Introduction
The transportation sector finds itself at a critical juncture. With sustainability taking center stage for governments, corporations, and individuals, the imperative to transform our approach to moving people and cargo is more evident than ever. Sustainable transport, covering a wide spectrum from eco-conscious vehicles to streamlined logistics systems, has evolved from a distant aspiration into an urgent need. In that regard, Europe leads the way but still has far to go.
The road to green transportation is riddled with complexities, obstacles, and a need for transformative changes across the board. By implementing key strategies, you can make your logistics more sustainable. Let's explore the challenges in all their complexity and gain practical insights to pave the way for a greener and more efficient transportation future.
Challenge 1: Fear of the unknown
Adopting sustainable practices includes adopting digital ways of working. For many people – not just employees, but management too – it’s an intimidating prospect. It’s human nature to feel comfortable with familiar routines and practices. When organisations propose changes, the uncertainty associated with something new, whether it be unfamiliar technologies or processes, can cause anxiety. There might be the worry about the ability to adapt and succeed in the changed environment.
The loss of control is another fear that often comes with the unknown. A sense of control over work and processes is highly valued. The introduction of new technologies may create a perception of losing control over tasks or responsibilities, contributing to the overall resistance to change. So, it’s not surprising that 70% of digital transformations suffer setbacks for the simple reason that most people resist change.¹
Solution: Embrace a culture of change
Embracing a culture of change is easier said than done, but it’s by no means insurmountable. The following factors play a significant role in overcoming these challenges:
- Leadership alignment: Start by ensuring that management is aligned with the vision of integrating digital solutions for eco-friendly transportation. Their commitment and support are crucial for driving cultural change.
- Education and awareness: Launch comprehensive educational programs and awareness campaigns about sustainability's importance and the role of digital solutions. Create a shared understanding of how technology can enhance sustainability efforts, and just as importantly, how digital solutions can enhance their autonomy.
For example, you can lessen your drivers’ stress by reducing unnecessary or inefficient processes with vehicle technologies, mobile systems, GPS trackers, and turn-by-turn navigation. This can lead to greater job satisfaction, contributing to overall driver engagement. (From the perspective of transportation and sustainability, efficiencies prevent unnecessary resource consumption and waste of fuel and time.)
- Sustainability as core values: Integrate sustainability deeply into the company's core values and mission statement. Ensure that sustainability is not just a checkbox, but a fundamental part of the company's identity. For example, going paperless, or minimising paper usage, demonstrates your commitment to sustainability.
Beyond the environmental benefits, consider the operational advantages, especially for drivers. Instead of dealing with paperwork, they can easily access the necessary documents via a mobile device and thus optimize processes. This is especially important for critical documents such as health certificates during livestock transportation; ensuring that they are easily accessible increases operational efficiency.
Moreover, transitioning to paperless billing and enabling online payments 24/7 not only aligns with sustainability goals but also enhances customer convenience. Incorporate a Customer Portal to reduce call volumes, decrease operational costs, and increase customer satisfaction. Sustainability software can give you a detailed overview of your ESG and sustainability performance at any given time, using important KPIs.
- Long-term perspective: Recognise that cultural transformation is an ongoing process that takes time. Stay committed to the long-term vision of a sustainable logistics company empowered by digital solutions.
Challenge 2: Managing the growing complexity of logistics technology
As the logistics industry embraces technological advancements, it faces the challenge of dealing with an ever-expanding and intricate technology landscape. Shippers and service providers must not only identify the most suitable use cases but also navigate through this complexity. According to a global survey:
- Around 34% of logistics providers find themselves managing up to eight or nine different technology solutions in their transportation technology stacks.²
- 37% contend with five or more solutions in their warehousing.²
Each additional technology solution added to the logistics stack can need additional hardware, software licences, and maintenance. This leads to increased resource consumption, including electronic waste generation and energy usage. Managing multiple disparate technology solutions also means duplication of efforts, manual data entry, and compatibility issues. Inefficient operations don’t just eat up more energy, but also can result in higher usage of fuel and labour, which can negatively impact sustainability efforts.
Solution: Achieving efficiency through integration and complexity management
The key lies in effective integration and complexity management. To attain optimal performance and a favourable ROI, logistics companies should consider the following strategies:
- Streamlined integration: Invest in integration platforms that can seamlessly connect various technology solutions, such as route optimisation, vehicle technologies and fleet management. These platforms act as intermediaries, ensuring that data flows cohesively across different systems. By streamlining integration, logistics companies can eliminate data silos and improve real-time decision-making.
Streamlined integration reduces operational inefficiencies, such as fuel consumption, by optimising routes and schedules. This leads to lower emissions and a reduced carbon footprint, contributing to sustainability goals.
- Data standardisation: Establish standardised data formats and protocols across the technology stack. This enables different solutions to communicate and share information more effectively. By centralising data management, the software ensures that data is consistent and easily accessible across the organisation.
Standardised data facilitates better reporting and analytics, allowing waste management companies to identify opportunities for waste reduction, recycling optimisation, and resource conservation. A data-driven approach supports sustainability efforts by minimising waste and resource consumption.
