Logistics is known to be not-so eco-friendly. However, it appears that many companies in this sector are attempting to become more sustainable with the help of innovative solutions such as electrification. Despite progress, what stands in
the way of the future of sustainable logistics?
From the surface, logistics is typically understood as the management of the transportation of goods, services and related information. It is the part of the freight sector supply chain that increases the value of deliveries, typically via
gateways or corridors located in urban areas.
By transporting goods in bulk by aircrafts, ships, trains and trucks, logistics companies connect everyone and everything around the world without actually producing anything.
The various elements—transport, communication, resources—of logistics as part of the supply chain. | Tech in Asia / Flickr
Regardless, logistics is stereotypically coupled with unsustainable practices that carry environmental and social consequences. In fact, global logistics is the sector that emits the most greenhouse gases (GHGs) and consumes the most
petroleum products.
For example, heavy-duty vehicles (e.g. trucks) in the freight sector produce 25% of Europe’s GHG emissions, whilst representing less than 2% of the region's vehicles. This percentage is slowly mounting due to increased numbers of freight
volumes from direct deliveries and online shopping. Taken together, this means that logistics contributes to environmental degradation through various types of pollution and the depletion of the ozone layer.
Nevertheless, the situation is not all bad: logistics firms are increasingly developing an environmental consciousness. Moreover, authorities and key stakeholders are now expecting logistics companies to set, seek, and achieve
sustainability targets.
This new era of logistics, known as sustainable logistics, focuses on accomplishing Environmental, Social and Governance (ESG) standards, which help evaluate the performance of a company beyond profit-driven roles.
‘Heavy-duty vehicles in the freight sector produce 25% of Europe’s GHG emissions.’
The social feature of ESG focuses on the relationship between a logistics firm and its stakeholders (e.g., through inclusion, diversity, and safety), while governance points to how a firm is administered (e.g. stakeholder
rights and executive pay).
The environmental aspect aims to lessen its ecological footprint by reducing carbon dioxide (CO2) emissions, air and noise pollution, waste, and logistics mishaps. However, with logistics puppeteering such a global influence, one is
left wondering how, if at all, these climate-aware goals are realised throughout the sector.
Opportunely, there are several ways to future-proof the logistics sector. These methods are all the more important, considering the ongoing Russia-Ukraine war that is prompting countries to lean off of fossil fuels and towards renewable
energy sources. One key undertaking is known as electrification.
Many believe that electrification—the conversion to electrical power via the charging of a machine or system with electricity—throughout the logistics sector could be the silver lining to end dependence on fossil fuels. Indeed, the use of
heavy-duty electric vehicles (greater than 12 tonnes) is proceeding rapidly, encouraged by reduced pollution levels, enhanced driver safety, and lower operating costs.
Some of Walmart’s trucks are hybrid vehicles, where electric power offers extra support to the motor when more power is needed. | Walmart / Flickr
In fact, electrification plays a role in mitigating climate change by decarbonising the economy. By substituting fossil-fuel technologies, logistics companies can turn to renewables, natural gas and the electricity grid to generate
electricity, which are all significantly less carbon intensive. The electrification of fleets can also help improve air quality, as electric transportation does not produce tailpipe emissions.
Additionally, research shows that the price of electric trucks will be significantly less than diesel trucks in the 2025 to 2030 period. This is mainly because the average cost of a battery pack is steadily decreasing; prices dropped 85% in
just eight years. Additionally, e-trucks are estimated to have 37% and 46% lower fuel and maintenance costs, respectively.
Notably, it is not only trucks that are being revolutionised via electrification. There are currently 2,500 ships that have been electrified, equalling approximately 5% of the world’s maritime fleet. This future of shipping is again largely
focused on making ships more environmentally friendly, since maritime transport emits 2.5% of total GHG emissions, accounting for one billion tonnes of CO2 and up to 30% of nitrogen oxide (NOx) pollution annually.
So far, progress into this transformative practice is promising; available shipping technologies include diesel-electric drive, hybrid drive, and fully-electric drive. Whether a ship is semi-electric or fully electric really depends on the
type of vessel and the distance it travels.
‘The average cost of a battery pack is steadily decreasing; prices dropped 85% in just eight years.’
There are, however, some obvious difficulties regarding full electrification of marine vessels and the electrification of other modes of transport in general. The major issue is that batteries are yet to become more efficient.
Indeed, battery innovation did not keep pace with the race towards global logistics electrification. Batteries still have a low energy density and an associated energy/power tradeoff. Essentially, batteries can either store more energy
or charge more rapidly—not both. Moreover, there is a mismatch in the knowledge and practical application of the anode and cathode electrodes, which also hinders battery potential and commercialization.
Additionally, regardless of dropping prices, investing in batteries is still too expensive for many companies, in particular smaller companies, as vehicle and fleet renovation require many diverse resources. This in itself creates a divide
between businesses in which some firms are outstandingly more experienced with electrification than others.
This ties into the obstacle of operational disruption, whereby specialised training for company staff regarding the running of electric fleets is overlooked. It is imperative that a firm’s hybrid interim phase—the one where both electric
and diesel fleets function—runs smoothly.
A charging station for electric transportation, where vehicles can fast charge for up to one hour. | Duncan Rawlinson / Flickr
Another key challenge is inadequate charging infrastructure. Again, building stations can be expensive, with costs ranging from $2,500 for a slower charger to $36,000 for a faster charger. The bigger issue is understanding when and where to
build charging stations, as well as specifically doing so in enough suitable locations for transportation fleets.
Fortunately, these hurdles do not make electrification a far-fetched dream. Rather, these barriers give rise to further innovation and determination for making the logistics sector more sustainable.
To address these challenges, collaboration on international, regional, and national scales is necessary. This includes cooperation between companies and government actors, start-ups, investors, and civil society. It is much easier to raise
awareness about the things that need changing in the logistics sector if various stakeholders are interested and invested.
‘To address these challenges, collaboration on international, regional, and national scales is necessary.’
These alliances are indeed done with purpose. For example, policymakers can support electrification across the logistics sectors by reforming network charges, while investors can provide loans to kickstart greener initiatives.
It appears that the future of logistics can be sustainable, particularly when looking at the benefits and progress of electrification across the sector. However, challenges such as battery efficiency require urgent attention if logistics
companies are to make more of a positive environmental impact.
Altogether, this decade of action will likely create a more sustainable supply chain.
Hildermeier J. and Jahn A. (2020) ‘Electrifying EU city logistics: an analysis of energy demand and charging cost.’ The International Council on Clean Transportation. Available at: https://theicct.org/wp-content/uploads/2021/06/EU-logistics-electrification-fv-202011.pdf [Accessed July 24th, 2022]
