The coronavirus-fuelled disruption of the last 12 months has understandably seen the logistics industry turn its focus to supply chain resilience. The environment nonetheless remains a huge issue for the sector. Both industry bodies and companies have ambitious goals to drastically cut their carbon footprints, which requires a number of smart solutions.
One individual with a vast array of knowledge in this area is Michael Nutto of the PTV Group, who has worked as Logistics Solution Manager and Senior Product Manager during his 12 years at the company.
The PTV Group’s services include a return on investment calculator for electric trucks, specialist route planners for fleets, and research in the area of smart city solutions.
Given that all three of these areas concern ways in which carbon footprints can be reduced, we hooked up with Michael to get his thoughts on how much of a positive impact various proposed solutions can have on the environment.
Hi Michael, thanks for speaking to us. First of all, electric vehicles are considered to be one way in which road transport companies can become greener. What should companies take into consideration when trying to work out the return on investment for the purchase of electric vehicles?
Well, we know the investment is quite high. Therefore, you have a lot of aspects to be considered.
One really important cost aspect is the transportation costs and part of that is the cost of road tolls. If you have an e-vehicle at the moment that’s a big advantage as they are toll free. That is a really important aspect to take into consideration.
The second one is when you’re really optimizing your transports and your fleet, then of course you have reduced costs of using e-vehicles, materials and so on. So, there’s a midterm or long term cost aspect which you can take into consideration.
What role will biogas have to play as road companies seek to reduce their CO₂ emissions?
There are some alternative fuels like biogas, which for me is a transition between standard fuel and electricity. There are a lot of political discussions right now about how long we would like to support that with regards to free tolls.
It is an interesting factor to consider when making investments. You really need to take care of what kind of sufficient energy consumption we have, and which kinds of alternative energy you can use besides electricity.
Electrical vehicles have a limited distance and a really high investment at the beginning, and it might be worth considering, especially when we’re talking about long distances or cross-regional transportation, that perhaps these CNG and LNG solutions might help.
On one hand, we need to reduce emissions because it is a real goal not only for politicians but also businesses. A lot of companies, like SAP for example, are dedicated to reducing CO₂. They want to be CO₂ neutral by 2025, and let’s say it’s those internal requirements and obligations they have made for themselves that’s driving things forward.
I think there are two aspects we have to mention here. One is that if we want to reduce emissions, we need to think about alternative energies. Natural gas alone is not the solution, because that has limited CO₂ reduction.
So you only really have these two choices; switching to natural gas or to electricity. The extent to which these are used will depend on company policy. Businesses will need to decide how dedicated they are to saving our environment and weigh that up against taking care of the commercial side of things.
If you choose to go down the biogas route, the ROI is typically between 2 and 3 years. The distance range of the trucks is around 400 km, which is perfect for line-haul. Fuel costs are between 10% and 20% lower too.
Of course, refueling is as fast as it is by standard fuel. An extension to the existing bio-gas station network is also ongoing in Europe. That means coverage will soon be sufficient even for long-distances.
In conclusion, biogas is a very interesting alternative and perfect for a mixed fleet. One more benefit is that the noise is lower than in comparison to Diesel trucks.
So is a mixed fleet the way to go?
I think a mix of fleet is the strategy that logistics companies have at the moment, depending on whether your business transports goods over long distances, or if you have line traffic.
For line traffic, electrical trucks could be the perfect way to start as you know your distances and charging stations. At the same time, we need to take care of this infrastructure. As we know, in Europe it is really poor at the moment when it comes to the amount of charging stations.
Line traffic I believe is a perfect start for electric vehicles. Then you can see how these electric trucks can be used in the fleet and how they can save costs from a long-term perspective.
Is the drive to electric and hydrogen-fuel cell trucks being held back by a lack of charging infrastructure then?
That’s the main reason why we do not have the success that many political authorities would like to have. It is also the reason why a lot of companies are very cautious about really changing their fleets in a disruptive manner.
