Written by Victor Chartier
Ariadne's Thread, a mythic lifeline in the labyrinth, can symbolize the way to resilient and decarbonized EU logistics sector.
Amid the ongoing conflicts, recent events have once again negatively impacted the logistics sector, especially in the red sea. While we have previously explored the Sales-Procurement dynamic for regaining control, logistics operators must extend efforts beyond customer relationships. Proactiveness is crucial in navigating environmental regulations, climate change impacts, and the broader challenges to sustain operations.
In the realm of decarbonization, the logistics sector, responsible for 10-12% of EU emissions, faces urgency under new EU regulations.
Road freight contributing 6% of EU GHG emissions (around 248 MtCO₂e in 2021), although it accounts for only 2% of vehicles, is targeted with ambitious emission reduction goals: -45% emissions (compared to 2019 level) by 2030 and by -90% by 2040. To support the market toward a successful transition, the EU is implementing Incentives when adopting low or zero emissions vehicles, GHG emissions and fuel consumption simulation tool and penalties for non-compliance. Finally, a worldwide driver shortage is hitting the sector, currently lacking more than 200k drivers, number that can grow up to 700k by 2028.
Sea freight, contributing 3-4% of EU GHG emissions (124 MtCO₂e in 2021), sees on the one hand, the IMO introducing the CII Rating, triggering the vessels technologies, and on the other hand, EU initiatives extending ETS coverage for 55% of all vessels thus covering 90% of the sector’s emissions and aiming at an 80% emissions reduction (compared to 2020 level) by 2050. Geopolitical instability adds an extra layer of constraint.
The race will be tough to remain the front runner, strategic decisions become paramount as we already foresee:
Equipment shortages Demand for new truck technologies, coming from all operators while manufacturers compete for resources other industries, is leading the market to inevitable rising cost and delivery lead-times. The sea freight sector already sees vessels taken back to Asia where regulations are less restrictive.
Labor shortages While a similar trend is starting in rail freight, little room is left to attract non-European drivers as the crisis is worldwide.
As a result of the above 3 points, the operators will naturally tend to optimize their network leading to regional market imbalances.
What Ariadne’s thread can lead to operation resilience and meaningful and impactful transformations?
Structured data for impactful actions Building structured data analysis supports informed decisions. Standard methodologies such as carbon accounting methodologies as a first step, or Life Cycle Assessments, to go deeper, will provide insightful and visual results for effective planning and prioritization.
Diversified and region-specific approaches for resilient services Acknowledging technology limitations in addressing the coming challenges, diversified and region-specific approaches are crucial to ensure operations resilience. Clean technologies alone will not be sufficient, necessitating sober approaches – wanted or forced – and to not underestimate the power of rail freight.
Collaborative Investments In a collective effort to address shared challenges, investing in long-term relationships and mutual knowledge-sharing is a low-investment approach for impactful transformation across the sector.
Time to get started!
Embarking on the journey toward resilient and decarbonized EU logistics operations begins with the crucial first step: knowing where you stand and where you go.
Quantifying initial conditions and constraints aids in crafting a practical strategy that aligns with the sector's current and future challenges, despite potential stakeholder readiness or reluctance issues. Consider investing in external support, like sustainability consultants, as it can prove instrumental in triggering overlooked questions, paving the way for breakthrough transformations.
Do you want to know more? Don't hesitate to reach out to our expert Victor Chartier!