Moving goods from one point to the other is one of the most deceptively complex endeavors humanity has ever achieved, and one of the least environmentally friendly as well. As the world struggles to desperately reduce CO2 emissions by 2025 in order to avoid climate armageddon, reducing the environmental impact in the logistics industry has become more urgent than ever.
This is no easy task, however, the supply chain as we know it hasn’t seen much improvement in the past decades, and the aftermath of the pandemic has put an almost unbearable strain on it that has resulted in unprecedented delays and increasingly higher costs.
If that wasn’t enough, people are buying more products than ever to the point that the last-mile sector, in particular, is struggling to handle even the basic aspects of the operation: from warehouse management to the delivery process itself.
This anxiety-inducing nightmare scenario we are facing has most experts rubbing their foreheads in dismay in the most developed countries in the world, but not in emerging markets where the perennial crisis is a daily affair.
Fiery beginnings
SimpliRoute, last-mile delivery startup from Chile, has managed to solve both the environmental conundrum and operational hurdle at the same time while saving thousands of lives in the process.
While studying for his master’s degree, Álvaro Echeverría, CEO and founder of SimpliRoute, helped the fire department of the city of Santiago, Chile, to optimize their routes and meet the goal of arriving at lightning speed to any emergency. Álvaro, who was only 25 at the time, created an algorithm that reduced firefighters’ time to reach an emergency by 40% and 78% of the time they arrived in less than 5 minutes.
A couple of years later, he applied the same principles to the last mile delivery process, optimizing time and resources to the point of reducing by 34% the CO2 emissions in the supply chain, plus a 10% reduction in the use of vehicles for delivery (making it possible to reduce the use of gas and miles traveled). On top of this, his algorithm also reduced delivery times by 80% and logistic costs by 34%, while at the same time increasing the performance of each shipping by 25%.
Retail and its Environmental Challenges
When we talk about polluting sectors that need to cut down on emissions urgently, retail is always in the Top 5. A recent study by McKinsey pointed out that 1 in 4 consumers are planning to focus more on environmental issues in their shopping behavior. How can retail be greener and more sustainable? For SimpliRoute the solution needs to be integral, although a big step towards this goal could lie in the last mile.
“Last-mile delivery is considered the most expensive and time-consuming part of the shipping process. And the main problems are two: costs and inefficiencies”, says Álvaro. Now, he adds, “there are new ways to optimize last-mile delivery for small, medium, and large businesses with the help of AI and algorithms.”
“We discovered that most journeys relied on the drivers’ expertise to choose a route, and those routes often weren’t the most efficient. We knew that we could apply these takeaways to other sectors. We saw the potential to integrate AI into a broader scope of industries, lower travel times, and make a real impact in one of the most polluting industries in the world.”
The fully realized, AI-driven SaaS solution streamlines middle and last-mile delivery and has empowered companies of all sizes to optimize their delivery operations by providing faster, smarter, and cleaner navigation routes.
Álvaro, along with Eyal Shats, co-founder and CSO of SimpliRoute, raised $8 million last December to expand its services to Brazil, Canada, and the United States, where they are already working with big retailers like Walmart and are planning to help businesses optimize their last-mile deliveries in Europe. In the EU they are going to start with Spain as its main base and then continue to expand to the rest of the continent.