A systematic approach towards efficient logistics and green freight

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1 Martin Schmied, INFRAS AG A systematic approach towards efficient logistics and green freight Singapore, 26 th of June 2014

2 Agenda 1. Key elements of a green freight strategy 2. Exemplary options for greening freight transport 3. From options to a national action plan INFRAS Approach towards efficient logistics and green freight 26th of June 2014 Martin Schmied 2

3 Green logistic in Europe focus on GHG emissions and costs to identify win-win-situations Green Logistics Greenhous gas emissions Air pollutions Ecology Ressources Land consumption Noise Reduction of GHG emissions Reduction of fuels and energy consumption Reduction of costs = win-win-situation Economic Social INFRAS Approach towards efficient logistics and green freight 26th of June 2014 Martin Schmied 3

4 5-6% of the global direct greenhouse gas (GHG) emissions are caused by the logistic sector Focus of today Logistic is more than the freight transport a comprehensive green logistic strategy should be address all topics BUT: particularly road transport is the dominating source for GHG emissions of logistic sector (also important for air pollutants and noise) Source: World Economic Forum / Accenture, cited by McKinnon INFRAS Approach towards efficient logistics and green freight 26th of June 2014 Martin Schmied 4

5 Starting point for a green freight strategy in road transport: Calculation of GHG emissions Air pollutants (e.g. NOX, particulate matters) Greenhouse gas emissions (e.g. CO2) Noise land consumption GHG emission calculation and CO 2 emissions = Weight of shipment x Distance x Specific CO 2 emissions 5 tons x km x 100 g CO 2 / tkm potentials for GHG emission reductions INFRAS Approach towards efficient logistics and green freight 26th of June 2014 Martin Schmied 5

6 Possible options for greening the road freight transport: Overview CO 2 emissions = Weight of shipment x Distance x Specific CO 2 emissions AVOID Avoiding transport and reducing weight Reduce average haul distance Optimize vehicle utilisation: empty trips, load factor, size SHIFT Shift to other mode of transport IMPROVE FUEL Improve fuel efficiency of vehicles: Technology and operation Use alternative fuels and drive systems INFRAS Approach towards efficient logistics and green freight 26th of June 2014 Martin Schmied 6

7 Impact of empty trips, load factor and vehicles size on GHG emissions of trucks Δ+ 50% Δ+ 250% Δ+ 200% Source: Based on INFRAS Approach towards efficient logistics and green freight 26th of June 2014 Martin Schmied 7

8 Green logistic strategies have allwaysto be adopted to the local situation Comparison of Indian and European long-hail trucks: % ofco 2 emissions per tkm BUT the use of bigger trucks depends on road infrastructures, handling systems, commodity mix, structure of the logistic sector Source: based on McKinnon INFRAS Approach towards efficient logistics and green freight 26th of June 2014 Martin Schmied 8

9 Impact of modes of transport on GHG emissions of trucks Without black carbon Δ-50-70% Source: Based on INFRAS Approach towards efficient logistics and green freight 26th of June 2014 Martin Schmied 9

10 Impact of new vehicles and additional measures on GHG emissions of trucks In short-term additional measures like low rolling resistance tyres or eco-driving are very important In mid-term hybridisation will allow larger improvements Source: Based on INFRAS Approach towards efficient logistics and green freight 26th of June 2014 Martin Schmied 10

11 Impact of fuels used on GHG emissions of trucks Not sustainable: Indirect Land Use Change (ILUC)? Source: Based on EN INFRAS Approach towards efficient logistics and green freight 26th of June 2014 Martin Schmied 11

12 Key elements of a green freight strategy with focus on road transport GREEN FREIGHT (ROAD TRANSPORT) AVOID SHIFT IMPROVE FUEL Reducing freight volume and haul distance Shifting road transport to nonmotorised traffic Technologies for fuel efficient trucks Using alternative fuels and drive systems Avoiding empty trips Shifting road transport to rail Operational measures Improving fuel quality Increasing load factor Shifting road transport to ship Reduction of air pollutants/noise Appropriate vehicle sizes INFRAS Approach towards efficient logistics and green freight 26th of June 2014 Martin Schmied 12

13 Agenda 1. Key elements of a green freight strategy 2. Exemplary options for greening freight transport 3. From options to a national action plan INFRAS Approach towards efficient logistics and green freight 26th of June 2014 Martin Schmied 13

14 Avoiding road freight transport by logistic optimization: Examples AVOID Reducing freight volume and haul distance Avoiding empty trips Increasing load factor Appropriate vehicle sizes INFRAS Approach towards efficient logistics and green freight 26th of June 2014 Martin Schmied 14

