The environmental impact of heavy-duty vehicles, comprising trucks and buses, is a critical concern given their substantial contribution to approximately 25% of CO2 emissions within road transport in the European Union (EU). They also account for approximately 5% of the total emissions produced across the EU.¹ In the UK, heavy-goods vehicles contribute nearly 20% of total transport emissions, equivalent to the combined carbon footprint of domestic and international air travel, buses and domestic shipping.²
In 2019, the EU introduced Regulation (EU) 2019/1242, which established CO2 emission standards for heavy-duty vehicles. This regulation outlines specific targets aimed at reducing the average emissions generated by new lorries for the years 2025 and 2030. Keep in mind, too, that the European Green Deal aims to improve sustainable transit with a 90% reduction in transport emissions by 2050.¹ Consequently, logistic trends point to reaching these standards and targets sooner rather than later.
The impact of your ESG policies
ESG policies, also known as Environmental, Social, and Governance policies, have an important part to play. These policies are a set of guidelines and practices that organisations implement to address and integrate key environmental, social, and governance considerations into their operations and decision-making processes.
Unless effective actions are implemented, logistics could contribute up to 40% of global carbon dioxide emissions by 2050, according to the European Environment Agency. The industry has been slow in making meaningful reductions towards green transportation. However, a noticeable change is underway, propelled by shippers' insistence on environmentally responsible supply chains. A recent report on European logistics reveals³:
- 72% of shippers include sustainability goals in their tender processes.
- 56% of shippers are prepared to terminate contracts if sustainability objectives are not achieved.
- 53% of shippers disqualify forwarders from tenders if they do not meet sustainability criteria.
Those results show a growing commitment within the logistics sector to prioritise sustainability and meet the demands of conscientious shippers. In the same study, 62% of Third-Party Logistics providers (3PLs) have successfully secured new business opportunities, thanks to their robust ESG practices. Furthermore, half of these 3PLs have experienced heightened employee motivation and engagement as a direct result of their commitment to ESG initiatives.³
Gen Z is especially sensitive to sustainability issues across all industries, with 88% not believing companies' environmental, social, and governance claims.⁴ They have the digital savvy to find out if a company is ‘greenwashing,’ or if their ESG policies are authentic. Truly environmentally friendly transportation is critical in attracting talent among a young and skilled workforce.
Regulations will intensify for shippers and their logistics provider
This will compel them to request emissions data from their logistics provider. In 2022, the International Sustainability Standards Board (ISSB) introduced IFRS S2, a groundbreaking global climate-related disclosure standard.
- Advocates for businesses operating worldwide to make mandatory disclosures regarding their greenhouse gas emissions.
- Ranges across all three emissions scopes: 1, 2, and 3.
- Scopes 1 and 2 include emissions that their production is directly. Responsible for, plus the power used to produce and operate.
- Scope 3 emissions are not produced by the company itself, but by their suppliers along their value chain.
- Is not legally binding, but more and more governments are integrating them into their emissions reporting frameworks.
The European Union's Corporate Sustainability Reporting Directive (CSRD) has taken a leading role in enforcing emissions reporting regulations. It mandates that shippers start disclosing their scope 3 emissions, beginning in 2024. The UK, US, Australia, and Brazil are likely to follow suit.³ Consequently, 2024 may emerge as a pivotal year in establishing global emissions reporting standards. It's worth noting that logistics providers often underestimate the significance of the shipment data they possess.
This data is crucial for generating accurate and accredited measurements of supply-chain emissions. As regulatory requirements and consumer expectations align, 2024 is poised to become a critical juncture, prompting shippers to seek freight forwarders capable of proactively assisting them in complying with supply-chain emissions reporting.
Agility will be a necessity
Changes in the global climate have heightened the risks associated with extreme weather events. These changes manifest as rising air and water temperatures, resulting in higher sea levels, more intense storms with increased wind speeds, prolonged droughts, more severe wildfire seasons, heavier precipitation, and a surge in flooding. The evidence supporting these phenomena is substantial, and the outcomes are nothing short of devastating.
From Oxfam International, we have these glaring figures:
- The number of climate-related disasters has tripled in the last 30 years.
- Between 2006 and 2016, the rate of global sea-level rise was 2.5 times faster compared to nearly all of the 20th century.
Black swan events – that is, unforeseen and random occurrences – emerged as a prominent trend for freight forwarders in 2023. However, in 2024, the focus will shift towards the more prominent and disruptive forces of climate change and geopolitical instability. These formidable factors have the potential to disrupt resource supplies and transportation routes, hinder production processes, and escalate operational costs.
It’s not only the escalating frequency of natural disasters, but also the rise in global tensions and conflicts, both existing and emerging, which can significantly influence supply chain operations and investment decisions.
Given this dynamic landscape, it’s imperative for freight forwarders to prioritise key attributes such as agility, flexibility, and enhanced visibility. These qualities empower them to proactively anticipate challenges and respond swiftly.
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Enabling eco-friendly transportation for livestock
Technologies play a significant role in improving the sustainability in livestock transport by addressing environmental, animal welfare, and operational concerns. With agricultural and livestock management under scrutiny, expect to see the growth of these technologies:
- Real-time monitoring systems: By continuously tracking environmental factors, such as temperature and humidity, IoT systems can prevent adverse conditions that can lead to animal stress or even fatalities. This, in turn, promotes sustainable transport by reducing the loss of livestock and minimising transporters’ environmental footprint.
