Shifting to cargo bike deliveries could save taxpayers £4bn 

If delivery companies switched to using cargo bikes instead of diesel vans for the first and last mile of deliveries, it would save the NHS and other government services over £4bn by reducing the costs of congestion and air pollution, according to new analysis published today. 

The figures are published to mark the launch of a share offer for Pedal and Post, a low emissions courier company currently operating in Oxford. The company, currently valued at £2 million, plans to raise up to £500,000 through a crowdfunding campaign on the ethical investment platform Ethex in order to expand in Oxford and to launch in Reading next year.

Research from the Department for Transport has found that “33% of all urban deliveries could be done by cargo bikes or ecargo bikes.” (1)

A recent report looking at the impact of van pollution by researchers at Just Economics found that the hidden social and environmental costs associated with diesel vans total £2.46 billion in London alone. (2)

If a third of those costs were saved from switching to zero emissions cargo bikes, the savings in health and environmental would be £4.25 billion across England. 

In Oxford, the equivalent saving for taxpayers would be £14 million. (Figure 1)

Figure 1 – Savings from switching from diesel vans to cargo bikes

Figures from the Just Economics report for London are factored for both Oxford and Urban England based on population size.

Place	Population	Light commercial vehicle miles in 2019 (millions)	Just Economics total externality cost of diesel vans (£m)	Just Economics total externality cost of cargo bikes (£m)	% of van miles which could be by cargo bike delivery	Potential saving by switching from diesel van to cargo bike deliveries (£m) – factored by population
London	8,982,000	3,265	£2,464	£10	33%	£813
Oxford	150,000	55	£41	£0.2	33%	£14
Urban England	46,900,000	17,043	£12,865	£50	33%	£4,246

Sources:

• Light commercial vehicle miles: Table TRA8902: Motor vehicle traffic (vehicle miles) by local authority and selected vehicle type in Great Britain, annual from 1993 tra8902.ods (live.com)
• Cost of diesel vans: https://www.justeconomics.co.uk/uploads/reports/JE-09-Impact-on-Urban-Health-Report_v5.pdf 
• 33% of which could be cargo bike: EST007-01-ESTDFT-Electrifying-last-mile-deliveries-guide-WEB-02.pdf (energysavingtrust.org.uk)

The costs are derived from savings from reduced congestion, less air pollution, better health outcomes for riders, and fewer accidents and greenhouse gas emissions from switching from diesel vans to cargo bikes. (Figure 2)

Figure 2: Social and environmental externality costs of diesel and electric vans and cargo bikes (in pence per mile)

Environmental or social impact	Diesel vans	Electric vans	Cargo bikes
Congestion	27.5700	27.5700	5.1700
Health	13.9100	13.9100	0.0000
Air pollution	8.5200	0.4300	0.0000
Accidents	4.6500	4.6500	2.3400
Infrastructure costs	3.1600	3.6300	0.0001
Climate change	3.1200	1.2000	0.2600
Noise	2.8800	0.8900	0.0000
Water pollution	2.8000	2.1000	0.0000
Total social costs (pence per mile)	66.6	54.4	7.8

Taken from “Delivering Value – A quantitative model for estimating the true cost of freight via three transport modes” Just Economics November 2022

Chris Benton, the CEO of Pedal and Post, said: 

“The potential to clean up our air and grow the UK economy is huge. Pollution from diesel van deliveries costs the NHS nearly £25,000 across the lifetime of the van, compared to around £150 for an electric cargo bike. We also know that cargo bikes can deliver  more parcels per hour than the average van, and produce 92% less greenhouse gas emissions per delivery, so it really is a no brainer to make the switch.”  

The potential market for cargo bike deliveries is estimated to be worth around £4.6bn in the UK, and the UK deliveries market grew from £6.9 billion in 2013 to £13.9 billion in 2021, and by 50% during COVID. (3)

Pedal and Post are already working with established delivery companies such as DPD, Yodel and Riverford to handle their smaller packages, as well as more traditional Oxford partners such as Blackwell’s bookshops and Wolfson College, part of the University. 

