The study, carried out in partnership with The European Freight & Logistics Leaders’ Forum, indicates that despite the coronavirus pandemic, the logistics decarbonisation process in Europe is underway and getting integrated in companies’ strategic planning. Many businesses, however, are still at a relatively early stage in the process. 

The report summarises the results of a survey of over 90 senior executives to determine the extent to which their businesses are working to improve the environmental sustainability of their logistics operations, mainly by cutting carbon emissions. Logistics activities account for around 10-11% of global CO2 emissions and will be difficult to decarbonise because of their very heavy dependence on fossil fuel and high forecast growth rate.

European road freight transport remains one of the most important sectors to decarbonise, with heavy goods vehicles accounting for roughly 20% of transport-related CO2 emissions.* In order to tackle CO2 emissions from freight transport, governments, shippers, and logistics service pro-viders (LSP’s) are setting ambitious decarbonisation targets and strategies. The EU plans to achieve a 90% CO2 reduction in the transportation sector by 2050.

The study by SFC and KLU shows that there are important differences regarding the ability of carriers to decarbonise, depending on their fleet size. While the vast majority of carriers acknowledge the importance of decarbonising the road freight sector, operators with larger fleets are in a better position to undertake concrete steps to bring down transport-related CO2 emissions. The majority of carriers with under 20 vehicles, on the other hand, see little or no business opportunity in decarbonising their operations. The study finds that besides the associated costs, uncertainty about customer demand, emission reduction measures and new energy technologies are clear barriers for the carriers. As a result, many carriers lack basic emission calculation capabilities and available operational and technical fuel efficiency measures are of-ten not implemented. This represents a large untapped potential for saving money as well as CO2 emissions.

Other conclusions of the study include:

• Around 30% of the companies are leading the way as they have sustainable logistics strategies in place or being implemented, have set absolute carbon reduction targets for their logistics operations and are capable of measuring related CO2 emissions at a disaggregated level.
• Providers of logistics services appear to have a greater capability to manage the decarbonisation process than the users of these services. 
• 40% of respondents (and 60% of those in leading companies) reckon that half or more of CO2-reducing measures also cut costs, confirming close alignment of environmental and commercial objectives.
• The three most cost-effective ways of decarbonizing logistics are deemed to shifting freight from road to rail, improving vehicle utilization and switching transport operations from fossil fuel to renewable energy.
• Three-quarters of the managers consulted reckon that digitalisation will have a transformational impact on logistics over the next five years with improvements to supply chain visibility, advances in transport management systems, innovations in vehicle routing and online logistics platforms expected to make the greatest IT contributions to logistics decarbonisation.

The report includes short case studies in which eight companies outline sustainable logistics initiatives they have undertaken: P&G, Stora Enso, Kuehne+Nagel, Tata Steel, Saint-Gobain Isover and Transporeon, Vlantana, Bertschi, and LKW Walter. 

The report concludes with a series of recommendations for the various stakeholders in the European logistics industry.

Prof. Alan McKinnon, co-author of the study, Center for Sustainable Logistics and Supply Chains (CSLS) at Kühne Logistics University (KLU) pointed out: “The discussion on road freight decarbonisation in Europe is increasingly dominated by the choice of low carbon truck technology and energy sources – essentially a supply-side issue. This research shows that there will also be a major demand-side challenge in encouraging over half a million small carriers to switch to these new vehicles and, until then, to operate their current diesel-powered ones more energy-efficiently. KLU’s work on this subject recognises the need for managerial as well as technological change.”

The study by KLU and SFC is one of the first to focus on the decarbonisation potential of SME carriers in Europe. It provides unique insights into current thinking in the road carrier market on the decarbonisation issue. It examines emission calculation capabilities and the rate at which emission reduction measures are being implemented across a sample of more than 800 European carriers in 32 European countries, provided by the global transport platform Transporeon. It also highlights factors driving and constraining efforts to cut fuel consumption and emissions.