Global supply chains are facing times of upheaval. This affects various areas, from risk resilience to greater agility. In this context, greater sustainability is also a key issue in the logistics sector.
The opportunities for greater efficiency andCO2 savings are huge from the first to the last mile and range from alternative drive technologies to intelligent warehouse and transport management. However, as great as the potential is, the question is often just as big: how can green logistics be implemented in practice?
LOGISTICS: BIG IMPACT, MUCH NEED FOR ACTION
The logistics sector is one of the most important drivers of the economy and therefore one of the largest economic sectors. The transportation and storage of goods are key to creating high value.
Logistics itself generates such values: with a cross-sector turnover of around 327 billion euros, the German logistics industry could increase once again in 2023 compared to the previous year. This would give the German logistics market a share of 25 percent within Europe – according to figures from the German Logistics Association (BVL).
The volume of goods transported is enormous, totaling 4,584 million tonnes in 2022. Over 700 billion tonne-kilometres were transported by road, rail, water and air. Road transport accounts for a large proportion of these services:
- The share of the transportation volume was 79.5 percent.
- The figure for transport performance was around 72 percent.
The forecasts of the Federal Ministry for Digital and Transport Affairs (BMDV) assume that freight traffic on the roads will continue to increase until 2050. This is not least due to the fact that the transportation of general cargo will continue to increase in the future. With growth rates of 200% and 91% respectively, postal items and groupage freight in particular will contribute to the higher volume of freight traffic.
Against this backdrop, the question of how the logistics industry can combine such growth with climate targets is becoming increasingly important. With a view to the future, it is therefore crucial to determine whether and how green logistics can be implemented in practice.
Most important logistics submarkets
As we explain in more detail below, “green logistics” is about holistic solutions. One challenge in this context is that the logistics business is by no means homogeneous, but is made up of various submarkets with different requirements.
According to the German Freight Forwarding and Logistics Association (DSLV), retail logistics accounts for the largest share of services, followed by automotive logistics, food and beverages and mechanical engineering. Temperature-controlled goods and pharmaceutical logistics, on the other hand, make up a much smaller proportion of the range of services offered by German logistics.
Vehicle stock in the German logistics sector
A key factor in the implementation of sustainable logistics solutions is the handling of vehicle fleets. The predicted increase in goods traffic on the road requires more vehicles to ensure transportation. This applies to both larger transports and last-mile deliveries.
According to figures from the Federal Motor Transport Authority (KBA), the number of trucks in Germany has been trending upwards for decades. As a result, the German truck population reached a new high in 2023 with a total of around 3.64 million registered trucks. This corresponds to an increase of 2.6 percent compared to 2022.
Against the backdrop of ever-increasing transport volumes, this development is without question understandable. However, the question remains as to how the growing number of vehicles and climate targets can be reconciled – especially with regard to the associatedCO2 emissions in the industry.
CO2 emissions of the German logistics sector
The transport sector is still one of the largestCO2 emitters in Germany. According to studies by the Federal Environment Agency, transport accounted for around 20 percent of total energy-related greenhouse gas emissions in 2022. Only the energy sector and industry caused more.
Trucks produce an average of 121 grams ofCO2 per tonne-kilometre in freight transport (values according to the Federal Environment Agency for 2022). Compared to private cars, this is less, as the average value in 2022 was 166 g/tkm. However, in order to classify thecarbon footprint of trucks within freight transport, it is necessary to look at other suitable means of transport:
- Freight trains produce an average of just 16 g/tkmof CO2, and only 15 g/tkm when powered by electric traction.
- Even inland waterway vessels with an average value of 35 g/tkmCO2 emit less than a third of the quantities produced by trucks.
In order to reduceCO2 emissions in road freight transport, the aim in future must be to find more sustainable solutions, especially for the use of trucks in the 3.5 to 12 t range. This is because the values here are considerably above average. At the same time, developments such as the continuing growth of online trade mean that there is an increased need in these classes in particular.
