Blog

9.2.2021 Green Business

The future of the transport industry

The future of the transport industry

By sennder team, 7 minute read

Market opportunities, government policies, and technology are driving a fundamental shift in the expectations for road transportation. The transport industry as a whole is changing, both globally and domestically. This shift was apparent even before the COVID-19 pandemic put newfound pressure on supply chains... and sent consumers fleeing to supermarkets to hoard toilet paper.

What’s a transport company to do? Construct the foundation of their future on the following principles:

  1. Digitalization

  2. Low carbon

  3. Driving with advanced fuels

To a certain extent, these three principles are already changing the road freight industry for good. Technology is driving unprecedented upgrades in transparency, analysis, and control over trucks, goods, and fuel usage, which in turn is reducing greenhouse gas emissions. In short: The future is already here.

Digitalizing road freight logistics

In the transport industry, technology-driven companies are increasing efficiency and maximizing profitability and flexibility for shippers and carriers while also addressing transport’s role in climate change. There’s room for improvement at every aspect of the supply chain, from the first mile to the last.

But what value does digitalization bring to road freight more specifically? Why does digitalization truly matter?

Traditional freight forwarders are logistics experts who coordinate freight transports as an intermediary between a shipper and a carrier, otherwise known as a trucking company. Most of the logistics industry is still a traditional sector operating with inefficient processes. People miscommunicate with one another, an important document goes missing, and trucks drive back to their starting point empty. That’s where digitalization steps in.

Digital freight forwarders act as a connector between shippers and carriers but also act as an optimizer. Digitalizing and automating road freight logistics processes saves money for shippers and increases earnings for carriers because inefficiencies are eliminated or reduced.

6 key ways digital freight forwards use technology to improve road freight logistics

  1. Better control over goods and their movements

  2. Better optimization among service providers and routes (and thus fewer empty trips)

  3. Visibility and real time tracking

  4. Data generation and analysis

  5. Digitization of paper documentation

  6. Workflow optimization and automation

A major distinction between traditional “pen-and-paper” logistics and digitalized logistics is the creation and structuring of data. This allows digital freight forwarders, and the shippers and carriers who use them, to benefit from a wealth of data on past shipments, run analysis of operations, and continuously improve on inefficient processes. If a carrier consistently runs late, we can easily identify this and address the problem with a quick look at the real time GPS data. Algorithms identify the problem and flag it so human beings can check the GPS to anticipate and take action if the carrier is indeed running late. Routing algorithms can save fuel and inefficiencies by routing vehicles in a more efficient path and connecting them to their pickup and drop off locations more effectively - thereby avoiding empty kilometers driven.

Technology in road freight isn’t limited to digital freight forwarders. Players throughout the ecosystem are adapting their day-to-day business and longer-term planning to make use of the opportunities tech solutions provide. Software as a service (SaaS) companies, for example, provide software solutions directly to shippers, carriers, or both. Overall, digitalization is an opportunity to use the most advanced technology to make traditional road freight logistics simpler, more efficient, and higher quality for everyone involved. Eventually, this will even lead to lower prices on store shelves for end consumers.

Low carbon solutions for road freight transport

The logistics industry is in the midst of a fundamental change for the better - a change towards low carbon operations becoming the standard. Technologies like diesel are soon going to go the way of the horse and carriage.

Best practices for companies include the establishment of key processes that allow for improvement of carbon emissions:

  1. Calculating and tracking companies’ carbon footprints and fuel consumption

  2. Establishing carbon targets as a key performance indicator (KPI) for organizations

  3. Putting the processes in place to allow for the optimization of the supply chain to account for carbon emissions

Implementing these three best practices allows an organization to move towards becoming a low-carbon operation, even when the challenge seems big at year 1.

1 Company carbon emissions calculations can take place either top-down or bottom-up. The top-down practice looks at the entire company carbon footprint and can use a recognized framework such as the Greenhouse Gas Protocol. The bottom-up approach empowers companies to understand the emissions from each transport. The Global Logistics Emissions Council (GLEC) has developed the industry-standard methodology for calculating and reporting the greenhouse gas footprint of logistics.

2. Establishing emissions targets is an important next step (or can be done simultaneously with step 1). This ensures that companies will move in the right direction even when many of the answers are still unknown on day 1. There are several ways to set emissions reduction targets, one of which is the Science Based Target Initiative (SBTi). SBTi considers targets to be “science-based” if they are in line with “limiting global warming to well-below 2°C above pre-industrial levels and pursuing efforts to limit warming to 1.5°C.”

