De-Carbonising Road Freight Operations: Bridging the Know-Do Gap

The sixth assessment report by the Intergovernmental Panel on Climate Change (IPCC) published in August 2021 once again stressed the importance and urgency of decarbonising all sectors of the economy. While many sectors can already report decreasing greenhouse gas (GHG) emissions, logistics continues to be seen as a hard-to-abate sector given its current growth rates and its persistent dependence on fossil fuels. However, over recent months, there has been a steady flow of good news. For example, Maersk ordered eight 16,000 TEU vessels to be operated on carbon-neutral methanol fuel, while DHL has purchased large amounts of sustainable aviation fuel and ordered 12 all-electric cargo planes. These are some examples of large players making bold moves, often involving low-carbon fuels and related engine technology.

Also in road freight vehicles, battery-electric or hydrogen-powered drivetrains are close to market launch. However, the trucking industry is highly fragmented, composed of many small and medium-sized carriers. In Europe, more than 500,000 road carriers are in the market, 99% of them with less than 50 employees. Unlike many of the large logistics providers, they operate on thin margins and generally considered to have limited resources to devote to decarbonizing their operations. Unlike their customers, usually large shippers with their own sustainability strategies and targets that often span their entire supply chain. They have genuine interest in influencing their carriers of all sizes to cut emissions.

This article sheds some light on sustainability considerations at the carrier-shipper interface by analyzing recent survey data. It comes from the annual customer survey conducted by logistics software company Transporeon. It was collected in May 2021 and contains information on the sustainability practices of hundreds of European road carriers and shippers, focusing on ways of reducing the fuel consumption of current internal combustion engines. Overall, we observe a clear ‘know-do’ gap both at shipper and carrier levels: actions known to help cut emissions are too often not pursued despite clear economic benefits.

First, we take the carrier perspective and analyze which fuel efficiency measures are known about and implemented in the road freight sector. Figure 1 provides an overview of different behavioral, technical, and operational measures. Most respondents report monitoring their fuel consumption, which is a critical first step towards reducing it. Also, more than half of the carriers use transport route optimization and track their drivers’ performance. However, a lower uptake and large gaps between knowing and doing can be observed for other measures like eco driver training and low-resistance tyres. This is surprising as studies show that the training and subsequent monitoring of drivers can have a fuel-saving potential of 5-10% and offer a quick financial payback: essentially one of those low-hanging fruits that one wants to harvest first. Overall, the analysis shows a low uptake of well-known measures that simultaneously reduce fuel consumption and GHG emissions. Furthermore, the smaller the carriers, the less likely they are to know about the fuel-economy measures, and the larger are the know-do gaps.

Turning our attention to the shippers in the survey sample, we can analyze the strategies they pursue to engage their carriers in GHG emission reduction initiatives. Most of the shippers procure their transport through long-term contracts with selected carriers. Most of them also declare to be committed to cutting emissions also beyond their own operations. Figure 2 provides an overview of the findings. Almost 60% of the shippers reveal that they do not actively engage with their carriers around decarbonization in any way. Around 20% are undertaking initial pilot projects with their carriers, 15% set minimum emission reduction requirements in new tenders. Only 5% are prepared to offer extended freight contracts, while a mere 4% pay a premium to carriers that are making an effort to cut their emissions.

From our analysis, two things are particularly striking: first, many carriers possess surprisingly little knowledge about fuel efficiency measures. Also, a considerable gap exists between knowing and implementing these measures, even for those that are comparably easy to implement and known to have short payback periods. 

Second, despite their own targets to reduce emissions from transport, most shippers do not collaborate with their carriers on fuel-economy initiatives. As a result, carriers are given little incentive to pursue measures that cut emissions.

What can be done to bridge the know-do gaps? Starting with the shippers, they need to realize that even some larger carriers lack the necessary incentives and capabilities to decarbonize their operations. The situation is even worse for the smaller carriers making up most of the market. Thus, freight buyers need to do more to integrate decarbonization into their procurement practices. The Smart Freight Procurement Guidelines published by SFC provide shippers with a useful roadmap for achieving this.

The high degree of fragmentation in the trucking sector gives shippers market power but with that comes a responsibility to source road freight services more sustainably. They can increase pressure on their carriers to cut emissions while simultaneously reducing the risks and uncertainties in investing in lower carbon
technologies and practices. For example, freight contracts could be lengthened and tied to the implementation of fuel economy measures. Some shippers might assist their carriers with financial support to help them shoulder upfront investments into alternative drivetrains. Finally, shippers can signal to their carriers their firm commitment to cut emissions by including minimum requirements on emissions reduction and reporting in their tenders, potentially offering a rate premium to reward carriers’ efforts.

Looking at the carriers, educational initiatives and knowledge transfer are obvious ways of bridging the know-do gap. In short: carriers need to be provided with trustworthy assessments of fuel economy measures, focusing on the potential carbon savings, ease of implementation, and information about financial returns and payback periods. Universities, NGOs, industry associations, and government agencies can do more to raise awareness of fuel economy measures and to showcase their economic and
environmental benefits. While the effectiveness of each measure depends on the composition and use of the fleet in question, there is now a substantial body of evidence available to show that fuel economy, carbon-reducing measures are widely applicable. The favourable experience of carriers that have implemented these measures needs to be widely publicised through media widely used in the trucking industry. Too often, information about emissions reduction is primarily shared through industry conferences or publications that seldom reach a small proportion of the 495,000 small road carriers in Europe.

Low-carbon fuels and engines are appearing on the horizon, but fleet renewal will cost a lot of money and will take time – the average truck replacement cycle in Europe is over 13 years. While fleet renewal is of crucial importance, it is not going to deliver the deep reductions in road freight emissions required over the next decade. Many smaller operational and behavioral interventions have a short-term impact and collectively cut fuel consumption by a significant margin. Most of them are not new; many have been widely applied for decades. Now is the time to bridge the know-do gap and greatly increase the uptake of these interventions by the large population of small carriers. Shippers should be actively encouraging and supporting this process.