Example CEP industry
As in many industries, the developments of recent years are also making themselves felt in the courier, express and parcel services (CEP) sector in the form of some distortions in the growth lines. Specifically, this means that the coronavirus pandemic has led to significant growth, which is now gradually leveling off again.
Expressed in figures, the balance sheet of the Bundesverband Paket und Expresslogistik e. V. (BIEK) for 2022 looks like this:
- The volume of shipments fell by 7.9% in 2022 compared to the previous year – and thus for the first time since 2009.
- Nevertheless, a total of 4.15 billion parcel, express and courier consignments were delivered. On average, around 14 million consignments were delivered each day.
- This means that the shipment volume was still 14% above the pre-corona level.
The slump in the CEP sector is therefore noticeable on the one hand, but the drop is less pronounced due to the high growth rates during the coronavirus pandemic. In addition, the BIEK assumes that average annual shipment growth of 3.3% is possible. The volume of shipments would therefore increase to around 4.9 billion by 2027. The CEP sector is therefore representative of the challenges involved in achieving greater sustainability in logistics.
WHAT IS “GREEN LOGISTICS”?
In its study “Green logistics – a benefit for shippers and logistics service providers” , the Chamber of Industry and Commerce summarized the concept of “green logistics” as follows to make it clear that it is by no means a fad: “‘Green logistics’ rather stands for a sustainable concept for simultaneously overcoming several major challenges that are currently shaping the logistics industry.”
These challenges include, among others:
- greenhouse gas emissions and the share that freight transport and other logistics services have in total emissions. This is followed by questions on how these emissions can be reduced quickly in order to achieve national and international climate targets.
- The growth in freight traffic described above, because it means additional pressure to find a solution for lowerCO2 emissions– not least because lower mileage will not be part of this solution.
- Transport policy expectations that consider logistics and its efforts towards greater sustainability within the broader framework of an overall strategy.
For these reasons, “green logistics” should be understood as a comprehensive concept that does not focus solely on individual companies and their capabilities. Operational improvements in energy and resource consumption or environmental reporting are undoubtedly important building blocks for achieving the overall goal of sustainable logistics.
Ultimately, however, the point is that measures on a much larger scale are necessary to make logistics green for the future. Cross-company measures start with vehicle dimensions and vehicle volumes, for example, and extend to joint logistics systems and a joint location policy. There are therefore sufficient starting points to ensure greater sustainability in logistics.
In practice, however, implementation is still difficult. The IHK study in question and the associated practical guide, for example, date back to 2012, but the recommendations for action are still valid today – even if not in their entirety. As a result, there is still a lot of catching up to do in the logistics sector when it comes to sustainability.
OPPORTUNITIES & POTENTIALS FOR THE DESIGN OF GREEN LOGISTICS
Sustainability in logistics will become an even bigger issue in the future than it has been to date. The Supply Chain Act, which has been in force since 2023, stipulates, among other things, that companies must exercise greater environmental due diligence in their supply chains. This includes, not least, the recording or calculation of theCO2 footprint for companies with 250 or more employees.
Development of sustainable logistics products is progressing slowly
However, many logistics companies still have some catching up to do, and not only in this respect. According to the results of an online survey of 100 European companies conducted by the international consulting agency Simon-Kucher & Partners, 55% of respondents stated that they consider sustainability to be very important.
In the “Green Logistics” study, however, only a third (31 percent) stated that this point plays a role in the selection of logistics service providers. A similar picture emerges when it comes to the question of which measures logistics companies use to achieve climate neutrality:
- With a share of 28 percent, avoidingCO2 emissions is the most important measure for achieving the target.
- However, compensation measures (20 percent) or certificate trading (20 percent) are at a similar level.
An important reason for this reluctance is still the cost issue, as the changeover can be cost-intensive for the company. However, there is sufficient scope for optimization, as figures from the Gryn sustainability network show. According to this
- 50 percent of trucks within the EU drive half empty;
- a third of truck journeys are empty runs;
- 400,000 of the logistics companies registered in the EU own ten or fewer trucks.