15 Reducing freight volume and haul distance: Innovative city logistic concept AVOID Reducing freight volume and haul distance Pilot project in Nuremberg (Germany): Beverage logistics Today Avoiding empty trips 5 Shipper Direct supply: 5 x 8 = 40 relationships Increasing load factor Appropriate vehicle sizes Future Transshipment center 8 Customer 5 Shipper 8 Customer Bundling effect reduce vehicle kilometres travelled by 32%! Direct supply: 5 x 8 = 40 relationships Supply via x-dock: = 13 relationships INFRAS Approach towards efficient logistics and green freight 26th of June 2014 Martin Schmied 15

16 Avoiding empty trips: Internet-based freight exchanges AVOID Example of internet-based freight exchanges Reducing freight volume and haul distance Avoiding empty trips Increasing load factor Appropriate vehicle sizes Similar measure: Corporate alliances for general cargo INFRAS Approach towards efficient logistics and green freight 26th of June 2014 Martin Schmied 16

17 Increasing load factor: Improvements by cooperation of shippers and logistic companies AVOID Reducing freight volume and haul distance Avoiding empty trips Increasing load factor Appropriate vehicle sizes Example: IKEA tea lights Tea lights are packed in boxes (not any more loosely in a bag) Per palette 3,600 instead of 2,500 tea lights could be transported (increase: more than 40%) Worldwide the transport of 18,000 pallets and 800 TEUs (Twenty-foot Equivalent Unit) could be avoided that equates to a reductionof mileages by around 30% similar approaches are realised by other companies (e.g. BSH Bosch und Siemens Hausgeräte GmbH) INFRAS Approach towards efficient logistics and green freight 26th of June 2014 Martin Schmied 17

18 Shifting road freight transport to more environmental-friendly modes: Examples SHIFT Shifting road transport to nonmotorised traffic Shifting road transport to rail Shifting road transport to ship INFRAS Approach towards efficient logistics and green freight 26th of June 2014 Martin Schmied 18

19 Shifting road freight transport to rail: Need of new infrastructure (and funding) SHIFT Example Switzerland: Construction of new railway tunnels Shifting road transport to nonmotorised traffic Shifting road transport to rail Shifting road transport to ship Lötschberg tunnel: 35 km, opening 2007, 4bnEuro Gotthard tunnel: 57 km, opening 2017, 10 bneuro Funding by introduction of a heavy duty vehicle charge (based on popular vote) INFRAS Approach towards efficient logistics and green freight 26th of June 2014 Martin Schmied 19

20 Shifting road freight transport to rail: International harmonization needed SHIFT Shifting road transport to nonmotorised traffic Shifting road transport to rail Shifting road transport to ship Example: Electrification systems across Europe Example: Loading gauges in Europe Loss of time if systems change Need of special equipment (e.g. multi-current locomotives) International harmonization needed to speedup the cross-order traffic INFRAS Approach towards efficient logistics and green freight 26th of June 2014 Martin Schmied 20

21 Improving the fuel efficiency of trucks and reducing air pollutants and noise: Examples IMPROVE Technologies for fuel efficient vehicles Operational measures Reduction of air pollutants/noise INFRAS Approach towards efficient logistics and green freight 26th of June 2014 Martin Schmied 21

22 Options to improve the fuel consumption of vehicles: Improvements by different measures IMPROVE Technologies for fuel efficient vehicles Percent savings in trucks fuel use from several measures (European situations): Operational measures Reduction of air pollutants/noise INFRAS Approach towards efficient logistics and green freight 26th of June 2014 Martin Schmied 22

23 Options to improve the fuel consumption of vehicles: Improvmentsby technologies IMPROVE GHG reductions potential of all technologies for new vehicles Technologies for fuel efficient vehicles Operational measures Reduction of air pollutants/noise Source: ICCT INFRAS Approach towards efficient logistics and green freight 26th of June 2014 Martin Schmied 23

24 Using alternative fuels and drive systems: Examples Fuel Using alternative fuels and drive systems Improving fuel quality INFRAS Approach towards efficient logistics and green freight 26th of June 2014 Martin Schmied 24

25 Using alternative fuels and drive systems: Biofuels have high environmental impacts (1) Fuel Ecological assessment of 1 st generation biofuels: Using alternative fuels and drive systems Improving fuel quality Source: EMPA et al INFRAS Approach towards efficient logistics and green freight 26th of June 2014 Martin Schmied 25

26 Using alternative fuels and drive systems: Biofuels have high environmental impacts (2) Fuel Ecological assessment of 1 st generation biofuels (w/o iluc): Using alternative fuels and drive systems Improving fuel quality 1 st generation biofuels based on cultivated biomass have higher impacts on the environment than conventional fuels Source: EMPA et al INFRAS Approach towards efficient logistics and green freight 26th of June 2014 Martin Schmied 26