- Interoperability: Prioritise technology solutions that offer strong interoperability capabilities. This allows for better compatibility between different software and hardware components, reducing friction in integrating new technologies.
With better coordination and management of logistics and warehouse processes, the user can reduce operational complexities, leading to a more efficient use of resources. In turn, this reduces the user’s environmental impact.
- Data analytics: Leverage advanced analytics and machine learning tools to make sense of the vast amounts of data generated by various technologies. These tools can provide valuable insights for optimising logistics operations, such as route planning, inventory management, and demand forecasting – all of these aspects can help identify opportunities for sustainability improvements.
- Scalable solutions: Choose technology solutions that scale and adapt to changing business needs. Scalability ensures that as your logistics operations grow, your technology stack can accommodate new requirements without undue complexity. The agility that scalability ensures allows for continued sustainability efforts in response to evolving industry demands and logistic trends.
Challenge 3: Meeting customer demands
Sustainability within logistics faces a unique challenge primarily driven by customer expectations. The modern consumer often perceives logistics as a seamless process, expecting rapid deliveries, often within a 24-hour window, and frequently at no additional cost. This consumer mindset presents a significant hurdle for implementing environmentally conscious logistics practices, as these demands can hinder load consolidation and optimal transport stream utilisation.
Consequently, the outcome is inefficient shipping methods, resulting in elevated emissions, the release of greenhouse gases, and additional operational costs.
Solution: Implement the right digital solutions
Digital solutions can play a vital role in addressing the challenge of inefficient shipping methods driven by customer expectations. Some examples include:
- Route optimisation: Advanced algorithms analyse delivery routes, considering factors like delivery windows and traffic patterns. By optimising routes, logistics companies can minimise the number of trips required, reducing emissions by up to 25% and significantly cut fuel consumption.
This technology is ideal for all sectors in logistics, such as the Fuel Oil industry. Route optimisation ensures more sustainable transit while also improving customer service and visit accuracy.
- Demand forecasting: Digital tools can predict customer demand more accurately, allowing logistics companies to plan shipments more efficiently. This minimises the need for rush deliveries and helps consolidate shipments.
- Automatic planning and optimisation: With streamlined demand planning, recyclers can minimise transportation costs, fuel consumption, and emissions associated with excessive material handling and transportation. (Recyclers should also look at implementing artificial intelligence for everything from detecting contamination to identifying composition.)
Cloud-based software can deliver big benefits to the fuel distribution sector with compartment planning, volume deviations, delivery forecasting, product substitution and order prioritisation.
With the right route planner, users have a powerful engine for optimising master routes. This is especially advantageous for the transportation of livestock. Customer and ad hoc orders can be inserted into existing master routes and for daily batch-based route optimisation.
- ERP system: Let’s take the transportation of building materials. Ready-mix concrete, for example, is time sensitive. But using the right logistics system can mean up to 25% more full loads of ready-mix delivered per vehicle, with up to a 20% reduction in miles driven – all with the use of a best-in-class ERP system.
- Guided navigation: By providing optimised, turn-by-turn navigation, cloud-based software helps drivers follow the most efficient routes. This reduces unnecessary mileage, idling time, and fuel consumption. As a result, fuel costs – and CO₂ emissions are minimised, while your drivers get to their destinations in good time. That’s just what customers expect.
Think of waste and recycling. Accurate and optimised navigation helps drivers ensure that they complete every segment of their route and make all scheduled collections. This reduces the likelihood of missed collections and waste left behind. Fewer missed collections mean less waste ending up in the environment, contributing to cleaner streets and reduced environmental impact.
- Fleet maintenance software: For your customers, regular fleet maintenance helps ensure their deliveries are made without interruptions due to breakdowns or unplanned repairs. This is especially important for complex logistics – food and beverage are a good example – where time-sensitive deliveries define the business. One missed delivery can have far-reaching consequences.
For sustainable shipping, intuitive fleet maintenance software lets you digitally manage the complete life-cycle, cost, and health of an unlimited number of asset types. Rigorous maintenance practices lead to reduced emissions. By preventing issues that can cause excessive fuel consumption and emissions, the service promotes a more eco-friendly and environmentally responsible fleet. It guarantees the efficient use of your fuel and resources such as oil and spare parts. This translates into reduced waste and lower overall resource consumption.
Consider, too, that timely maintenance ensures vehicles have a longer operational life. As a result, fewer vehicles need to be manufactured and replaced, reducing the environmental impact associated with vehicle production and disposal. All of this helps fleets adhere to environmental regulations and emissions standards.
Download the Whitepaper
Learn about the major changes in European transportation that are happening now. What are the challenges you can expect – and why should your company embrace a sustainable approach going forward?
The answers are in our Whitepaper: ‘Sustainability in Transport: Navigating Emerging trends and Economic and Environmental Benefits of a Sustainable Approach’.
Get the whitepaper¹ Perspectives on transformation, McKinsey & Company
² Digital logistics: Technology race gathers momentum, McKinsey & Company, 16 November 2023