Newtral
Feb 19 2024
In the race to a net-zero future, the transportation and logistics sector is both a major challenge and a major opportunity. On the one hand, the movement of goods and materials around the world is a significant driver of greenhouse gas emissions, contributing to climate change and air pollution. On the other hand, decarbonizing transportation and logistics can unlock massive benefits for businesses, society, and the planet, from reducing costs and risks to spurring innovation and creating new jobs.
Consider this: according to the World Economic Forum, the global logistics industry is responsible for around 6% of total greenhouse gas emissions, with freight transportation accounting for the lion's share. This includes emissions from trucks, ships, planes, and trains that move goods and materials across borders and continents, often burning fossil fuels and emitting pollutants along the way.
At the same time, the demand for freight transportation is only expected to grow in the coming decades, driven by factors such as population growth, urbanization, and the rise of e-commerce. In fact, the International Transport Forum predicts that global freight demand will triple by 2050, putting even more pressure on the sector to decarbonize.
So how can companies effectively decarbonize transportation and logistics in their supply chains, while also meeting the growing demand for faster, cheaper, and more efficient delivery? Here are a few key strategies and solutions:
But electrification is not just limited to road transportation. There are also opportunities to electrify other modes of freight transportation, such as rail and short-sea shipping. For example, the Port of Los Angeles is working with partners to develop a zero-emission freight corridor that will use electric trucks and trains to move goods from the port to inland distribution centers.
To accelerate the adoption of EVs in logistics, companies can work with transportation providers and technology partners to pilot and scale electric fleets, as well as advocate for policies and incentives that support the transition to zero-emission vehicles.
In addition, companies can leverage emerging technologies such as artificial intelligence (AI) and machine learning to predict demand, optimize inventory levels, and reduce waste in the supply chain. For example, the startup Transmetrics uses AI to help logistics companies forecast demand and optimize their fleet and resource management, reducing costs and emissions in the process.
By improving efficiency and optimization in logistics networks, companies can not only reduce their carbon footprint but also improve their bottom line, by reducing costs and increasing asset productivity.
To enable modal shift, companies can work with logistics providers and transportation authorities to identify opportunities to shift freight to lower-carbon modes, as well as invest in infrastructure and technology that supports intermodal transportation. For example, the Port of Rotterdam is developing a "modal shift" program to encourage shippers to use rail and barge instead of trucks for hinterland transport.
Modal shift can also be supported by policy measures such as carbon pricing, which can make lower-carbon modes more cost-competitive with higher-carbon ones. For example, the European Union is considering a carbon border adjustment mechanism that would put a price on the carbon content of imported goods, potentially incentivizing a shift to lower-carbon transportation.
Another promising solution is green hydrogen, which can be produced from renewable energy and used to power fuel cell electric vehicles (FCEVs) for long-haul trucking and other heavy-duty applications. Companies like Nikola and Hyundai are developing hydrogen-powered trucks and fueling infrastructure, with the goal of creating a zero-emission freight network.
To accelerate the development and deployment of sustainable fuel and energy solutions, companies can collaborate with suppliers, customers, and other stakeholders to create demand signals and invest in R&D and infrastructure. They can also advocate for policies and regulations that support the transition to low- and zero-carbon fuels, such as blending mandates and tax incentives.
Another example is the Global Maritime Forum's Getting to Zero Coalition, a multi-stakeholder initiative that aims to accelerate the decarbonization of the maritime industry and deploy commercially viable zero-emission vessels by 2030. The coalition brings together companies from across the maritime value chain, as well as governments, IGOs, and other stakeholders, to develop and implement a roadmap for the transition to zero-emission shipping.
By collaborating and working towards systemic solutions, companies can not only accelerate their own decarbonization efforts but also help to create a level playing field and drive the broader transition to a net-zero transportation and logistics sector.
But the imperative for action is clear. As the global economy becomes increasingly interconnected and the demand for freight transportation continues to grow, we must find ways to move goods and materials more sustainably and efficiently, while also creating new opportunities for innovation and value creation.
By investing in electrification, efficiency, modal shift, sustainable fuels, and collaborative solutions, companies can not only reduce their own carbon footprint but also help to accelerate the broader transition to a net-zero transportation and logistics sector. They can also position themselves as leaders in the low-carbon economy, and build more resilient, agile, and future-proof supply chains.
Of course, the road ahead will not be easy. Decarbonizing transportation and logistics will require significant investments in technology, infrastructure, and human capital, as well as policy and regulatory support. It will also require a willingness to challenge the status quo and reimagine traditional business models and practices.
But the benefits of this transition are immense - not just for the planet and society, but for the long-term competitiveness and profitability of the companies that embrace it. By decarbonizing transportation and logistics, companies can reduce costs, mitigate risks, enhance customer and stakeholder trust, and create new sources of value and innovation.
As a sustainability and supply chain professional, I believe that the time for incremental change is over. To meet the urgent challenge of climate change and build a more sustainable, resilient, and equitable world, we need nothing less than a transformation of the global transportation and logistics sector.
This transformation will require bold leadership, deep collaboration, and a shared vision of a net-zero future. It will require companies to think beyond their own operations and work across the value chain to drive systemic change. And it will require all of us - as individuals, as organizations, and as a global community - to do our part and take action.
The road to a decarbonized transportation and logistics sector is long and challenging, but it is also one of the most important journeys of our time. By working together and leveraging the power of innovation, collaboration, and leadership, we can build a cleaner, more efficient, and more sustainable supply chain - and a better future for all.
Newtral AI Platform- Enterprise ESG Platform for Corporates and Supply ChainĀ
We help organizations automate their ESG metric measurements, tracking and reporting across company as well as their supply chain. Our platform solves for all corporate sustainability reporting and carbon accounting needs.