- IoT-Supported Trailer Disinfection for Health and Efficiency: IoT-enabled trailer disinfection technology not only ensures the health and well-being of livestock but also enhances operational efficiency. By providing real-time updates on the disinfection process, it minimises energy waste and helps maintain a clean and safe environment for animals. Sustainability is thus achieved by optimising resource usage and promoting animal health.
- Route optimisation: This technology not only reduces travel time and costs, but also enhances animal welfare by minimising their exposure to unfavourable conditions during transportation. Sustainable transportation practices are achieved by reducing fuel consumption and emissions while improving animal comfort.
- Telematics for enhanced driver behaviour: Telematics systems promote sustainability by encouraging responsible driving habits. Safer driving reduces the risk of accidents and injuries to both humans and animals, minimising potential environmental and economic impacts of accidents. Sustainability is further advanced through efficient fuel use and reduced emissions.
A critical juncture for fuel distribution
The fuel oil industry must navigate the challenge of producing and introducing new products to counter the anticipated long-term decline in fossil fuel demand for transportation.
Fuel Oil industry reports indicate a deceleration in global oil demand over the long term, with an annual increase of only 0.4 million barrels per day (mbpd) expected until 2027.⁵
At the same time:
- Global demand for biofuels is anticipated to surge by 44% between 2022 and 2027 as it replaces petroleum-based products.⁵
- The share of electric vehicles (EVs) in global car sales is forecasted to range between 62% and 86% by the year 2030.⁵
As a result, Fuel Oil trends show a growing emphasis on adopting a customer-centric and market-oriented approach. This shift underscores the importance of incorporating a mix of low-carbon fuel alternatives, spanning from biofuels and hydrogen to chemicals.⁵ The forecourt experience also needs to be redesigned. It will need to cater to the evolving fuel landscape and customer preferences, which is vital for the downstream industry's success. In the meantime, fuel distributors will need to adopt new technologies to streamline processes. This will enable them to lower their operating costs, work more productively and improve their own carbon footprint.
Artificial intelligence (AI) and data-powered fleet maintenance are already proving instrumental, and their uses will only grow. For example, robust Fleet Maintenance software can help organisations schedule maintenance for their vehicles more effectively. Regular maintenance ensures that vehicles operate at peak efficiency, reducing fuel consumption and emissions. By preventing breakdowns and optimising maintenance intervals, users can minimise downtime and the need for emergency repairs, reducing overall resource and energy consumption.
Streamlining the transportation of building materials
The buildings and construction sector account for nearly 40% of global CO2 emissions.⁶ A substantial portion of that can be attributed to the manufacturing and transportation of materials. This underscores the need for enhancements in material procurement practices.
An effective starting point going forward is the adoption of a local supply-chain strategy. This approach diminishes the distances materials must travel to reach construction sites, resulting in a direct reduction in transportation-related carbon emissions associated with each project.
To minimise waste, the industry will also need to prevent unnecessary deliveries, over-ordering, and empty runs. Digital solutions will play an integral part in this by establishing complete transparency throughout the supply chain. These solutions offer mechanisms to authenticate claims of sustainable sourcing and facilitate the monitoring and tracing of materials.
The data harnessed through these digital solutions can be used for precise demand forecasting. This, in turn, opens avenues for waste reduction and affords procurement teams more time to consider sustainable alternatives to conventional materials.
There are economic benefits to a robust digital system. The right logistics system can not only deliver sustainability improvements, but also help you improve operational efficiency and achieve major cost savings. Take cement, for example. Between 30% and 35% of the price of cement comes from transport and distribution. Simply by using flexible, automated planning, operators can realise:
- Up to 25% more full loads of ready-mix delivered per vehicle
- Up to 20% reduction in miles driven
- Up to 10% fewer vehicles needed
- Up to 75% less time spent on resource scheduling
- Up to 60% less time required for registration and follow up⁷
Tools that conduct lifecycle assessments, gauging the environmental impact of materials from inception to disposal, will also gain increasing significance. This will be especially important as the industry transitions toward contemporary and sustainable shipping modes of operation.
Conclusion: Digital solutions play a critical role in advancing sustainability
The adoption of digital solutions emerges as a pivotal factor in achieving sustainability objectives throughout the transport and logistics industry. These technological advancements offer a pathway towards complete transparency, efficient operations, and the intelligent use of resources. For instance, digital systems have the potential to significantly reduce carbon emissions by optimising route planning and minimising miles driven. With the ability to streamline operations, augment visibility, and lower operating costs, digital solutions play an indispensable role in sustainable practices.
As the industry adapts to the ever-evolving landscape of environmental responsibility, the seamless integration of digital technologies emerges as the driving force in shaping a more sustainable and resilient future.
To learn more about sustainability trends and the economic impact on businesses, download our new whitepaper 'Sustainability in Transport: Navigating Emerging trends and Economic and Environmental Benefits of a Sustainable Approach'.
²UK urged to electrify HGVs for net zero in £100bn investment plan, Energy Live News, 29 November 2023
³HFW & Panattoni European Logistics & Supply Chain Sustainability Report 2023
⁴Mind the Gap, newsletter, McKinsey & Company, 2022
⁵2024 oil and gas industry outlook, Deloitte
⁶Materials procurement: How a new approach can transform the sustainability of the construction industry, PCB Today, 2 January 2024
⁷Effective ERP software for the Building Materials industry, AMCS
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