As more food and consumer goods businesses pledge their allegiance to future zero-carbon operations, how realistic is it that the industry, and logistics more generally, will reach this new standard?
Many countries have committed to being carbon neutral by a specific year – the UK, France and Sweden penciling in 2050 for carbon neutrality. More progressive targets have been set by countries including Finland (2035), Norway (2030), while Costa Rica is aiming for 2022! It, therefore, makes sense that businesses respond before changes to achieve this goal are mandated by governments, although we are starting to see this in some countries through increased taxation on certain types of vehicle, for example.
Getting a jump start on the journey to being carbon neutral can provide businesses with a point of difference and an opportunity to steal a march on laggard competitors.
One such example is Waitrose, whose parent company, John Lewis and Partners has committed to converting its current fleet of 3,200 vehicles to zero-carbon alternatives by 2045. Transport emissions account for some 40% of its total carbon footprint so this is necessary if it is to achieve its broader goal. Still, the target years set by businesses and nations for carbon neutrality tells us something about how hard it will be to achieve…
The scale of the challenge
Despite the emergence of electric vehicles, logistics remains a highly carbon-dependent sector. It’s responsible for an estimated 10-11% of global CO2 – comprised of freight transport (8%) and warehousing and terminals (1-2%), with the remainder coming from administrative functions and IT.1
The sector is set to grow significantly – expected growth in freight movement between 2015 and 2050, as measured in tonne-kilometres (tkm), is forecast at +330%.1 Emissions from this increase will generate an additional 118% of CO2 by 2050 under current policies, and an additional 21% under the highest ambition estimate (the best outcome) for 2050. In this context, the prospect of zero-carbon logistics looks remote.
These statistics aside, the route to zero carbon logistics, or significantly less carbon-intense logistics, would seem to rely on the decarbonisation of electricity generation, and the electrification of logistical activities. The decarbonisation of electricity is underway, albeit slowly. The International Energy Agency (IEA) estimates a global average reduction in the carbon intensity of electric generation of 10% between 2010 and 20182, but progress differs dramatically by country and region. The process currently relies on renewables such as wind, nuclear and carbon capture for storage or use techniques.
Areas to target
As things stand, the majority of freight movement occurs by sea and this will not change. Indeed, this is where most growth is expected, and sea freight’s share of the total freight movement as measured in tkm’s will grow. Sea freight will be incredibly challenging to decarbonise in the short-to-medium term due to distances travelled by vessels in relation to the performance and range of batteries as well as the long lifespan of vessels, which are incredibly expensive to buy and take a long time to pay back the initial investment.
However, if we look at other modes, including rail and road, progress is being made to decarbonise through increased electrification. Korea and China have both dramatically increased the percentage of electrified track within their respective rail networks in recent years – Korea has increased its electrified rail from less than 40% at the turn of the century to more than 80% by 2016. The use of batteries and hydrogen cells have contributed to the electrification of rail in some countries. The IEA now estimates half of all freight moved on rail is done so by electrically powered trains2. This is positive, but rail is third behind sea and road in terms of tkm’s of freight moved and that is not expected to change between now and 2050.
Road transport is also beginning to see a move towards electrification, with electric vehicles now relatively common in local delivery operations. We are also moving closer to viable battery-powered vehicles for long-distance hauling. Uptake of the latter will require increased ranges, more rapid charging as well as the expansion of the recharging network, and a narrowing of the price differential between traditional vehicles and electric alternatives.
The alternative is to electrify the roads on which vehicles travel, which, in some markets, could be highly effective. In Germany, for example, 60% of heavy truck CO2 emissions occur on just 2% of the road network. In addition, 89% of trucking routes have an onward journey of just 50km or less once they've left this part of the road network... The opportunity seems fairly clear, but installing the supporting infrastructure will be incredibly expensive.3
Low-carbon logistics appears to be a far more realistic ambition than zero-carbon, at least in the foreseeable future. There are lots of potential pathways and it’s unlikely that one solution will solve the challenge. Instead, it’s highly likely we will see a blend of solutions and their aggregated impact will push countries and businesses of the world towards a new paradigm of low-carbon logistics.
Of course, It’s certainly possible to do a better job within the current way of working through optimising vehicle loading, being smarter about how goods are moved through intelligent routing and collaboration. We produced a case study on LOGISTAR, which aims to do just this by providing the industry with the tools needed to improve transport collaboration.
Moving less by embracing circularity is another option that will help. However, this will not provide the scale of change needed. In the short-to-medium term, a modal shift from road to rail would appear to provide the biggest opportunity to kick start the journey, and build momentum towards a lower carbon future.
Sources and notes
1 McKinnon (2019) – Decarbonizing Logistics
2 International Energy Agency (2019)
This blog was inspired by Zero Carbon Logistics, McKinnon 2019