The cost of fleet ownership – can our deliveries be commercially environmental?
This year has been one great hiccup in the disruption of what was, yet the nouns of “transition” and “pivot” have resonated as unwanted clichés for many, none more so than in the F&B space. Earlier this year, over 4,000 local restauranteurs complained to aggregators about their high commissions, offering a 3-4 percent profit margin on deliveries. Yet, in one on one discussions, many said “unfortunately we have to be present”.
When we asked our (ONE MOTO) customers including restauranteurs and aggregators about the industry, many focused on the costs of delivery which made up 40 percent of costs. Inclusive of servicing, fuel, maintenance, fees and licenses – understandably many don’t realise there is an immediate solution – yet the next conversation surrounds Capex vs. Opex. Nearly every aggregator is considered a tech company which is un-emotive to restauranteurs problems, and likewise the parity of understanding is disjointed.
We respect that some delivery operators and aggregators aren’t in a position for a Capex investment and would prefer the current arrangement. This itself isn’t sustainable as a price war resonates amongst the larger players, and this year has seen an unprecedented increase in restaurants and cloud kitchens advertising their own delivery apps. This is the sign that restauranteurs are not accepting the ‘norm’, bringing their own change to the industry which will ultimately affect even the largest aggregators and operators.
Although there are various payment structures among delivery aggregators, I’ll use one example. Riders pay for their own fuel (around AED 450 per month) and lease their own bikes (AED 950 per month) leaving them with a bare minimum for living expenses. Servicing is carried out during lunch breaks. This isn’t even touching the high-pressure these riders face every day, 15-16 deliveries, 10-12-hour shifts. Several of our customers in the F&B sector agree and want to champion the welfare of their riders. 40 percent have implemented a sustainability mandate, and many are looking towards a cleaner operation.
Here are the facts and stats based on some of the conversations and extensive research.
The environmental vision and policies of the UAE government are incredible. Each year greater initiatives are introduced, and this is compounded by companies setting up to help contribute to a sustainable society. Yet radical adoption is still needed to expedite this transition. Switching the delivery vehicles of the UAE to electric has an immediate impact on the environment and air quality. 15,000 delivery vehicles produce enough toxic emissions each year that switching to EV would save 21,100 acres of forests (42X the size of Downtown Dubai). We are working closely with government departments in the UAE to help incentivise the switch to EVs and this is could prove to be viable.
How do we make the transition? The answer is in “phases”. By switching out the current owned assets or 10 percent of these delivery fleets to electric creates enough impact and a measurable change. A phased approach shows commitment and a commercially manageable transition.
So, when are you going to switch?