3. Finally, establishing processes within a company to implement low-carbon initiatives empowers employees and teams proactively find solutions to hit those targets. One example of an effective process in the logistics industry is when companies make greenhouse gas emissions targets a KPI for purchasing managers. This empowers purchasing managers to make decisions that are both good for the company monetarily and also effective as green business.

Some examples of lower-hanging fruit for logistics companies can include switching to 100% renewable energy in offices and installing solar panels on logistics hubs. Installing solar on logistics hubs is often a positive return on investment and a relatively standardized product to implement. Many companies have recognized this potential, one example being Nike’s new EU logistics hub.

Other low carbon solutions in the road freight industry include driver training, regular maintenance of vehicles, proper tire pressure maintenance, and the use of aerodynamic and high-efficiency equipment. All of these factors can reduce fuel consumption and emissions by more than 20%.

Driving with advanced fuels

Advanced fuels are certainly the key to competitiveness for the transport companies of the future. We have advanced fuels that are on the road today at scale, primarily biofuels. New fuel technologies that will be hitting the road more widely over the next few years are battery electric trucks and hydrogen fuel cell trucks.

There are a number of drivers pushing the adoption of advanced fuels in the logistics industry:

  1. Demand from shippers to reduce carbon emissions

  2. Demand from end customers (aka individual people) who prefer low-carbon products

  3. Efficiency of newer fuels

  4. Government regulations

Many of the world’s largest companies have already implemented the best practices mentioned up above: Coca-Cola will reduce emissions by 30% by 2030 and be carbon neutral by 2040, IKEA will be climate positive by 2030, AB InBev will reduce emissions by 25% by 2025, and Amazon will be carbon neutral by 2040.

With these types of goals in place from the world’s largest companies, there is a strong demand to implement clear, provable reductions in carbon emissions. Driving with advanced fuels that can lower carbon emissions by up to 90% today versus fossil diesel can achieve this.

The first category of such fuels are those available widely today: advanced biofuels. Advanced biofuels turn waste products such as food waste into high-grade fuels that can power vehicles in large numbers.

The main 4 types of biofuels

  1. HVO

  2. B100

  3. Bio LNG

  4. Bio CNG

HVO is an advanced, high-grade biofuel made from recycled oils and oil waste products. It can completely replace fossil diesel and reduces carbon emissions by up to 90% compared to fossil diesel.

B100 is the first generation of biodiesel, which is most often made from crops such as corn or rapeseed. This has the advantage of being renewable but the potential disadvantage of competing with agricultural space. B100 can reduce carbon emissions by up to 60%.

Compressed Natural Gas (CNG) and Liquified Natural Gas (LNG) can come from either fossil sources (think fracking) or they can come from renewable resources such as environmentally friendly biogas plants that take food waste and turn it into gas to power vehicles. The advanced fuels version of CNG is called Bio-CNG; the advanced fuels version of LNG is called Bio-LNG. Both come from renewable sources. Fuels such as Bio-CNG and Bio-LNG can reduce emissions by approximately 65% compared to fossil diesel and other fossil fuels.

The second category of advanced fuels are electric in nature and include battery electric trucks and hydrogen fuel cell trucks. Both of these vehicle types can be powered by 100% renewable electricity such as solar and wind, which gives them a large long-term advantage when it comes to reduction in carbon emissions.

There are technologies available now that can reduce emissions by 90% compared to fossil fuels. sennder has them on the road already in the form of HVO and B100. These technologies are scalable today. The technologies of tomorrow - including electric and hydrogen - are just around the bend. These newer technologies can reduce emissions by up to 95% compared to fossil fuels, so we are working hard to get them on the road today.

The future of logistics: A summary

The future is here, and the transport industry needs to be ready to get out in front of all the challenges the twenty-first century will throw at it.

The transport companies of the not so distant future will all have three characteristics in common: they will be digital, low carbon, and run on advanced fuels. This change has already arrived and is here today - just look at Nike, IKEA, AB InBev, Amazon and many other leading global companies. They have set aggressive goals for themselves. They know that change is here, and that the time to act is now.

Implementing these best practices isn’t necessarily easy - but it is necessary for the transport companies of the future.

Learn more about sennder’s approach to green business HERE.