More Sustainable Options: Freight forwarders Need to be Better Advised

Prof. Alan McKinnon and Prof. Moritz Petersen from the Kühne Logistics University (KLU) explain the challenges facing the transport industry in the context of the climate targets and how climate protection can be driven forward in the companies.

The interview was conducted by:
Natalia Jakubowska, trans.iNFO

The economist Michael Hüther said last week that, in his estimation, the EU climate protection package cannot be implemented as planned because of the war in Ukraine. But others claim that the war will serve as a catalyst. Which side do you support?

With respect to road freight, we are more on the “catalyst” side of this argument. In the short term, there are opposing forces. On the one hand, the high price of diesel is encouraging trucking companies to improve their fuel efficiency and vehicle loading. On the other, in such an intensely competitive sector, it is difficult for carriers to compensate for higher fuel prices. Where doing so is impossible, carriers’ profit margins, which are already slim, get squeezed, leaving them with less money to invest in new, more fuel-efficient vehicles or to upgrade their existing fleets. In the medium to long term, the outlook for freight decarbonization is more promising. High diesel prices may encourage companies to make more use of rail freight services, given their much higher energy and carbon efficiency. Expensive diesel will also improve the relative economy of switching to the new generation of low-carbon trucks powered by renewable energy sources. The carbon intensity of the electricity used by these vehicles will probably fall more rapidly as Germany and other EU countries rush to reduce their dependence on fossil fuel from Russia.

Many transport and logistics companies are already saying that the package is too much for them. Are politicians taking companies' concerns seriously enough? Where do you see a need for action on the part of policymakers?

National governments and the European Commission have to strike a delicate balance. They are confronted by a climate crisis and have to drastically cut CO2 emissions to meet the targets for 2030 and 2050. They are trying to do so as cost-effectively as possibly, while minimizing harm to the economy. Trucking accounts for 4-5% of the EU’s CO2 emissions and is considered a difficult sector to decarbonize, partly because of its high fragmentation, the high projected growth of freight traffic, and the difficulty of converting it to renewable energy sources. Carriers need to be given more advice on the broad range of measures that they can take to cut energy consumption and emissions from their existing vehicles, plus more incentives to make the switch to a new generation of low-carbon trucks once they become more affordable.
Above all, these incentives must work in the long term. Carriers who opted for LNG at an early stage have been left out in the cold since the beginning of the year because of the high gas prices. Of course, that doesn’t motivate them to move forward boldly now and consider the comparatively early purchase of hydrogen or electric trucks.

What are the biggest hurdles in implementing climate protection measures at companies?

In the logistics sector, there are three important hurdles. First, there is a lack of knowledge about decarbonization options and their relative cost-effectiveness per metric ton of CO2 saved. The second hurdle is a financial one for those carbon-reducing measures that require an initial capital investment. Many logistics providers either lack the resources or consider the likely rate of return on carbon mitigation measures to be too low. This ties in to the third hurdle, which is the perception among carriers that the users of logistics services are unlikely to reward them commercially for their efforts to cut emissions.

Last year, KLU’s Center for Sustainable Logistics and Supply Chains (CSLS), in collaboration with the Smart Freight Centre (SFC), released a study on the decarbonization of road freight. According to the study, small fleet operators account for 99 percent of all companies in the European road freight sector. What must be done to ensure that climate protection doesn’t remain a project pursued by the elite?

It is true that around 99% of the half a million European road carriers have fewer than 50 employees, making trucking one of the most fragmented economic sectors and also one of the most intensely competitive ones. It is clearly difficult to get the message across to this huge population of small operators that it is imperative to reduce freight-related emissions. Although the carbon-reduction targets and strategies pursued by larger logistics providers get more media coverage, we need an industry-wide commitment to decarbonizing road freight. After all, the major logistics providers sub-contract much of their transport to small carriers and therefore have to include their emissions in the so-called Scope 3 calculation of their corporate carbon footprints. This gives these providers an incentive to outsource their transport to lower-carbon carriers and to work with their carriers on decarbonization schemes.

To achieve the climate targets, both a long-term strategy and medium-term goals are needed. But what should a company start with? Which measures make sense and which ones don't?

