Irish Haulage Strategy Webinar - 16th June 2021 Kühne Logistics University Hamburg

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Irish Haulage Strategy Webinar - 16th June 2021 Kühne Logistics University Hamburg
Improving the Economic Efficiency and Environmental Sustainability of Road Haulage

                             Professor Alan McKinnon

                           Kühne Logistics University
                                  Hamburg

                          Irish Haulage Strategy Webinar
                                 16th June 2021
Irish Haulage Strategy Webinar - 16th June 2021 Kühne Logistics University Hamburg
Road Haulage Sector: defining characteristics

     low barriers to entry           few economies of scale            highly fragmented        intensely competitive

treated as commodity service             low margin        high level of subcontracting    under-utilisation of capacity

          operational inefficiencies largely the result from need to meet clients’ logistics requirements

                  prioritising commercial performance / survival over environmental sustainability

                             Survey of 800 small and medium-sized European road carriers
priority to be given to decarbonisation in road freight sector         Importance of fuel efficiency in long term strategy

                                                                                                            https://bit.ly/35p4d8A

                                  % of carriers                                            % of carriers

                                   business opportunity in improving sustainability?
    very large 5%            large 11%                moderate 32%               small 32%                 none 19%
Irish Haulage Strategy Webinar - 16th June 2021 Kühne Logistics University Hamburg
Decarbonising Road Freight Transport by 2050
                       Leveraging key freight parameters to achieve a 90% reduction in CO2 emissions
                Scenario 1                               80%
                                                         70%
                                                                                        Scenario 1         Scenario 2
    transfer 30% of road tonne-kms to rail               60%
                                                                                                                                       heavier reliance
                                                         50%
80% reduction in carbon intensity of rail freight                                                                                      on switch to low
                                                         40%                                                                            carbon energy
                                                         30%
                        +                                20%
25% improvement in efficiency of truck routeing          10%
                        +                                 0%
    30% increase in loading of laden trucks
                        +
   30% reduction in empty running of trucks
                        +                                                                                                      EU road tkm reference scenario
                                                                                                                 BAU trend (with constant carbon intensity)
    50% increase in truck energy efficiency                                                                            160
                                                                                       2035 peak     143
                                                                                                                 151

                         +                                            2025 peak
                                                                                  126
                                                                                             134

                                                                         117
 60% drop in carbon content of truck energy                     109
                                                         100                      97                  95

                                                                                             77
                                                                                                                                  28% more accumulated
  90% reduction in carbon intensity                                                                   57         56
                                                                                                                                  CO2 emissions by 2050
                                                                                                                 36

 At 2017 rate of truck replacement in EU:                                                                                16

13 – 14 years to replace the fleet once mass             2015   2020     2025   2030        2035     2040       2045    2050
       production and uptake begins                                     BAU       2035 peak          2025 peak
Irish Haulage Strategy Webinar - 16th June 2021 Kühne Logistics University Hamburg
managerial / operational / behavioural (MOB) options                                                          UK road freight trends in key parameters
                                                                                                                                             weight-based load factor on laden trips
•   faster to implement                                                   need changes in business                         65%
•   yield economic + environmental benefit                             practice, operating procedures ,                                                       artics
                                                                                                                           60%
•   low capital investment                                                 skill levels and mindset                                                                             all HGVs
                                                                                                                           55%
                                                                                                                                                             rigids

            Possible Contribution of MOB Options to Road Freight Decarbonisation                                           50%

                                                                                                  reference scenario       45%

                                                                         improve loading                                   40%
                                        reduce road freight activity
                                                                                                     energy efficiency             average fuel efficiency of road freight operations

                                                                                                    switch to biofuels                 3.8
                                                                                                                                       3.6
                                                                                                                                                                       rigids
                                                                                                            electrify                  3.4
                                                                                                                                       3.2

                                                                                                                            km/litre
                                                                                                                                       3.0
                                    42% contribution of logistics to fuel savings                                                                           artics
                                                                                              modern truck scenario                    2.8
                                                                                                                                       2.6
        IEA (2017)                                                                                                                     2.4
                                                                                                                                       2.2
    https://bit.ly/2IQJ5jE                                                                                                             2.0
                                                                             Mt CO2 saved by 2040

