The road to low-carbon logistics

COMMENT The latest Intergovernmental Panel on Climate Change report, released in August, illustrated the significant amount of effort organisations still need to make to reduce the environmental cost of inaction, with transportation and logistics activity responsible for 24% of global direct CO₂ emissions. Decarbonising the logistics market to make it more sustainable can be achieved through several channels – all of which have emission reduction at their core. They include reducing Scope 1 emissions, which is the carbon emitted within the buildings that a company operates out of, and the reduction of emissions from the vehicles that are used to transport goods through a network – as well as reducing carbon in the materials and packaging that are used by an operator, which can be either Scope 1 or 3 depending on ownership structure. Companies are increasingly looking at these emission-heavy elements as they look to meet their own ambitious ESG targets, and this is going to continue as we enter a period of greater awareness from consumers and investors on the carbon footprint of an organisation. On the move Operators have much more control in reducing carbon in their networks from the materials, packaging and freight vehicles used, compared to the buildings they operate out of. Freight transport accounts for 8–15% of total traffic flow in urban areas within the European Union, and the transportation sector as a whole produced 27% of the UK’s total emissions in 2019, of which 91% came from road transport vehicles. There is therefore significant headroom to support the UK government’s decarbonisation plan and an organisation’s own net zero commitments through a targeted vehicle sustainability strategy. Location, location, location Industrial supply is extremely limited so quite often an operator’s choice when opening a new distribution hub isn’t around what is the most sustainable building they can find in the right location, but more likely what building is available in that location. As a result, there is increasing importance on leveraging the use of electric vehicles to help reduce carbon emissions across supply chains. The advancements in technology and automation have seen a significant increase in the production and type of EVs available, as well as the range they can cover. As such, we are now seeing more companies using EVs within their supply chains to transport goods and materials – contributing towards reducing their Scope 1 or 3 emissions and ultimately meeting organisational net-zero carbon commitments. When considering the introduction of EVs, operators currently have to consider the vehicles that are available and the range that they can cover. Top-of-the-range EVs have approximate real-world miles of 400 with charging of around 44 mins to 32 hours, depending on the charging point used. However, the unit economics for an organisation may not stack up commercially when transitioning to a wider fleet at scale. To counteract the current limitation on long journeys, operators have started to introduce EVs into their networks in urban areas at the “last mile” point of the journey where vehicles travel shorter distances. Parcel operators have been early adopters of EVs in urban areas, opening all-electric micro fulfilment centres where they have solely used EVs to transport their parcels across the network. More recently, we have seen the on-demand online grocers enter the market in cities across the UK and Europe and they have been using electric scooters and bikes to undertake their final-mile delivery. Across urban areas, the use of EVs to reduce carbon emissions and contribute towards cleaner air agendas is going to become more common and we will see more modes of EVs being used, from cars to vans to bikes and scooters. Hydrogen vehicles in urban logistics are also getting to reality. They will allow for greater breadth of strategic options for businesses that are concerned about their environmental footprint and wish to leverage new technologies to decarbonise their logistics activity. Scaling up As hydrogen and electric charging and battery technology continue to improve, we expect that we will also see advancements in the size of vehicles that are manufactured to either run as hybrids, all-electric or hydrogen. Larger vehicles that can be built with increased ranges will in turn create even lower carbon supply chains and enable companies to reduce the carbon in their logistics networks. What has always been apparent is that the cost of these vehicles when they are initially produced can be prohibitive to a number of smaller businesses. However, as more manufacturers develop hydrogen and electric vehicles – and are able to build on scale as the price point drops – many more smaller businesses will be able to switch their fleets and reduce their carbon emissions. Yet to be tested at scale in the market is capacity within the power network and accessing it from the grid – providing enough power to charge vehicles in the case of EVs. As such, landlords are increasingly looking to future-proof their buildings by securing enough power for them to operate. This can include highly automated warehouses which require significant levels of power, as well as having capacity to provide electric charging points for their fleets, occupiers and employees. We are likely to see more innovative solutions in integrating on-site power generation into both new and existing developments to cater for the growing power needs and support decarbonising logistics activity across the network. Decarbonising an organisation’s operations requires significant upfront investment. However, this will increase over time as emissions become more costly in the medium to long term from an overall organisation perspective. There is an increasing pressure across the board from consumers, employees, regulators, and investors to act and progress to a low carbon logistics model – acting now is much more prudent than later. Tessa English is head of urban & city logistics and Harris Karim is sustainable product manager at JLL Image © Susan Walsh/AP/Shutterstock