How to lift energy productivity in Freight Transport

A Roadmap to double energy productivity in Freight Transport by 2030” is now released for comment, and yours will be most welcome.

Urgent action is needed to generate more economic value from the energy used to move freight in Australia, as congested cities increasingly constrain productivity across the economy. Decisions made today can lock-in energy-intensive freight transport activities for decades.

Published by the Australian Alliance for Energy Productivity using extensive consultation with leading transport businesses, industry associations and government stakeholders, the roadmap aims to agree actions and priorities for both industry and government under the National Energy Productivity Plan (NEPP).

Transport is now Australia’s largest energy user, and with the freight task to grow 25% over the next decade, it will have ever-greater influence on congestion, climate change, air pollution and economic productivity across all sectors. The transport sector has some of the most cost-effective opportunities for energy and emissions savings, yet as the NEPP 2016 annual report notes, raising energy productivity in freight and commercial transport relies largely on voluntary action, and little progress is being made.

The Roadmap considers trends that will shape future energy use in the sector, including increasing urbanisation, a shift to renewable energy, vehicle electrification, connectivity and intelligent transport systems, automation and business model transformation. It gauges the extent of improvements possible via known technologies; it highlights the uncertainty expected from various levels of disruption that is coming; and it identifies measures to help the transition to a much more energy-productive freight sector.

Key suggestions will be incorporated into its final version, so please check it out and contribute your ideas.

 

How will Blockchain Disrupt Freight Transport?

Blockchain technology could slash the cost of transactions and reshape the economy.

Blockchain technology will soon facilitate and track financial payments, cross-border trade and freight flows. A peer-to-peer digital network, blockchain is an open-source distributed ledger that records transactions between two parties efficiently and in a verifiable, secure and permanent way, while also enabling ‘smart contracts’ that trigger transactions automatically.

Logistics companies are already using blockchain for commercial settlements of bills of lading and customs; to pay for international cargo fees with Bitcoin crypto-currency; to decentralise the tracking of shipping containers; and to record a globally accessible provenance trail for diamonds that has enormous applications for quality assurance in retail, agriculture and pharmaceuticals supply chains.

The impact of blockchain on freight transport will go hand-in-hand with the rise of autonomous and connected vehicles and other exponential technologies. Envision a world where self-driving vehicles, with routing and pricing software tuned to minimise energy use, are guided to the quickest route by real-time traffic updates and to the next customer by real-time requests, with blockchain eliminating the middleman to match freight with vehicles, charge transaction fees and set terms and conditions in a smart contract that sends payment to a supplier as soon as sensors confirm a shipment is delivered. No drivers, back office staff or banks required. Tolls, parking, energy and maintenance automatically transacted. Logistics companies face the prospect of competing with anonymous fleets of privately-owned vehicles optimised for quick, low cost delivery services.

Is this a realistic vision of blockchain’s impact on freight transport? What other possibilities are emerging? And how soon must we be ready for blockchain integration to our business models?

Are you ready for Intelligent Transport Systems?

Melbourne’s ITS World Congress 2016 was a mind-blowing experience for someone getting up-to-speed with the latest in a fast-changing field.

With 12,000 delegates from 73 countries, this annual event tracks the rapid progression in Intelligent Transport Systems (ITS), where leading players show how new transport technologies are disrupting business models across the globe.

No longer science fiction or 5-10 years away, ITS is already here, and not just in big cities like London, Singapore and San Francisco. Smaller places like Milwaukee, Ohio and Estonia are showing that Intelligent Transport Systems can be applied anywhere for those willing to collaborate and share value in new ways.

Visions of Transport’s Future:

ITS offers a vision of seamless transport of people and goods by connecting all elements of multimodal transport – passengers, freight, vehicles, information and communications technologies and infrastructures – in a digitally integrated system.

The National Transport Commission believes five disruptive technologies will change transport systems over the next 25 years:

  • Automation
  • Connectivity
  • Big Data analytics
  • The sharing economy
  • Zero emission vehicles

They see fleets of driverless vehicles providing on-demand shared passenger and freight transport services with a dramatic reduction in private vehicle ownership and the number of vehicles on our roads. Government reliance on fossil-fuel-based revenues to fund transport infrastructure is in jeopardy from relentless fuel-efficiency gains even before electrified vehicles (EVs) emerge, inevitably needing ‘user pays’ road pricing based on when, where and how people use roads.