                                                             0         100            200            300                                                 % of empty running
                                                                                                                            34%
                              supply chain collaboration                                                                    32%                                                    rigids
                                                                                                                                                                        all HGVs
                                      modal shift to rail                                                                   30%

                                                                                                                            28%
                                                                                                                                                                                   artics
                               optimised fleet / routing                                                                    26%
                                                                                             demand management
                                    fuel efficient driving                                                                  24%
        ETC (2019)
                                                                                            can cut CO2 emissions by
                                                                                                                            22%
     https://bit.ly/3jcc1is      modal shift to shipping                                    28% in heavy-road sector
                                                                                                                            20%
                                                                                                     by 2050
Irish Haulage Strategy Webinar - 16th June 2021 Kühne Logistics University Hamburg
Constraints on the Utilisation of Vehicle Capacity

                                                                 retrospective analysis of potential for backloading
many factors constraining vehicle utilisation

                                                               9000 journeys by 29 lorry
                                                                  fleets over 48 hours

                                                                 Source: McKinnon and Ge, 2005
                                                                         https://bit.ly/3xwlqsV
Irish Haulage Strategy Webinar - 16th June 2021 Kühne Logistics University Hamburg
Optimising the Utilisation of Vehicle Capacity

                                                                                                                                   typical density (tonnes / cubic metre)
                                                                                                         9
     % empty running                  loaded trips                                                       8
                                                                                                                                          decline in average density of freight
                                                                                                         7
                                                                                                         6
                                                                                                         5
                                                                                                         4
                                                                                                                           optimum density to
                                                                                                         3                  fill 40 tonne truck
                                                                                                         2
                                                                                                         1
average payload weight             % space utilisation             % weight utilisation                  0

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            2-dimensional view                       3-dimensional view
             floor-area coverage                          cube utilisation                                                                                                                   vehicles ‘weighing out’
                                                                                                                   vehicles ‘cubing out’
                                                                                                                  space is the constraint                                                  weight limit is the constraint
                                     data availability
     high                                                                      zero       Impact of handling equipment, packaging and product design
      Macro-level Truck Utilisation Statistics: available data in EU
                                                                                                                                                                                                              right-sizing
                                                                                                                                                                                                              packaging

https://bit.ly/3vpWDoV
Irish Haulage Strategy Webinar - 16th June 2021 Kühne Logistics University Hamburg
Supply Chain Collaboration
                  Deep decarbonisation of road freight transport will need much greater sharing of vehicle capacity
           Nestle – Pepsico Horizontal Collaboration in Benelux                                 The Physical Internet
                                                                                        applying networking of principles of the
                                                                                       internet to physical movement of freight

                                                                                         Open, collaborative network with full
                                                                                        visibility and incentivized asset sharing
                                                                                       ‘Physical encapulation ’ of goods in a new
                                                                                         generation of modularised containers’
1. Separate delivery operations            2. Groupage by Logistics Provider

                                                                               Kg
                                                                               CO2 /
                                                                               tonne
                                           1. Separate delivery                43.8
                                           2. Groupage                         27.3
                                           3. Collaborative synchronisation    20.3

                                                    EU project:                22

 3. Collaborative synchronisation         Source: Jacobs et al 2014
                                                                                                                   https://bit.ly/2TzTJ04
Irish Haulage Strategy Webinar - 16th June 2021 Kühne Logistics University Hamburg
High Capacity Transport: relaxing truck size and weight constraints
increases inHigh
              truck size and
                 Capacity     /or weight
                          Transport         limits
                                    in Europe 2019 since 2013                                                                                  UK longer semi-trailer trial
                           Norway                  Sweden                    Finland
                    25.25 metre 60 tonnes   25.25 metre 74 tonnes      34.5 metre 76 tonnes

                            Denmark:
                        25.25m 60 tonnes

            Netherlands:
          25.25m 60 tonne
                                                                           Germany:
            UK:                                                     25.25 metre 40/44 tonnes
                                                                                               Load consolidation cuts truck-kms, fuel use,      up to 15% more pallets
trial of 1-2 m longer trailers
 Extensive use of double-                                                                       emissions, accidents and labour demands
      deck trailers                                                                                                                                   2013-2018
       Flanders
    HCT pilot project                                                                            Net CO2 savings even after allowance          37K tonnes of CO2e saved
            Spain                                                                               made for modal shift and induced traffic           https://bit.ly/37R9UyK
     25.25 metre 60 tonnes

