BrazilLogistics ecosystems are a growing part of the global net zero puzzle
Cutting back on emissions in logistics needs to be a bigger part of net zero goals moving forward. A report from AllChiefs, Smart Freight Centre and the Rotterdam School of Management shows how companies that are leading the way in decarbonization integrate sustainability into their daily business operations.
A report released last year by MIT on supply chain sustainability found that only 35% of companies currently have net zero goals in place. What’s more, many of those companies were unprepared to meet upcoming deadlines.
One of the main takeaways from the analysis is that companies with a clear roadmap are more successful in meeting their net zero targets. The hard part is not setting a target; rather it is ensuring the organization follows through. Companies need to set milestones and carefully track their progress.
Companies with a higher level of sustainability maturity follow a number of management practices that set them apart. These sustainability leaders have a more involved leadership, dedicated sustainability teams, clear governance, and above all, center sustainability as an integral part of day-to-day business operations.
Air freight a major emitter
When it comes to hard-to-abate sectors, the aviation industry is near the top of the list. These significant challenges in achieving sustainability are linked to an enormous usage of fossil fuels, huge demand, and a notable lack of global coordination and policy.
The most promising innovation in cleaning up the aviation industry is sustainable aviation fuel (SAF). SAFs are fuels that are made from up to 80% renewable materials, which provide a huge reduction in emissions. These fuels are designed to be compatible with existing aircraft that use standard fossil fuels.
The challenge is that, despite the promise that SAFs offer, both supply and adoption remain very low. Only about 1% of the total amount of aviation fuel used in 2023 was sustainable aviation fuel. Some government policies in favor of SAFs have been put forward by countries like Australia and the United Kingdom.
There also has been notable industry action taken to boost the use of SAFs. For example, United Airlines has set up the Ecoskies Alliance, which is made up of 40 members who are taking collective action to purchase SAFs. The International Air Transport Association (IATA), a global airline trade association, has also been working towards accelerating the transition to SAFs.
Alternative fuels for ocean transport
Around 90% of total global freight volume is moved around the world by sea. Ocean transport is the first choice for industries that move large volumes of cargo over very long distances. Over 8 out of 10 respondents in the survey by AllChiefs, Smart Freight Centre, and the Rotterdam School of Management said they use ocean freight.
Overall, ocean transport contributes around 3% of global CO2 emissions, a figure which will rise considerably without serious intervention. In order to meet net zero goals, companies will need to explore a variety of different decarbonization strategies.
Similarly, sustainable fuels stand out as a key solution for decarbonization of the ocean freight industry. For example, biofuel – just like SAF for aircrafts – is created from renewable sources and dramatically reduces overall emissions.
There also several other fuel solutions, including bio-methanol, bio-ammonia, liquid natural gas, and hydrogen. Green hydrogen, in particular, is promising, though the technology to produce it is complex and production plants are only just beginning to be built in Europe.
Prioritizing rail freight
For long distances, rail transport is significantly more energy-efficient than air and road transport, with trains capable of moving much larger volumes of goods using less fuel. In fact, many rail networks in Europe, China, and elsewhere are already electric.
The study found that respondents see multimodal freight transportation – in which various modes of transport like rail and road are combined – as increasingly important. The European Green Deal is set to increase train capacity by optimizing rail usage and improving cross-border rail freight corridors.
The researchers provide examples such as Ikea, which has been working hard to shift transport from road to rail in recent years. Just this year the Swedish giant announced it reached over 50% share of intermodal land transportation.
Further reading: A roadmap for decarbonising the global road freight industry.
Electric trucks in road transport
Road freight makes up around 30% of all transportation emissions globally, making it a major contributor of harmful emissions. Like air freight, emissions in this sector are also notoriously hard to abate, though some progress is being made.
Electric trucks were indicated in the survey as the most important road transport sustainability solution. Rapid improvements in electrical vehicle technology have helped lead to a growing supply of electric commercial vehicles. There are high up-front costs and some issues with range, but overall, electric trucks are likely to be one of the main decarbonization solutions in this sector.
Biofuels are also a potential solution in the road freight sector. They are, however, not expected to be as important as in air freight. That is because battery-powered vehicles are far more feasible on the road.
Though adoption of electric trucks is still quite low, there will likely soon be a substantial increase in the number of vehicles on the road. A number of companies in Europe, including DAF Trucks, MAN, Scania, Volvo and Mercedes, have begun or will soon scale their production of electric trucks.
An important but challenging goal
Overall, the importance of sustainability is clear to a majority of the companies surveyed. A total of 94% have already set net zero targets and 76% reported that logistics decarbonization is important to them. “Talking to leading organizations and experts, it became clear that while decarbonizing logistics is challenging, there are practical steps and innovations that can help us make real progress,” said Pim Roest, partner at AllChiefs.
A previous white paper from AllChiefs noted the power of carbon insetting in the freight sector. Carbon offsetting involves funding external projects to reduce emissions elsewhere, while insetting focuses on reducing emissions within a company’s own value chain.