Then there’s Gartner’s three key emerging digital technology trends for the next 5-10 years:

  • Transparently immersive experiences, such as brain-computer interfaces, augmented and virtual reality;
  • Perceptual smart machines, where radical computational power enables machine learning, artificial intelligence, autonomous vehicles/drones and smart robots;
  • The platform revolution, allowing organisations to connect with new business eco-systems that exploit internal and external algorithms to generate value, including quantum computing, Blockchain and Internet of Things (IoT) platforms.

Add to this picture a series of global Megatrends: urbanisation; online retail with free, fast shipping globally; decarbonisation and green finance; mobile connectedness; and social media, to name a few, and you get an explosion of new business models enabled by technology and collaboration that change the very nature of how people and freight move today.

What will this mean for Freight?

How will freight movement be transformed, and how will transport operators need to change their traditional thinking? Some opportunities include:

Smart GIS:           Geographic Information System (GIS) mapping provides content and context about everything, where everything that moves or changes is measured and reported real-time to networks in geospatial frameworks. Advanced space/time analytics enable Big Data visualisation for supply chain design using simulations, enabling new types of collaboration across networks of individuals and organisations using shared-information services. Daimler, BMW and Audi now jointly own the HERE map technology business whose map data is used by four out of every five cars in world today.  Daimler has made it an open platform to encourage innovation to optimise use of infrastructure, with interesting possibilities for its truck brands.

Automated & connected vehicles:            Supervised autonomous driver assistance systems; truck platooning; restricted-access route choice systems using infrastructure sensors to manage and monitor compliance; Truck drivers become Operators that are advised what to do, where to go and how fast to drive by voice-guided navigation and live sight augmented reality, which may help attract drivers to the industry. That’s if the vehicle isn’t driverless, as many road, rail, water, air, port, terminal and warehouse vehicles and equipment will be, always in the most fuel-efficient driving mode. Uber Freight’s self-driving truck acquisition, Otto, recently partnered with Volvo to complete its first shipment of Budweiser beer.

Freight matching:             Uber has released its freight platform that matches trucks with the right load wherever they are, aiming ultimately for a self-driving freight system. Both uShip and Australia’s yojee run online freight marketplaces, while Convoy has contracted 10,000+ regular scheduled shipments per year for Unilever in addition to on-demand deliveries.

Urban freight:    Better use of infrastructure capacity will take serious private-public collaboration. Technology helps negate barriers: EVs are quiet and safe to help extend off-peak deliveries; vehicle routing systems provide real-time congestion and cargo updates to combine with loading dock/zone scheduling to optimise flows; consolidating loads via matchmaker systems maximises equipment utilisation for fewer empty or under-utilised trips; and what about last-mile deliveries with e-trikes or robots?

Container optimisation platforms:            Melbourne start-up Opturion routes containers between wharf, container yards and transport yards using multi-source data sets to maximise efficiency within vehicle, cargo, site and route constraints.

Clean energy:  Rapid advancements in light and heavy electric truck technology combined with battery energy storage and renewable power present a ‘chicken & egg’ dilemma for developing charging infrastructure networks. Nikola isn’t waiting for public investment in refuelling networks for its zero-emissions heavy duty hydrogen electric truck, planning instead to build a network of hydrogen refuelling stations fed by its own solar farms that produce hydrogen from water using electrolysis.

Insurance:           Revolutionised to reduce costs, both through significantly safer vehicle operation and Telematics providing location, time and driver behaviour data to enable precise estimation of underwriting risk for lower insurance costs;

Then there’s some that don’t fit simple categories: Hyperloop One/DP World high-speed electric container transit system (possibly underwater); Blockchain crypto-technology to track financial payments, cross-border trade and freight flows; and the physical internet intended to replace current logistics models entirely with an open system routing freight using the principles of the Digital Internet.

Together, these technology-enabled business model advances offer greater asset utilisation, cheaper freight movement and happier, better-served customers.

Technologies need Collaboration

The key lesson for me is these technologies rely on collaboration to design, develop and apply into the community. Sharing knowledge and proprietary data via open access platforms is fundamental to a term used widely at the ITS World Congress – Collaborative-ITS.

Freight transport is a fragmented, diverse sector, with four modes of road, rail, sea and air transport connecting networks of transport yards, sea ports, airports, intermodal terminals, warehouses and customer distribution systems. Austroads found generating interest from industry for its urban freight improvement project very challenging, because individual freight operators believe there’s little they can do to make a difference, while for their customers freight is only a small business cost.

Yet there’s plenty of examples around the world that may inspire action here.

