achieved a remarkable 70–80% reduction in delivery vehicle trips to the city centre.

The European Commission underscores the significance of such planning: “City authorities are encouraged to fully integrate the freight transport dimension within their sustainable urban mobility plans (SUMPs) through dedicated sustainable urban logistics plans (SULPs) developed in collaboration with private stakeholders.”

Consolidating deliveries for multi-tenant buildings is emerging as a highly promising strategy. Take Amazon Hub Apartment Locker, for instance – it’s a secure, user-friendly solution for managing packages in apartment complexes, accepting parcels from any delivery service. Some property developers have implemented unified delivery systems in residential areas, drastically cutting down the number of delivery vehicle trips.

Local governments are also promoting these transformations through various rules and incentives. London’s Ultra Low Emission Zone imposes fees on vehicles that fail to meet certain emission standards. Meanwhile, several cities across the UK have established clean air zones and launched incentive programmes aimed at promoting the use of low-emission vehicles.

Paris has developed centralised ‘logistics hotels’ – multi-story urban warehouses that facilitate the consolidation of goods by various carriers using eco-friendly delivery methods. The first of these, Chapelle International, was inaugurated in 2018 in the 18th arrondissement. This trailblazing facility combines rail freight operations with urban distribution, utilising electric and other alternative energy vehicles, which greatly cuts down emissions and traffic congestion.

Paris is committed to expanding this model, with additional logistics hotels like the SEGRO Centre Paris Les Gobelins scheduled to open in 2025, thereby advancing sustainable urban freight solutions even further.

The human dimension of sustainable urban delivery

Switching to more sustainable urban delivery methods impacts not only the environment but also the individuals employed within these systems. For instance, the rise of e-cargo bikes has opened up new job opportunities that don’t require a driver’s licence, making delivery roles more accessible to younger individuals and those who can’t afford a car.

Training programmes are pivotal in this shift. FedEx, for example, offers driver training focused on fuel-efficient driving techniques to cut down on emissions. These programmes enhance safety and efficiency while minimising environmental impact.

The nature of delivery work is also changing. Electric vehicles eliminate exposure to harmful diesel exhaust, and cargo bikes add a fitness component to the workday. Advances in route optimisation technology help ease stress by creating more manageable workloads and reducing time pressures.

Nonetheless, challenges persist. The gig economy aspects of delivery work can lead to unstable employment conditions. Industry leaders are increasingly acknowledging that truly sustainable delivery should integrate eco-friendly practices with fair treatment for workers.

Looking ahead: Technology driving the future of urban delivery

The landscape of urban delivery is changing swiftly, with new technologies set to bring even more shifts. Hitachi predicts that “connected, shared, autonomous and electric solutions” will take centre stage in the future of city logistics. These changes will be driven by innovations like IoT, Big Data, predictive analytics, cloud computing, crowdsourcing platforms and connected devices.

Some technologies hold particular promise for urban settings. Advanced AI-driven route optimisation is already cutting down on both mileage and emissions. Meanwhile, tools like what3words enable drivers to pinpoint exact delivery locations more accurately, eliminating unnecessary trips.

After years of anticipation, drone delivery is finally finding its footing in specific situations. Project CAELUS has seen NHS Scotland successfully use drones to transport medical supplies and lab specimens, especially in rural and remote areas. These trials have slashed delivery times from hours to under 35 minutes and highlighted the potential for reducing carbon emissions.

Digital advancements are also transforming how delivery companies engage with their customers. Increasingly, businesses are using predictive analytics to better predict where and when the next orders will arise, leading to more efficient route planning and loading. Hitachi points out that this strategy helps companies “manage routes better from the point of load balances and excess capacities when it comes to truck deliveries”.

A significant factor is the changing mindset of consumers. As people become more aware of the environmental impact of deliveries, they are more inclined to accept slightly longer wait times for more eco-friendly options. A Royal Mail survey revealed that 55% of UK consumers would opt for a retailer based on sustainability commitments, a figure that rises to 69% among Gen Z.

As Map Transport says: “The future of urban logistics is at a critical turning point. As the demand for home deliveries continues to grow, businesses must rethink their logistics strategies to adapt to the complex environment of urban areas. Technology, collaboration and innovation are key elements in shaping the future of urban logistics.”

Balancing extensive urban delivery reach with environmental accountability is a multifaceted challenge, yet the industry’s direction is unmistakable. Through technological advancements, reimagined operations and teamwork, delivery companies are proving that expanding reach doesn’t have to compromise environmental stewardship. In reality, the most effective solutions often advance both goals at once.

As cities continue to expand and transform, the delivery infrastructures catering to them must also adapt. The forward-thinking carriers at the forefront of this evolution understand that sustainability isn’t merely about being eco-friendly – it’s about developing smarter, more efficient systems that enhance service for customers and communities while safeguarding the long-term sustainability of urban delivery.