Industry leaders from global logistics discussed the best routes to decarbonisation and share thoughts on how they can meet these targets. In this second part, we continue looking at the ten outcomes and insights from their discussion.
To get the entire breakdown of the discussion, make sure you read part 1 first where we cover points 1-5.
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6. Don’t be blinded by technological solutions, decarbonisation needs to be approached holistically
While the logistics industry focuses on electric vehicles and renewable energy for sustainability, relying solely on technological solutions won’t suffice. The main problem, especially in road freight, is the low utilisation of vehicles. The solution demands an approach that combines technology with operational strategies (e.g., fuller trucks, modal shift, supply chain redesign).
While technological advancements are crucial, adapting a more balanced approach integrating operational efficiency often proves more financially attractive than technological measures alone.
7. Collaboration across the logistics supply chain is crucial
Systemic change in the logistics sector necessitates collaboration among multiple shippers to signal demand, co-invest in decarbonisation solutions, and enable shared freight suppliers to optimise logistics supply chains. Increased visibility of scope 3 emissions through calculation tools and data exchange platforms can be a catalyst for this transformation.
Internal collaboration within companies is equally vital, requiring the integration of decarbonisation into various functions, from accounting and communication to legal compliance, staff training, procurement, and logistics operations.
8. The growing importance of NGOs in supporting climate action across the value chain
Non-Governmental Organisations (NGOs) have been instrumental in elevating climate change on the agendas of businesses, governments, and investors. It’s legitimate for NGOs to monitor how companies fulfil their climate commitments. Yet, it’s crucial to recognise that companies are learning through action, and not every misstep is necessarily greenwashing.
The peril lies in “greenhushing” – where companies quietly invest without communication, impeding collaboration and shared learning. NGOs play a crucial role in facilitating data and knowledge exchange, mobilising financing, advocating for supportive policies at government and industry levels, communications and coordination as well as implementation of key industry initiatives.
9. Support for market mechanisms to help finance the transition
A limited supply of sustainable fuels like SAF or maritime biofuels poses challenges for freight operators, and solutions like ‘book and claim’ are emerging – where a company that, as a customer, chooses SAF or maritime biofuels that has been “booked” into an emission tracking registry and “claims” the attributes of that low emission service as its own.
Emission trading schemes and voluntary carbon credits are also utilised by companies, requiring clear accounting standards, interoperability and government regulations to ensure credibility. Clear and unambiguous accounting standards (including the GHG Protocol that is to be revised), government regulations and rules under Article 6 of the Paris Agreement are critical to guarantee the adoption of, and trust in, these schemes.
10. The adoption and scale of sustainable logistics: You need to build the business case
While regulations set minimum requirements for adoption, a strong business case is essential for effective and credible climate action. Decarbonisation should be framed in terms of both monetary and environmental impact. Considerations like total cost of operation (TCO), return on investment (ROI), and emissions reductions per invested dollar play a pivotal role.
The financial return on investment (ROI) is key, and for this, the TCO should be considered alongside initial investment costs. Another consideration is emission reductions per invested dollar, which is why SFC introduced the term “total emissions of operation” (TEO) in parallel to the TCO. Finally, who pays for emissions reporting and decarbonisation measures will influence the business case.
For example, electric heavy-duty trucks cost 2-3 times more than diesel trucks, but the TCO is in some cases already at par with diesel trucks. For vans and light-duty trucks the business case is even more solid. The TEO very much depends on the energy type used for power generation. Carriers normally buy trucks but leasing options including ‘trucking as a service’ can remove the investment barrier.
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Source: Pledge
PLEASE NOTE: All information contained in this article was correct at time of publication and obtained directly from Pledge. Please ensure information is cross-checked against current legislations before taking any action.