One way to improve these figures and thus ensure greater efficiency is to better link manufacturers, suppliers, freight forwarders and service providers. But there is also untapped potential in other areas that could contribute to greater sustainability in the logistics sector.
Green logistics: Transport and vehicle fleet field of action
One obvious way to ensure more sustainable conditions in the company is to redesign the vehicle fleet. There are different approaches to this:
- The vehicle fleet can be retrofitted to EURO V or – if this measure is no longer economical – replaced by EURO V-compliant vehicles.
- The switch to alternative drive models is also conceivable, be it EEV vehicles or hybrid variants.
- Telematics systems can improve localization and thus the coordination of vehicles and routes. They are therefore a further means of increasing efficiency.
Although it is an important lever in terms ofCO2 savings, companies generally have less influence on the possibilities of changing modes of transport and switching to combined transport. This is because the infrastructural prerequisites must be created for this.
THE POTENTIAL OF ELECTRIC DRIVES IN LOGISTICS
According to the German Logistics Association (BVL), the switch to electromobility in logistics has great potential for reducing CO2 emissions:
- In the case of light commercial vehicles up to 7.5 tons, up to 90 percent fewer emissions are possible.
- For heavy trucks over 12 tons, the savings potential is still up to 74 percent.
In fact, the number of trucks with alternative drive systems in Germany has increased in recent years. This applies above all to electric drives, the number of which almost doubled between 2021 and 2023 – to almost 61,000 vehicles.
To this end, fleets in the CEP segment are becoming more sustainable: DPD, for example, plans to use 7,000 low-emission vehicles by 2025 and Deutsche Post / DHL wants to expand its e-fleet to 38,000 e-transporters and 14,000 e-trikes by 2025.
Green logistics: Real estate and site selection
There are some very basic options for integrating company locations into a sustainability strategy that are now more or less standard. These include, for example, the installation of PV systems on the roofs or similar measures that improve building efficiency.
However, one factor of great importance is the choice of location itself. This depends on many different considerations – the local real estate market, the existing transport infrastructure, the labor market in the region in question. Increasingly, route optimization is another aspect that is being added to the other reasons for choosing a new location.
This consideration becomes even more important when placed in a wider context – for example in connection with decentralized logistics structures. These are increasingly being used to make the last mile more efficient. So-called hub & spoke systems ideally reduce the number of direct delivery relationships required for a delivery.
Optimization on an even greater scale is possible if the potential of digital networking – across all suppliers – is better exploited. This involves end-to-end networking that enables complex processes in the supply chain to be controlled automatically. In addition to the necessary technology, this requires appropriate partner networks in which suppliers, logistics service providers and manufacturers can coordinate these processes.
THE POTENTIAL OF DECENTRALIZED LOGISTICS
According to BVL estimates, micro hubs in cities could reduceCO2 emissions by around 23 percent. For this to work, however, the right conditions must be created. This is generally the responsibility of the local authorities. After all, the necessary conditions for efficient micro hubs include
- Designated loading zones in cities can help to reduce stop-and-go traffic on the last mile – and thus also emissions.
- Urban logistics is dependent on sufficiently large and well-connected storage areas.
- Exemptions for new, low-emission delivery vehicles could contribute to more flexibility and thus more efficiency in deliveries.
CONCLUSION
There is widespread awareness of the need for greater sustainability in the logistics sector – and this also applies to the solutions. From converting the vehicle fleet to digitally networking all participants in the supply chain, most solutions are already available today.
Stricter legal requirements are also increasing the pressure to focus even more strongly on the issue of sustainability. This is not just about climate targets, but also about competitiveness. Greater transparency, for example in terms of environmental management and reporting, ultimately creates trust among partners – and thus ensures sustainable economic success with the help of “green logistics”.
However, implementation is not solely in the hands of companies. They need the right framework conditions in order to make the path to climate-neutral logistics quicker and easier.
Image sources:
Image 1: Adobe Stock © Yuri Bizgaimer
Image 2: Adobe Stock © a_medvedkov
Image 3: Adobe Stock © Siwakorn1933
Image 4: Adobe Stock © Jarama