27 Options to improve the fuel consumption of trucks: Trucks with alternative drive systems Fuel Using alternative fuels and drive systems Examples of electric vehicles in the freight sector Hybrid truck: Battery electric vehicle: Improving fuel quality Trolley trucks: INFRAS Approach towards efficient logistics and green freight 26th of June 2014 Martin Schmied 27

28 Key elements of a green road freight strategy and the groups for the breakout sessions GREEN FREIGHT (ROAD TRANSPORT) AVOID SHIFT IMPROVE FUEL Reducing freight volume and haul distance GROP 1+2 Shifting road transport to nonmotorised traffic Technologies for fuel efficient trucks GROUP 4+5 Using alternative fuels and drive systems Avoiding empty trips Shifting road transport to rail GROUP 3 Operational measures Improving fuel quality Increasing load factor Shifting road transport to ship Reduction of air pollutants/noise Appropriate vehicle sizes Group 1+2: Logistics optimization Group 3: Modal shift rail Group 4+5: technologies +other measures to reduce fuel consumption of trucks INFRAS Approach towards efficient logistics and green freight 26th of June 2014 Martin Schmied 28

29 Agenda 1. Key elements of a green freight strategy 2. Exemplary options for greening freight transport 3. From options to a national action plan INFRAS Approach towards efficient logistics and green freight 26th of June 2014 Martin Schmied 29

30 Political measures and their impact in the freight transport sector Measures Key elements Outcome Market regulations and access Regulatory measures (e.g. bans or incentives) Economic measures (e.g. taxes, road charges) Financing of extension or new infrastructure Integrated land use and transport planning Subsidy programmes (e.g. R&D, pilot projects) Avoid (reduction of trips and distances) Shift (shifting to environmentalfriendly modes) Improve (improving energy efficiency/reducing pollutants) Fuel (introducing cleaner fuels) Reduction of - energy consumption - CO 2 and GHG emissions - air pollutants - noise Source: INFRAS. INFRAS Approach towards efficient logistics and green freight 26th of June 2014 Martin Schmied 30

31 Overview of different categories of political measures and examples from Europe Market access and regulations Access to railway network Homologation requirements (emission standards) Harmonised rules on vehicle dimensions Abolishment of cabotage Financing of extension or new infrastructure Extension of railway network (and waterways) Building of new terminals for intermodal traffic Extension of railway sidings Segregation of freight and passenger rail traffic Regulatory measures CO 2 targets for vehicle Weekend/night lorry ban Environmental zones Speed limits Obligatory in-job training (e.g. eco-driving) Advantages for user of low emission vehicles Integrated land use and transport planning Federal transport planning Strategic planning for freight distribution centres and intermodal terminals Alignment of roads Air pollution and noise protection plans Economic measures Fuel and vehicle taxes CO 2 taxes Road user charges or tolls (for roads or areas) Train path prices Public private partnership (PPP) Emission trading system Subsidy programmes Subsidies / low interest rate for advanced introduction of new emission standards or for purchase of new trucks Funding of alternative fuelled vehicles Subsidies schemes for scrapping old vehicles Source: INFRAS. INFRAS Approach towards efficient logistics and green freight 26th of June 2014 Martin Schmied 31

32 Effectiveness of measures depends on changes in the key parameters of freight transport Which kind of measure? Government/Cities Measures Which packages of measures are needed? In which Intenseness? Influence on freight transport Costs Time Reliability Flexibility Shipper Logistic provider Response of companies Avoid Shift Improve Fluel Source: INFRAS. INFRAS Approach towards efficient logistics and green freight 26th of June 2014 Martin Schmied 32

33 Truck operators should have an interest in reducing the fuel consumption of trucks Improving fuel efficiency will decrease cost appreciably INFRAS Approach towards efficient logistics and green freight 26th of June 2014 Martin Schmied 33

34 but knowledge is low and the financial risks are high for small and medium-sized companies Reasons of German companies for non-implementing of energy saving measures: Source: KfW INFRAS Approach towards efficient logistics and green freight 26th of June 2014 Martin Schmied 34

35 Green freight strategy for road transport: Conclusions The key elements of a green freight strategy are avoiding transport by logistic optimization, shifting transport to more environmental-friendly modes, improve fuel efficiency and reducing environmental impacts by using vehicle technologies and operational measures, using cleaner fuels. Logistic optimization and improving fuel efficiencies are options which have the potential to reduce environmental impacts and costs at the same time (win-win solutions). A comprehensive set of measures for green freight is available, but they must be localized to regions and nations based on analyses of barriers and bottlenecks; furthermore the measures must be combined in an optimal way ( packages ). Besides governmental measures actions form the logistic companies, shippers and logistic associations are needed to realize green logistic solutions. INFRAS Approach towards efficient logistics and green freight 26th of June 2014 Martin Schmied 35

36 Thank you for your attention Martin Schmied Head of Transport and Environment Division INFRAS Muehlemattstr. 45 CH-3007 Bern Switzerland Tel