On Logistics Directors’ bad dreams and ways to escape them
Have you ever that feeling of unexplainable existential dread from waking up abruptly in the night? When everything feels just not right and you know something bad might happen, without any real reason.
Such events are a result of our subconscious suppressing of negative thoughts and experiences, helping us function properly and focus on what we can control. We shouldn't let memories of bad dreams, unpleasant exchanges, distant events, or climate changes affect our daily lives. Or did I just put too much in the last sentence and not everything should be hidden? Because there are ways to address some of these issues and improve our sleep quality.
It seems to me that we can do something to reduce the scale of human induced changes happening to the planet by, for example, choosing more environmentally friendly modes of transport. Short-distance flights, unnecessary car travel or over-reliance on delivering goods by road whenever rail is possible are some of the bad habits which can be addressed. Fortunately, most people in Europe understand that, as they voted for parliamentarians, implementing measures trying to address some of the core issues by setting up emission restrictions or introducing reduction goals.
Some of the most important of them are listed in “Fit for 55” package which commits the EU in general to reduce emissions by 55% before 2030. For road transport planned reduction benchmark is 45% before the same year.
As one of first measures comes Sustainability reporting, along with hefty fines for under reported emissions. The reports will, likely, be the basis for carbon allowances under Emission Trading Scheme, which will try to directly motivate CO2 reductions for companies active in transportation of the goods, including shippers and carriers. Current estimates are that price of tonne of CO2e (carbon dioxide equivalent) for inland transports will be set at 45 EUR since scheme entry into force in 2027 till 2030 and will only rise further afterwards.
Some of the logical steps to achieve the goals and avoid penalties for many shippers and carriers could be establishing transparent and compliant emission tracking procedures across the whole supply chains and moving larger parts of their networks to more sustainable and CO2-neutral means. Battery-electric trucks, fuel cell electric vehicles, railway, short sea or inland water transports and their combinations have significantly lower carbon footprint. Inserting them into transport flows does not only save emissions from entering the atmosphere, but soon will also save money in a form of tradeable carbon certificates. Most of the mentioned solutions are already commercially available and (sometimes) viable.
Traditional arguments against intermodal and greener solutions come mostly from extra costs, or longer times, or operational difficulties arguments. European authorities seem to be happy to counter them with emissions related taxes and fines, trying to make sure cargo moving from A(msterdam) to B(udapest) avoids using a drop of diesel fuel.
We at Transporeon can observe increasing efforts to increase intermodal adoption. Within Transporeon Market Intelligence community, intermodal share increased by roughly ~22% in 2023 versus 2022. While reasons behind the increase not only lie in green transition stimuli, they also indicate structural changes in member’s networks adopting larger proportions of intermodal solutions. Furthermore, our research indicates that significant quantities of road-based lanes are immediately suitable as candidates for next round of intermodal expansion.
This increase in intermodal share is even more significant if we take the economical environment in 2023 into consideration: reduced demand for transportation and overall rate average increases for intermodal traffic of +3% compared to a -3% drop for pure road transports within Transporeon Market Intelligence community members. Main reasons for these developments were opposite movements of energy costs (electric power vs. diesel).
Besides intermodal efforts, some companies, like Amazon, Coca-Cola, Holcim, IKEA or Rhenus Logistics made announcement about using electric or fuel-cell trucks in their networks on longer distances, or as first and last legs in intermodal lanes, to test solutions and prepare themselves for large-scale adoption.
So, even if your sleep was good before, its’ quality might degrade when everyone will rush into pitfall of insufficient numbers and capacities of terminals, barges, locomotives, highway charging stations, etc., which is already clear on the horizon to happen right after first significant carbon taxation checks will hit freight market.
3-5 years might seem like a lot, until you consider time needed to go from the first meeting to ribbon cutting on high-power charging station at a warehouse or administrative efforts to change material flows for a billion-dollar factory. Only by starting now to shift large portions of their networks to more sustainable and intermodal means of transport companies could be prepared to the inevitable bottleneck in the future, with robust and diverse supply chains in place, bringing peace of mind to the involved people.