In a study conducted by Shell and Deloitte, more than two-thirds (68%) of fleet owners surveyed expect pressure to decarbonize – from regulators, customers, and employees – to increase over time.
Yet nearly half (46%) of fleet owners said they either have no decarbonization targets or it is unclear how existing targets translate to their fleet.
Are you one of them?
Decarbonizing Road Freight: What It Means and Why It Matters
Due to the global pandemic, the rise of e-commerce and instant delivery fulfillment has significantly increased in the last two years. While this has helped limit the risks associated with in-person activities, it has led to increased congestion and emissions from the explosive growth in deliveries, particularly in urban spaces.
A recent study by the World Economic Forum predicts that the number of delivery vehicles in the world’s biggest cities will increase by 36% in the next seven (7) years. This leads to a 21% increase in traffic congestion and a 32% increase in carbon emissions.
What is Decarbonization?
Decarbonization is the process of transitioning to a lower – and eventually zero – carbon footprint to mitigate the impact of climate change. In logistics, decarbonization takes the form of improving fleet efficiencies to decrease carbon intensity, such as optimizing delivery routes to reduce distance driven, substituting conventional fuels (e.g. diesel) with new fuels (e.g. renewably-generated electricity), and adopting paperless practices, for example, digital proof of deliveries.
Why is it important to Act Now?
Decarbonization addresses many challenges that people are experiencing daily:
1.Reduce the Consequences of Global Warming & Climate Change
Data from a Shell & Deloitte study shows that the global transport sector was responsible for 33.9 million tonnes of carbon dioxide. Out of this, 7.2 million tonnes came from aviation, shipping, heavy-goods vehicles, passenger-carrying vehicles, light-duty vehicles, and rail sectors.
The effects of climate change are being felt everywhere, e.g., the super typhoon Nanmadol which hit Japan in 2022, leaving 115 people injured, 340,000 households without electricity, and racking up losses in excess of $10 billion, or in the Philippines, where it is experiencing rising sea level, increased frequency of extreme weather events, rising temperatures, and extreme rainfall.
2. For the Well-being of Current and Future Generations
With emissions from human activities being one of the major drivers of climate change, we need to take immediate action to decarbonize our economies, and societies. The evidence of the harmful effects of air pollution on human health is overwhelming; according to WHO, air pollution is estimated to cause 29% of lung cancer, 43% of COPD, and 24% of stroke fatalities globally.
As such, reducing emissions through decarbonization efforts is critical to protecting public health and improving our overall quality of life. By transitioning to cleaner energy sources, reducing emissions from transportation, and reducing waste, we can build a healthier and more sustainable future forall.
3. Lower Operational Costs
With the growing concern over the impact of carbon emissions on the environment, government organizations around the world are taking measures to reduce them, including financial penalties on high-emitting companies. For example, Singapore, a country with one of the largest logistic hubs in Southeast Asia, set aCarbon Tax of S$5 per tonne of GHG emissions effective in 2019. As a result, companies must take steps now to reduce their carbon footprint and prepare for the added costs that will come from these penalties. By taking proactive steps towards decarbonization, companies can not only reduce their environmental impact but also ensure their financial stability in the face of these penalties.
Digitalizing operations, and adopting technology solutions can also provide a significant boost to companies’ bottom-lines, by lowering their operational costs while supporting their decarbonization efforts. By digitising tasks such as proof of delivery, product catalogs, invoicing, and report generation, companies save time, and costs by going paperless. In addition, digital solutions allow for more efficient delivery routes, reducing the number of trips needed to complete the same tasks and reducing carbon emissions. By embracing the power of technology, companies can stay ahead of the curve and remain competitive in an ever-evolving market while reducing their impact on the environment.
Global and macro trends can take a long time to impact consumer sentiment, but local legislation can happen quickly. Companies should take action today to future-proof their businesses for tomorrow.
The best place to start is for fleet operators to diagnose current operations and workflows, and identify steps towards reducing their carbon footprint by using technology to drive efficiencies in operations. The global pandemic has resulted in an enormous push for companies across all sectors to digitize; many now have the opportunity to use tech-enabled efficiency gains to also decarbonize their businesses, and take the next step towards both lower costs, and towards achieving their sustainability goals.