  • Singapore is leading the way with Big Data networks. To optimise every mile of road on their small heavily populated island, the Land Transport Authority has smart sensors installed everywhere to collect transactional real-time movement information which is shared at a rate of 400 million downloads per month. They aim to enable mobility on demand services via driverless vehicles, sharing and electrification services while doubling its rail network to reduce reliance on privately-owned vehicles. What impact on collaborative freight management will this open source information sharing platform have?
  • With no room to expand, Hamburg Port optimises its infrastructure by connecting IoT sensors to collect and share data with all port stakeholders via mobile devices. Real-time delay updates prevent more widespread disruption within and outside the port. Smart sensors communicate truck parking availability; connect multimodal interfaces between ship, road, rail and movable bridges; and connect truck drivers to traffic lights to prioritise cargo movements.
  • The US state of Iowa’s Department of Transport conducted a supply chain design model for all products moving in the State at a zip code level using bill of lading data in a massive public and private sector data gathering and analysis exercise. Finding a clear need to better consolidate freight, with a private partner it’s developing the Cedar Rapids Logistics Park with intermodal cross-dock rail/river/highway access which will return a benefit of US$26.53 for every dollar invested.

Disruptors are coming from outside the transport industry, blindsiding traditional players. Partnerships with and between outsiders such as Google, UBER and Tesla abound, moving smart/shared concepts forward using technology. Amazon is building its own logistics business, buying branded truck trailers, leasing freight aircraft and building warehouses (opening 23 globally in Q3 2016 alone) to “control its own destiny” as well as serve other retailers and consumers. Even within the traditional players, disruption is underway. Deutsche Post DHL now makes its own electric vehicles enabled by open automotive standards, bypassing auto-makers to deal directly with their suppliers to build new tailor-made delivery EVs that they may even sell to other logistics providers.

Freight’s intelligent future

Future freight transport is automated, connected, shared, safe and clean. It’s all about data. Epic advances in volume and speed to generate, process and store data will fundamentally change goods movement.

Data overload and digital fatigue already hold back many from embracing new analytical capabilities that can create value for customers. Yet it’s riskier to do nothing or use Digital simply to protect existing business models.

We can continue to work around inefficiencies we see in the freight transport system every day, or join with progressive people to embrace an ITS future. To solve systemic challenges, we can do more together than we can alone.

 

#cleantransport

What does a COP21 goal of net zero emissions mean for Freight Transport?

Business leaders are calling for a goal of net zero emissions to be set at the UN Climate Change Conference COP21 in Paris this week. With 7% of global emissions coming from international freight transport, and growth in globalisation expected to increase such emissions nearly fourfold by 2050, the response from the logistics industry will be fundamental to meeting that goal. Yet for Freight Transport to achieve zero carbon, a key constraint is having good information all supply chain players can trust.

The Volkswagen saga shows how gaps in emission measurement standards or their application can shatter our faith in claims regarding emissions or fuel performance. Transport operators make a variety of statements about their environmental credentials, but how can freight buyers compare options with confidence?

A new non-profit, the Smart Freight Centre, is leading a collaboration of the world’s biggest shippers and transport companies to create a transparent, universal method of calculating logistics emissions along supply chains so people can make better decisions on how to move freight in the greenest way.

Data Drives Emissions Down

Transporters act in various ways to reduce energy use and emissions intensity across all logistics sectors to save money, reduce risk and meet growing customer demands for green transport services.

Good information is crucial for transporters to understand the real costs and benefits of potential emissions savings opportunities. It can be difficult to isolate gains produced by a single initiative given the amount of variables that affect fuel economy. Uncertainty about the environmental performance of alternative fuels and engine technologies is compounded by the lack of reliable case study information on their effectiveness for each transport mode. The integrity of external information sources relies on what exactly was measured, how and by who, and how the data applies to a specific task, the equipment configurations and local conditions.

In response, a growing number of collaborative groups are assessing technologies and practices that enable low carbon transport and share information on what works and what doesn’t.

Measuring the Whole Supply Chain

At a broader level we must consider a supply chain’s end-to-end profile. Measuring emissions from a train, truck, plane or ship is one thing, but allocating shares of those emissions to each freight item carried gets complicated across all legs of multi-modal freight movements criss-crossing the globe.

Online retail is creating exponential growth in single-item deliveries direct to homes and workplaces from worldwide sources. Growing consumer demand takes priority over the efficiencies of traditional logistics models, where bulk shipments via distribution centres to retail stores provide economies of scale for more energy- and emissions-efficient freight. Light commercial vans are the fastest growing traffic category in many countries, yet vans are second only to aircraft in energy consumed per tonne kilometre and generate over four times more CO2 per tonne-km than the average 44 tonne truck. This restructuring of supply chains affects the environmental footprint differently across geographies and logistics sectors.

Increasingly, freight buyers need to better understand the sources of logistics emissions along their supply chains, where freight can account for 25% or more of a product’s lifecycle emissions.