Overall, cycle courier provision across the UK is sporadic and fragmented. Birmingham, Manchester and Sheffield have no cycle courier services despite being some of the largest of UK cities. Many smaller towns and cities such as Swindon and Reading also have no cargo bike services, though Pedal and Post plans to expand to Reading early next year. Nationally, there are now around 8 cargo bike services that operate in more than one city.

Jamie Hartzell, chair of Pedal and Post, said: 

“The potential market here is huge. We know that internet retail sales grew by 47% in 2020. But while getting goods delivered to your home at a click of a button is easy and time saving at a time when we are all under pressure, it comes at a significant cost to our health and the environment. Electric cargo bikes are a crucial part of the solution to speed up deliveries and make our air safer to breathe.”

A major report ‘Breathing life into the UK economy: Quantifying the economic benefits of cleaner air’ by CBI Economics, (4) the CBI’s economic analysis arm, examines the economic impacts of the UK achieving World Health Organization (WHO) guidelines for air pollution, and found:

• A £1.6bn annual economic benefit to the UK could be realised by meeting WHO guidelines for safe air
• 17,000 premature deaths could be prevented every year from respiratory diseases
• Three million working days could be gained by reducing worker sickness absence or absence due to sick children.

Figure 2: Social and environmental externality costs of diesel and electric vans and cargo bikes (in pence per mile)

Environmental or social impact	Diesel vans	Electric vans	Cargo bikes
Congestion	27.5700	27.5700	5.1700
Health	13.9100	13.9100	0.0000
Air pollution	8.5200	0.4300	0.0000
Accidents	4.6500	4.6500	2.3400
Infrastructure costs	3.1600	3.6300	0.0001
Climate change	3.1200	1.2000	0.2600
Noise	2.8800	0.8900	0.0000
Water pollution	2.8000	2.1000	0.0000
Total social costs (pence per mile)	66.6	54.4	7.8

Taken from “Delivering Value – A quantitative model for estimating the true cost of freight via three transport modes” Just Economics November 2022

Source: https://www.justeconomics.co.uk/uploads/reports/JE-09-Impact-on-Urban-Health-Report_v5.pdf 

1. EST / DfT Electrifying last mile deliveries – “33% of all urban deliveries could be done by cargo bikes or ecargo bikes.” EST007-01-ESTDFT-Electrifying-last-mile-deliveries-guide-WEB-02.pdf (energysavingtrust.org.uk)
2. “This analysis compares the social, environmental and economic impacts of diesel and electric vans with e-cargo bikes. It finds that diesel vans are 67 times more environmentally damaging when air, water and noise pollution as well as climate change are taken into consideration….The hidden social and environmental costs associated with diesel vans in London total £2.46 billion annually.  On a per mile basis, social and environmental costs associated with diesel vans (66p/mile) are eight times higher than those associated with e-cargo bikes (7.8p/mile). Hidden costs associated with electric vans are 7 times higher than for e-cargo bikes.” https://www.justeconomics.co.uk/uploads/reports/JE-09-Impact-on-Urban-Health-Report_v5.pdf 
3. “The potential market for cargo bike deliveries is estimated to be worth around £4.6bn in the UK, and the UK deliveries market grew from £6.9 billion in 2013 to £13.9 billion in 2021, and by 50% during COVID.” Sources: https://www.statista.com/topics/8816/parcel-market-in-the-united-kingdom/#editorsPickshttps://apex-insight.com/product/uk-parcels-market/#:~:text=Market%20growth%20and%20segmentation,have%20been%20close%20to%204bn.
   https://www.statista.com/statistics/1010416/parcel-shipping-sales-value-uk/
4. CBI Economics Report on Cleaner Air: https://www.cbi.org.uk/media/5539/2020-09-cbi-economics-caf-report.pdf