A wave of sustainability initiatives has swept through the logistics industry over the last 12 months as logistics service providers grapple with a potent mix of legislation, consumer pressure and market incentives to decarbonise operations. Many of the world’s leading LSPs have committed to be net carbon neutral by 2050, signed up to global programmes such as the Science Based Targets Initiative, and announced significant strategic realignments and investment programmes to achieve their goals.
Progress on the decarbonisation of supply chains will be a significant measurement of the global community’s ability to reach the extremely ambitious target of being net carbon zero by 2050. The Carbon Disclosure Project’s Global Supply Chain Report 2020 concludes that supply chain emissions (those recorded by retailers, manufacturers and some LSPs themselves as Scope 3 emissions) were 11.4x higher that carbon emissions from direct operations – more than double previous estimates due to more comprehensive and accurate reporting.
In order to track the logistics and supply chain industry’s progress, Ti and the Foundation for Future Supply Chain have established a research programme to track the investments of major LSPs in decarbonisation. The sustainability programme’s initial goal is to build a comprehensive database tracking all publicly announced investments, operational changes, technology upgrades and target commitments. The research so far examines announcements made by the three integrators – UPS, FedEx and DHL – since 2015. While the sample remains small at this stage, significant findings are already emerging.
FedEx and UPS both display an externally focussed approach to reducing carbon emissions and increasing the sustainability of their operations. For their electrical vehicles especially, both companies rely heavily on relatively new start-ups, which perhaps is a product of the business culture both providers find in America, perhaps simply company policy. UPS especially hedges its bets with its “Rolling Laboratory” approach to decarbonisation, funding and trialling many different ways to reduce its carbon footprint at any one time.
On the other hand, DHL, a European provider, has so far used a far more internally focussed investment approach, advocating for carbon “insetting” and funding programmes such as its Greenplan and GoGreen initiatives. DHL state it sees environmental protection and business success as being closely interlinked, with the provider often trying to monetise its investments into carbon neutrality. This was especially the case with the firm’s StreetScooter subsidiary, which not only provided upwards of ten thousand vehicles for the DPDHL Group, but also sold its vehicles to Amazon and British milk delivery company Milk & More. However, since announcing the end of StreetScooter production last year, it is possible DHL purses a similar strategy to its American counterparts in utilising the technological advancements of other companies to decarbonise its operations. The purchase of the first 100 of Fiat’s new e-Ducato vans seems to hint towards a change in strategy at the company as it strives towards its aim of being carbon neutral by 2050.
The research so far also lays bare the reality of progress in certain sustainable technologies. Electric trucks received large investments across 2017 and 2018 as new OEMs promised replacements for diesel-powered internal combustion engines capable of undertaking long-range journeys and line-haul operations were only a few years away. Delivery on such promises has been scant however, with Tesla’s promised 2019 delivery date now scheduled for ‘late 2021’, although still contingent on the company manufacturing its own batteries. Nikola, another electric truck start-up to show early promise, has experienced massive troubles of a completely different sort.
DHL Supply Chain’s order of 10 Tesla Semis in November 2017 has gone unfulfilled, as has UPS’ order for 125 such vehicles and FedEx’s purchase of 20 semis. There have been some more successful electric truck initiatives, however, including DHL Freight and Volvo’s trial examining the performance of electric trucks over 150km in Q1 2021, deployment of the medium-duty Daimler FUSO eCanter by both UPS and DHL, as well as trials of Xos Trucks’ X-Platform vehicles by UPS.
It should be noted that the decrease in investment in long-range electric vehicles may also be driven by a more optimistic view of fuel-based alternatives (such as natural gas and hydrogen) as a method of powering trucks, with constraints on advances in battery technology yet to be overcome. UPS especially have been making big investments in natural gas vehicles for over a decade, having driven one billion miles in alternative fuel vehicles by 2016 and having pledged $450m in 2019 to fund gas infrastructure and to have 6,000 new natural gas trucks by 2022.
Targets and Trials
As LSPs have developed their own carbon emission reduction targets in the last few years, international, national and local government have also developed and implemented a range of targets, as well as incentives. This includes, for example, the EU’s aim to be carbon neutral by 2050, and its aim to have 30 million electric vehicles on its roads by 2030. At the local level, New York has set a goal to reduce greenhouse gas emissions by at least 40% economy-wide by 2030 and achieve 100% net zero emissions by 2050. Also in the state, the New York State Energy Research & Development Authority provided $500,000 in partnership with UPS to develop technology to convert existing diesel-powered vans into electric vehicles. These location-specific targets could see LSPs target investments at certain locations, while other regulatory incentives have already factored into LSPs decision-making. An example is UPS’ announcement that Fuel Cell Electric Vehicles would be trialled in California due to the state investing in zero tailpipe emission transportation and the installation of hydrogen fuelling stations across the state. The aforementioned DHL-Volvo partnership taking place in Sweden is partially funded by REEL, a joint initiative between Sweden’s innovation agency Vinnova and the Swedish Energy Agency.
Already, the approaches, success, constraints, and influences on LSPs sustainability investments plans and strategies are becoming clearer. In the months ahead, as the database developed by Ti and FFSC grows, further insights will be generated. It is beyond doubt already, however, that the logistics industry is taking a serious and considered approach to the task at hand.
Source: Transport Intelligence, June 10, 2021
Author: Jonah Critten