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Opportunities for the transportation and logistics industry

The transportation and logistics industries can help support sustainable energy by taking five priority actions.

Overview

The Sustainable Energy for All initiative was launched by the United Nations Secretary-General Ban Ki-moon to mobilize action and partnerships focused on sustainably meeting the increasing energy requirements of businesses and society. The initiative has set three primary objectives, to be met by 2030: ensuring universal access to modern energy services; doubling the global rate of improvement in energy efficiency; and doubling the share of renewable energy in the global energy mix.

This report looks at the transportation and logistics industry and identifies four priority actions it can take to reduce its energy use and drive renewable energy generation, while simultaneously driving high performance.

Background

The transportation sector, including passenger transport, accounts for roughly 30 percent of global energy consumption. According to the Energy Information Administration, truck and rail transport accounted for 27 percent of global transport energy use in 2006. About 90 percent of that energy was used by road transport, which is far more energy-intensive than rail. Marine transport is the most energy-efficient mode of transportation and accounts for nine percent of all global transport energy use.

According to The World Economic Forum, logistics and transportation services are responsible for 5.5 percent of all global greenhouse gas emissions, which is a direct result of the industry’s energy consumption. Estimates suggest that it is commercially viable to reduce current emissions from the transportation and logistics industry by about half. About 60 percent of those benefits would come from the sector’s own emissions. The remaining percentage would come from the broader supply chains of other industries.

The International Energy Agency predicts energy use from trucking will increase by 50 percent by the year 2050 from a baseline scenario; the vast majority of growth is expected to occur in developing countries. Because rail freight is so much more energy-efficient than road freight, it is worth increasing efforts around the world to foster a modal shift.

Analysis

Looking through the lens of business value from sustainable energy, the transportation and logistics industry is well positioned to contribute to Sustainable Energy for All. At the heart of most companies’ supply chains, the industry has already been identified as an area to reduce costs and manage risk. Initiatives include increasing the energy efficiency of operations, increasing the use of renewable energy and alternative fuels, and improving the design and capacity of vehicles, aircrafts and vessels through partnerships with manufacturers.

These actions can directly improve profitability through lower fuel costs, higher utilization rates, and faster service for the industry and its customers. Improvements in energy efficiency, especially if they decrease overall reliance on fossil fuels—given the volatility of prices—can also mitigate risks related to supply chain disruptions.

While engine-efficiency technology continues to improve, the growth of the transportation and logistics industry threatens to undermine progress in reducing total energy consumption. For this reason, strategic investments in rail infrastructure and intermodal facilities are required to facilitate a switch from highly energy-intensive modes of transport, such as truck and air, to the more efficient options of rail or ship. Since modal speed improvements tend to be marginal, it is at the intermodal or trans-modal facilities that most of the time and cost benefits are achieved.

Recommendations

The transportation and logistics industry can take four priority actions to become more energy efficient and to advance its business opportunities in the sustainable energy market:

  • Improve operations of vehicles, vessels or aircrafts to maximize the energy efficiency of transport.

  • Upgrade fleet to enable use of alternative, less carbon-intensive fuels and drive the use of renewables.

  • Improve the intermodal and trans-modal transfer systems to increase energy efficiency.

  • Partner with manufacturers to improve the design and energy performance of vehicles, vessels, and aircraft.

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