As of 2019, only 25 truck charging stations were available in Germany with a power of 150 kW, which is the minimum capacity for e-trucks. To put things into context, we need 6,000 charging stations with a minimum of 500 kW across Europe. In addition to that, we need to make sure that these charging stations are standardised.
Where we do have success at the moment is in environments where you have well known and accessible charging stations. For line traffic, it could be very possible that we will see electric trucks being successfully integrated.
However, when it comes to long distances of over 250 kilometres, I do not believe we have success at the moment because of the poor coverage of charging stations.
And what about Hydrogen?
Yes, Hydrogen-fuel cell trucks need to be considered too. Having said that, we are generally at the prototype stage at the moment – a lot more research is still necessary in this area. Daimler, for instance, expects to start mass production in the second half of this decade.
There’s currently very poor coverage. Also, given the battery loading time, just imagine – hundreds of trucks at one station… well, you need a lot of patience – probably comparable to that required at the queues at the UK-border last December!
The performance of hydrogen cells will be better in comparison to batteries, probably the same level as fuel refueling. And there are different fuel cell types, so much is to be researched until we receive valid values.
Production on the electric trucks could start in 2024 (announced by Daimler Truck). MAN has already a small production for trucks and buses. The same for Scania.
How much of a benefit is an electric commercial vehicle when it is effectively being charged by a coal power plant?
That is a really good question to discuss. It’s certainly difficult for countries that are dependent on electricity generated by fossil fuels and don’t have the geographical features to produce green energy easily. I’m not sure If I can provide a definitive solution to this problem.
If we only talk about trucks, I believe that the proportion of impact they have on energy consumption as a whole is not huge. However, once we bring private cars into the equation, and we want to power these vehicles with green energy, then we have a big task on our hands to create the infrastructure required to guarantee that there’s no carbon energy used.
When it comes to answering this predicament though, I must say I’m not sure. There might be a solution to distribute green energy in Europe via an efficient energy network. But this can only be solved at a European level.
One concern regarding electric commercial vehicles is the construction and eventual dismantling of batteries. How can the environmental impact of these processes be minimised?
Yes, this has a high impact today and it’s clear that the industry needs to research solutions to resolve this issue.
The first thing to sort out would be the return management, that is the recycling of the batteries. If we want to see wide scale use of commercial electrical vehicles, then research must be conducted in this area.
Tesla is trying to have this kind of cycle so that the batteries will be reused as much as possible so that nothing is lost. That nonetheless remains unsolved. Daimler, Scania and MAN are currently working on some solutions too, and they have their own ideas, but the research is at a very early stage at the moment. Production on the electric trucks could start in 2024.
Batteries will therefore play a big factor in influencing the success of electric vehicles.
How much of an impact can better tyres and aerodynamics make?
Well, first of all, when it comes to cutting CO₂ emissions, i think the most important elements to resolve are the lack of charging stations and the battery issue we mentioned earlier.
Then we can look at the aerodynamics of the vehicle followed by the kind of tyres and other vehicle components. All of these things together can really reduce the electrical energy required, allowing for more capacity.
There’s some interesting findings on this from several providers responsible for the analysis of truck aerodynamics. It is believed that the drag coefficient value can be reduced from above 1 to just 0.3. This drag of course is significant as it has a really heavy impact on fuel consumption. Renault calculates a possible 13% reduction when aerodynamics are optimised.
In what way can a specialised route optimiser yield efficiency gains compared to the standard map tools and traffic information that can be accessed free of charge?
Well, we have customers who could confirm recorded distance savings of around 15% to 20% using our route planner. Depending on how much you will optimize beforehand, sometimes it may only be 5% or 10%.
If you have 20 vehicles and you can reduce the distance travelled by one or two of them, that has a huge impact – particularly when you can reduce distance by the 15%-20% I mentioned earlier.
