It goes without saying that if logistics professionals are to be successful, they must organise their complex activities efficiently and sustainably. The transportation and logistics sector has been one of the main drivers of globalisation in recent decades, delivering all kinds of goods from one corner of the globe to the other, and the resulting CO2 emissions have an impact that potentially surpasses that of many industries in our modern economic system, especially when it comes to the transportation of goods in medium and heavy-duty trucks. According to a recent report by McKinsey & Co., road freight accounts for 53 per cent of CO2 emissions from global trade-related transport, and this share is expected to rise to 56 per cent by 2050 if current trends continue. According to Statista, the share of road transport in total inland freight transport in the EU-28 reached an estimated 76.5 per cent in 2018.
Large multinational corporations in the logistics and transport sector have double the pressure. On the one hand, supply chains are unpredictable, and this has been made worse by the Covid-19 pandemic and recent geopolitical tensions like the war in Ukraine. On the other, new regulations are pushing them to reduce carbon and other pollutant emissions from their activities. In addition, consumers are placing increasing importance on environmental considerations, alongside cost and customer service, when making their product choices.
At Iveco Group, we are keenly aware of this, given the dual role we play as enablers of the logistics industry through our vehicles and as major players in the same industry due to the large number of finished products and spare parts that we have to move around the globe. Conscious of our role, we are targeting Net Zero Carbon emissions by 2040, and have signed The Climate Pledge, a commitment towards the same goal co-founded by Amazon and Global Optimism. This ambitious target includes our own operations, those of our entire value chain, including our partners, and our end products and services.
Achieving long-term sustainable logistics
The strategies being deployed to achieve the goal of sustainable logistics vary in nature and scope. The transition to more efficient and environmentally-friendly vehicles is, of course, the most straightforward measure. While cars, buses and light commercial vehicles have achieved more in this respect than medium and heavy-duty trucks, manufacturers like IVECO are making significant efforts, with the production of more sustainable LNG, CNG and electric vehicles, as well as exploring the opportunities for hydrogen.
Long-term sustainability in logistics can also be achieved by adopting more efficient corporate strategies, including internal processes – the so-called 4R strategy: reduce, recycle, reuse and recover – and outbound activities. Within Iveco Group’s Operations, we are simultaneously developing an integrated approach to supply-chain optimisation and redesigning purchasing processes, so we can reduce waste and redundancies. We are also investing in spare parts logistics engineering, upgrading our depot automation, and introducing new sustainable packaging. Our products and spare parts are heavy and require robust boxes and containers. At first, we experimented with wood and reinforced cardboard, but now we are using recycled and recyclable metal or recycled and recyclable plastic.
We are also adopting intermodal transport, mixing on-road travel with ship and train travel within Europe. Not only does this increase the sustainability of our operations, but it also reduces lead times by 9% and improves tracking by 10%.
Finally, the digital revolution is a strong driver for reducing the impact of the transport and logistics sector. Digitalisation can help transform control systems and simplify processes, and it is an essential tool for designing innovative strategies that help protect the environment. One of the most notable examples is how data collection and analysis can help measure and monitor the impact of a company’s transport operations. The insight gained from these measures is instrumental in improving vehicle efficiency. Innovative strategies using digital tools are also enabling the optimisation of a sustainable manufacturing supply chain. Within Iveco Group, the use of track and trace platforms allows us to share data that can be used to help discover new measures for increasing sustainability.
Delivering a sustainable tomorrow
What are the most advanced ways for the logistics industry to reduce its carbon footprint? Continued research and development into next-generation alternative fuel engines, running on CNG, LNG and potentially compatible with biomethane, is necessary. We have been pushing the use of LNG and CNG in trucks for several years now, and are forming partnerships with various companies to unlock the potential of e-mobility for commercial vehicles. Our engineers are working to increase the autonomy of our trucks to create more sustainable transport solutions. It will be imperative to focus on natural gas engine technologies capable of achieving ultra-low NOX emissions in urban applications. It will also be important to offer alternative driveline technologies – such as electric and hybrid – to help drastically reduce emissions from single vehicles. Finally, governments and regulatory institutions will have to play their part by incentivising companies to “go green”, helping them to minimise any short-term losses and invest in these new capabilities.
Companies that choose to pursue this path will face initial upfront costs, as this process involves deploying resources at all company levels, so public subsidies are needed to foster change. In the long term, such actions will not only help maintain the well-being of the planet but will also allow companies to minimise expenses and manage risk by anticipating new more stringent regulations, as well as the demands of their customers and consumers.
The Covid-19 pandemic has put logistics in the media spotlight. The disruption of supply chains caused by lockdowns highlighted how the logistics industry is fundamental, both in terms of serving companies and consumers, and for the development of our global economy. It is therefore essential that all stakeholders continue to increase their commitment to the sustainability of the sector. By doing so, we will be able to deliver a brighter tomorrow.
By Annalisa Stupenengo, Chief Operations Officer, Iveco Group