      Gaining extra capacity vertically: UK double-deck trailer – major contributor to UK road freight efficiency and decarbonisation
                                                                                                                                   Double-decking within 4 m height limit:
       5m                                                                                                                                  EWOS (Netherlands)
                           UK ‘custom and practice’ 4.9m

                          Ireland     4.65m
                          Finland 4.4m
                          Slovenia 4.2m
       4m                 EU limit

            Source: ITF (2015)                                                                             Case study
                                                                           https://bit.ly/3cO7GSl 48% reduction in CO2 emissions
Irish Haulage Strategy Webinar - 16th June 2021 Kühne Logistics University Hamburg
Impact of digitalisation on the efficiency and sustainability of road haulage

                                                       Online freight procurement and optimisation            Smart road infrastructure
                                                       Upgrading of web platforms and software tools
     % rating the impact of digitalisation on
     logistics as ‘high or transformational’
                   in past 5 years   in next 5 years
total sample            22%                74%
                                                                                                           Intelligent connected vehicles
Industry leaders        25%               85%                    Internet of things
Logistics providers     38%                86%          Consignment-level visibility and connectivity
Shippers                9%                64%

    survey of 92 logistics executives

                                                                    Data pooling                        Advances in vehicle routeing / scheduling
                                                         cloud computing, software-as-a-service             Big data, predictive analytics etc

                                                          Supply chain applications of Blockchain

            https://bit.ly/3e5cYIY
Irish Haulage Strategy Webinar - 16th June 2021 Kühne Logistics University Hamburg
Should We Reverse the Just-in-Time Trend?                                           CO2 and process time in a supply chain

                  Some   suppliers
                      Some  suppliershave      adaptedbetter
                                        have adapted      better  than
                                                               than    others
                                                                    others to to
                  the disciplines
                      the disciplinesofofjust-in-time   delivery
                                           just-in-time delivery

                                                                                   CO2 emissions
                                                                                                                time

 Relaxing of JIT - an effective means of cutting carbon emissions?

Relaxing JIT:
• more time to consolidate loads and find backhauls                                        Time compression of non-transport activities
• easier for rail and water to compete for freight

But:
• JIT is business paradigm that minimizes waste
• contributes to energy / CO2 savings in production + warehousing
                                                                                                                                          https://bit.ly/35qx2Bt
Improving Energy Efficiency in the Road Freight Transport Sector

      vehicle technology: new build + retrofits                                       Truck platooning

                                                                                      Truck automation
            Improve vehicle maintenance

           driver training and monitoring                                         change operating practices:
                                                                          e.g. reduce maximum speed or rescheduling
                                            telematic
                                            monitoring

eco-driver training

    upgrade fuel efficiency of ancillary equipment

 e.g. more efficient transport refrigeration units,
 better   insulation,     improved     operational
 procedures, alternative refrigerants
Effects of traffic congestion on truck fuel efficiency and benefits of rescheduling deliveries to off-peak periods

     average fuel consumption (l/100km)                  Effects of Varying Start Times for Deliveries across the UK Trunk Road Network
               40 tonne lorry
90
      Source: VDA (Germany)
80
70
60
50
40
30
20
10
 0
         no stop     1 stop per km   2 stops per km

                                                                                                       Source: Palmer and Piecyk, 2010
                                                                                                                   https://bit.ly/3cL5lYh
                                20-75% CO2
                                reductions in                    constraints: sychronisation of production and logistics
                                 urban areas
                                                                               noise disturbance
                                Source: Sanchez-
                                Diaz et al 2017                                misalignment of stakeholder objectives
                                https://bit.ly/3gsLe3m
Increasing awareness and understanding of efficiency / sustainability interventions

                                                               https://bit.ly/35p4d8A

      https://bit.ly/2TDZWeY
https://bit.ly/2TDZWeY
Professor Alan McKinnon

Kühne Logistics University – the KLU
Wissenschaftliche Hochschule für Logistik und Unternehmensführung
Grosser Grasbrook 17
20457 Hamburg

tel.: +49 40 328707-271
fax: +49 40 328707-109

e-mail: Alan.McKinnon@the-klu.org
website: www.the-klu.org
         www.alanmckinnon.co.uk

    @alancmckinnon

                                             https://bit.ly/34hp5Pl
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