Companies with a mixed fleet that do not have many electric vehicles need overall optimization, it’s really important when cutting carbon footprint to reduce and optimize your route beforehand.
Naturally, there are economical aspects to be considered too, so you optimize your process in order to support your dispatcher. That then allows them to really focus on their work; there’s no need to hang on the telephone or solve problems because everything’s optimized. You have your alert system, you have your planning scenario, you have your dispatching scenario. The drivers are on the road, you can track them and if there are some changes, you can really communicate easily.
Thanks to these developments in digitalization, as well as the IoT technology that’s being implemented at the moment, you have your goods, your vehicles and your drivers all in one system. Then your customers can be included in the supply chain, which is something that optimizes your whole process in your company. That clearly is saving time, money, and of course, helping to reduce your CO₂ emissions.
How can smart city concepts help logistics operators reduce their carbon footprint?
There are two smart city concepts which are especially interesting for me. The first one is that logistics companies cooperate with each other on the micro hub concept.
The idea is to have one or two micro hubs on the outskirts of a city. HGVs drive into the micro hub, where goods are loaded and unloaded. Then you have small vans and other electrical vehicles that will transport goods into and around the city.
That’s a really interesting concept and there are several new startups really working in this area. There are a variety of small e-vehicles and e-cargo bicycles being created, which means there are different transportation types that can be used.
So that’s the first concept, but its success depends on the cooperation between logistics companies.
The second important point for me is the logistics concept that involves all the stores and retailers working together using one app. They can then have a contractual relationship with the micro hubs that covers delivery windows and where goods and packages are brought to stores. That would mean that stores would just have one time window during which they would receive everything they need for the whole day.
This is not currently the case today – retailers really have to consume their time loading and unloading on several occasions. This could be solved by a smart application and logistics optimization along with a contractual relationship.
You’d have all the digital information available in one place with one provider responsible for distributing everything into the city.
On top of that, we’re talking about how buses and trams can transport goods, we’re talking about robotics or automated small boxes or carriages able to unload and bring goods directly to the people.
At this point we are starting to have this multi-modal concept in which all these new transportation modes are included.
You’ve just mentioned cooperation. Data sharing is often cited as one way that the logistics industry can cut its carbon footprint. However, some companies naturally have a competitive advantage when it comes to data, and are not necessarily keen to participate in reciprocal data sharing. How can businesses such as this be convinced to cooperate?
I think that’s the biggest hurdle or obstacle at the moment when we talk about smart logistics being successful.
You need this cooperation; without that, you have to push. That is what the startups are doing at the moment; startups have a contractual relationship with bricks and mortar stores. They are going from store to store and from owner to owner and defining a contractual relation with each of them. Then they can go to the logistics company and say, “Hey, I have my contract now, that is now your delivery address.”
This is really time consuming though, and it’s not a method whereby you can be really successful fast. For me, the key to smart logistics being successful is these logistics companies cooperating together. Although at the moment it is difficult, they’re really beginning to think about it.
I hope that the topic of digital transformation that’s grown since pandemic will convince some companies that there are benefits of cooperating with a competitor.
This reminds me of an interesting case in which two retailers who were competitors. Both parties had to really change their systems because they were transporting goods in a traditional way. By cooperating, they were able to put the whole fleet together including the drivers, because there was a problem with the drivers as well. Thanks to a shared e-commerce system, they were able to work together throughout the pandemic. That for me is a good example.
Perhaps now is a time in which logistics companies are thinking that there might be an impact from outside – something that could really completely change their business models. Therefore, it may be that they can all derive a big benefit if they share the data and have systems supporting one another.
There are nonetheless steep hurdles to this happening at the moment. We will see after the pandemic if there is a process that sees companies talk to each other. I know that they’re working together on some research and staff projects. But it’s always on a research project. As soon as we get into questions like how can we go into production, or can we do something in an economical way, then everybody is shying away from cooperation. That has to be changed, otherwise smart logistics will be difficult to realize.