There are many things that carriers can do in the short-to-medium term while waiting for the mass production of the new generation of low-carbon trucks. They will obviously want to prioritize those initiatives that are the most cost-effective and most easily implemented. This category includes training in fuel-efficient driving techniques, telematic monitoring of driving behavior, aerodynamic profiling of vehicles, ensuring tires are properly inflated, setting high maintenance standards, and vehicle light-weighting. Taken together, these measures can lead to significant savings and, by the way, pay for themselves quickly. As already mentioned, the knowledge about this is surprisingly limited.

And what role do digital solutions play in this context?

They will also play an important role. The use of online platforms that help avoid empty runs by better matching supply and demand, and of software to optimize vehicle routes, can also lead to significant cost and emissions savings in the short term. We also need more transparency about the actual emissions generated in order to use existing fleets in a CO2-optimized way. Some companies are also working on this.

A central aspect of the discussion on climate protection is the mobility transition. Does it make sense to convert truck fleets today, when the range of battery trucks still leaves much to be desired and hydrogen-powered trucks are comparatively expensive?

This partly depends on vehicle size. In the case of local distribution by van, the transition to electric vehicles is well underway. The total cost of ownership of battery-powered vans is now similar to or lower than that of their diesel or petrol counterparts. Electrification will gradually rise through the vehicle size and weight hierarchy, as battery-powered rigid and articulated vehicles are mass-produced. It is worth noting, however, that the transformation of the European truck will be a lengthy process. If things continued at the 2019 rate of truck replacement in Europe, it would take around 20 years to completely switch to renewable energy.

Which technology should fleet operators opt for? What is the future drive system for trucks?

It’s a complex topic. Disregarding biofuels, which can be seen as a transitional solution in the short-to-medium term, the long-term decarbonization of trucking will require it to be powered by low-carbon electricity. The three main ways of getting that electricity into vehicles are batteries, hydrogen fuel cells, and overhead highway cabling. The last of these three options, using ‘trolley’ trucks, is the most energy-efficient, though it requires substantial capital investment in the electrification of a core highway network. The fuel cell option requires a large and affordable supply of green hydrogen produced by electrolysis of water with low-carbon electricity. Unfortunately, around 70% of the electricity is lost in this process. We see hydrogen fuel cells having niche applications in the European trucking industry for carriers moving heavy loads over long distances. For many companies, battery-powered vehicles are likely to prove the best option, given recent reductions in battery weight, advances in recharging speeds, and public and private commitments to developing extensive recharging networks for trucks. Dynamic charging options on e-highways would further enhance battery-powered vehicles’ appeal to freight operators.

Recently, e-fuels have been heatedly debated again. However, the topic is very controversial and associated with a number of myths. Can synthetic fuels really replace gasoline and diesel?

Synthetic fuel could be produced by combining green hydrogen with CO2 removed from the atmosphere. Achieving net zero targets at the national, EU or global level will require the removal of several metric gigatons of CO2 already in the atmosphere. Once captured, the CO2 could become a useful ingredient in synthetic, ‘diesel-like’ fuel that could be used in existing vehicles. This would do away with the need for new fleets of vehicles with different powertrains. Producing this fuel, however, is extremely energy-intensive and is likely to remain relatively costly for the foreseeable future. Consequently, this option does not feature very prominently in current debates on future energy sources for trucks.
Ultimately, however, it’s not a question of which is the one new technology that will prevail or whether there is a single, best solution. If we are to make significant progress on climate protection in time, all alternatives to fossil diesel will have to be pursued. But this will depend on the particular application.

 

When will truck traffic be completely climate-neutral? Or is it just a pipe dream?

It’s certainly not a pipe dream, though it is still a long-term vision. Here in the EU it will require the complete replacement of over six million diesel trucks with low-carbon models and the total decarbonization of the electricity used to power them, either directly, using batteries and overhead cables, or indirectly, using hydrogen fuel cells or synthetic fuels. Optimistically, this may happen in some EU countries by 2050. In much of the developing world, however, this will be a much slower process and, we should recall, climate change is a global problem.