One Common Standard

The Smart Freight Centre hosts a collaboration of business and associated stakeholders creating a global framework for logistics emissions accounting. In 2014 they established the Global Logistics Emissions Council (GLEC) to develop a universal and transparent way of calculating logistics emissions across global multi-modal supply chains so that shippers and logistics providers can include carbon footprints in business decisions, alongside costs, time and reliability when selecting modes, routes and carriers.

GLEC will harmonise existing methods and address gaps to devise an assurance standard in freight logistics emissions that enables more accurate and reliable benchmarking and realistic emission reduction strategies. Its’ framework builds on:

To better understand how it will operate for both shippers and logistics service providers in real world supply chains, a series of case studies is underway to gauge the practical availability of data and how it can be used to optimise low carbon freight movements. By simplifying a complex business with a common standard everyone can use to compare green logistics options, people can confidently use good information to reduce both environmental impact and cost.

Towards Zero Carbon Transport

Achieving net zero transport emissions requires using less fuel in tonne-kilometre terms (a key energy productivity metric) and using the cleanest fuels that suit particular freight tasks. The unavoidable residual emissions can then be neutralised by purchasing carbon offsets based on precise and trustworthy emissions measurement.

As global freight emissions rise, a harmonised method for emissions accounting becomes increasingly necessary. Supply chain players large and small must have good emissions information to maintain competitiveness and prepare for the complexity of a carbon-constrained world.

Consultation workshops in the USA, Latin America, Europe and Asia are inviting public comment on the GLEC Framework, so download it to learn more. If you think about how this tool can improve your freight decision-making, you can help develop a logistics emissions methodology that assists Freight Transport to realise the net zero emissions goal.

Manufacturers Target Supply Chain Emissions

As leading corporations respond to increasing customer, investor and community pressures to reduce environmental impacts, it is becoming clear that the biggest impacts occur outside their control but within their influence along the value chain. For some sectors such as retail and food manufacturing, latest estimates put their supply chain emissions at 50% to 90% of their total carbon footprint, and transport often accounts for the largest share.

Food Supply Chains Go Sustainable

After first reducing environmental impacts within its operations, leading brewer Anheuser-Busch InBev now recognises there are bigger challenges across their supply chain, where a large part of their impacts occur. Despite having less control over outsourced logistics processes, ABInBev has taken great strides by:

  • Developing emission measurement systems within a global framework
  • Understanding their network baseline emissions profile and setting reduction targets
  • Collaborating with partners to find innovations including fleet sharing with Walmart and Unilever, and working with industry programs such as Lean & Green in Europe

Food manufacturer Mars recognises that the supply chain represents their largest impact on people and the planet. As the infographic shows, transport makes up a full 25% of lifecycle emissions, with the most controllable activities on-site making up only 14% of all emissions in the Mars value chain.

Nestle meanwhile takes a full product lifecycle approach from farm to customer to certify emission reductions along their value chain, while SABMIller, ABInBev’s global rival and owners of Fosters and CUB brands in Australia, works with suppliers to build a detailed picture of supply chain emissions so that substantial reductions can be found.

Economic Growth = More Transport Emissions

No one has yet worked out how to de-couple economic growth and transport’s environmental impact. Simply put, the more freight you move, the more fuel you burn. Linehaul trucking is particularly energy and carbon intensive. While freight customers are beginning to set targets to reduce fuel use and carbon emissions from their outsourced transport, residual emissions will continue to be generated for the foreseeable future.

With Freight Transport accounting for 5.5% of global greenhouse gas emissions and growing it makes sense that progressive transporters are responding to an emerging market niche that seeks carbon offsets for transport emissions. Developing in parallel with ongoing cost pressure on Australian supply chains, large freight forwarders like DHL, UPS and Agility now offer carbon offsetting options as a premium service for their customers.

Offsets Create Shared Value

Enabling customers to offset 100% of the CO2 generated in their freight task creates shared value for customers, transporters and the communities we serve. By balancing freight emissions with investments in emission reduction projects, we can create a self-sustaining investment model that produces environmental improvements with social and economic returns.

Some fear that Offsetting may reduce the impetus to keep lowering emissions. Mars, for instance, uses no carbon offsets at all. Yet until de-coupling technologies and practices are realised, carbon offsetting may be an effective interim measure allowing manufacturers, retailers and other freight transport customers to demonstrate environmental and social responsibility to their local communities, and gain economic benefits from consumer and investor demand for low carbon goods and services. 

Offsetting freight emissions can help companies take big strides to meet their environmental targets across the whole supply chain.