Options for Competitive and Sustainable Logistics

Purpose - Logistics as a sector has a key role to play in reducing greenhouse gas emissions and in reducing the dependency of our economy on non-renewable energy sources. The challenges are enormous: by 2050 the sector needs to have achieved about 50% lower fossil fuel use and CO2 emissions. If freight volumes grow according to expectations, this requires over 70% less CO2 emissions per unit of transport. This chapter explores the options for reducing CO2 emissions from freight transport and their reduction potential, and analyses whether the logistic sector would be likely to achieve the required reduction based on its intrinsic drive for cost reduction alone. Methodology/approach — In this conceptual chapter we identify options for sustainable logistics and discuss the necessary economic conditions for their deployment using a simple cost/benefit analysis framework. CO2-reduction potentials of biofuels and other alternative, low CO2 energy carriers, it seems overall possible to reduce CO2 emissions per unit of transport by 70% or more allowing for a reduction of total CO2 emissions of freight transport in 2050 by 50% relative to the 1990 level. Sustainability will be crucial for the right-to-play of the logistical sector and improves the competitiveness of the companies on the long run. Companies can justify investments that on the short term lead to higher costs in case they anticipate for this situation. The logistics sector is strongly focussed on improving efficiency and reducing costs. As fuel costs are a significant part of many logistics operations, it could be argued that the logistics sector is already intrinsically striving for improved sustainability in the form of lower CO2 emissions resulting from lower fuel consumption. Nevertheless it is unlikely that the sector will achieve the necessary reduction by 2050 based on this intrinsic driver alone. As actors in the logistics sector strive for lowest cost it is likely that they will not implement the full reduction potential that is available at zero net costs. If the emission targets require reductions to a point where cost of operations is increased compared to the current situation, they will definitely not be taken up autonomously. Furthermore reduction options that have the potential to be cost effective may not be adopted because of high initial costs. Usually new technologies are expensive when first introduced, but become cheaper with increasing production volumes as a consequence of economies of scale and learning effects. Implementation of policy instruments may be necessary to shift the micro-economically optimal CO2 emission reduction to higher levels. The transition has to be made in a difficult economic and social situation which on the one hand complicates the process but on the other hand will stimulate creativity and will force us to let go of old paradigms. Changes will not only be driven by environmental concerns. Scarcity of food, energy and water may be expected to lead to drastic changes in transport flows and supply chains anyhow. The required response of the logistic sector to these challenges offers great opportunities to also improve the sustainabil-ity of the sector itself. © 2014 by Emerald Group Publishing Limited All rights