The Green Impact on Logistics and Transportation

A report by the International Renewable Energy Association (“IRENA”) states that Asia could have as many as 67.9 million EVs on the road by year 2025, accounting for approximately 20 per cent of passenger automobiles in Asia.

While factors such as high purchase and ownership costs and insufficient charging infrastructure have led to a slow uptake of EVs in Asia, the governments of Asian countries like Singapore, Malaysia, Indonesia and the Philippines still emphasise the importance of EV adoption in both the public and the private transport sectors.

Singapore’s Land Transport Authority (“LTA”), for instance, started trials of 60 eBuses in 2019, and the HDT Singapore taxi fleet now has over 100 EVs by Chinese firm BYD — a number expected to reach 800 in two years from now.

In Indonesia, President Joko Widodo has approved the use of fiscal incentives to encourage EV sales and boost the domestic EV industry in order to reduce the country’s dependence on fossil fuel imports and tap into its nickel reserves, which are needed to make lithium-ion batteries for EVs.

In Indonesia and Vietnam, electric two-wheelers are gaining popularity. ASEAN is the world’s biggest motorcycle market, and with experts predicting that it will continue to grow, government incentives for two-wheeled EVs can become a reality, making scaling back fuel subsidies and local manufacturing much easier.

Leading the pack in Asia’s land transportation industry appears to be China— China is the region’s largest EV battery manufacturing hub, as well as a key supplier for the Southeast Asian market.

While it might be challenging for private vehicle owners to switch to EVs, commercial fleet owners have been progressing steadily with EV adoption. Their ability to develop their own charging infrastructure, and high-intensity operations (using vehicles like trucks) that make their ownership costs more economically viable have made them largely responsible for the rise in EVs on the road in Singapore.

Air transportation

Air transportation has taken advantage of major technological advances to increase energy efficiency in recent years, though more frequent air travels and air freights have somewhat dampened these improvements. Therefore,  air transport remains a key source of CO₂ emissions for major logistics services providers who have been trying to combat the issue with better capacity utilisation, optimised network structures, and increased use of modern aircrafts.

One of the main obstacles, however, is the long lifecycle of aircrafts, which often exceeds 30 years and can be even longer in freight, making fleet turnover a very lengthy process. While open rotor technology might  provide a solution for upcoming aircraft generations, open rotors remain a contentious topic due to their higher noise level, longer travel time, compatibility issues with current aviation infrastructure, and higher maintenance cost.

Other initiatives include developing cost-effective, low-carbon solutions by optimising activities along its transport modes, and deploying technologies that include modernised air fleets.

When it comes to commercial airlines, low-cost carriers tend to use newer, more fuel-efficient aircrafts that are typically fully booked, resulting in lower CO₂ emissions per passenger per kilometre when compared to non-budget airlines.

Still, their total emissions remain high, especially in Asia, which happens to be the travel industry’s fastest-growing market. China has plans for another 216 airports by 2035, while India intends to build 100 new airports in the next five years. In Singapore and South Korea, airports are constantly being upgraded and expanded to accommodate the ever-growing number of travellers.

While electric aircrafts may be a viable alternative for short-haul flights, they require heavy batteries that make them ill-suited for long-haul flights, making overall reduction in CO₂ emissions for commercial flights a greater challenge.

Sea Transportation

The sea transportation sector is also under pressure to go green, with the IMO (“International Maritime Organisation”) 2020 initiative being implemented since the beginning of 2020. Under this initiative, the IMO ruled that the  marine sector emissions in international waters be reduced— this new regulation aims to achieve the greatest reduction in the sulphur content of transportation fuel at one go, calling for sulphur emissions to be lowered by over 80 per cent.

Considering the marine sector’s daily consumption of 3.8 million barrels of fuel oil in 2017, it accounts for 50 per cent of international fuel oil demand, exposing the sector to significant disruption of compliant fuel pricing and availability in the face of the new IMO regulations.

To lower the emissions of sulphur oxides and nitrogen oxides, scrubbers or exhaust gas cleaning systems (“EGCS”) are used to treat exhaust from ship engines and boilers, ensuring no chemical damage to human life or the environment.

Furthermore, technological innovation in the form of AI, robotics and IoT have made it easier to facilitate autonomy in shipping, making driverless vessels a reality. The IMO defines driverless vessels or autonomous or unmanned ships as MASS (“Maritime Autonomous Surface Ships”), and has strict standards for their development, focusing on cost-effectiveness, eco-friendliness, logistical optimisation, improved productivity, and enhanced safety and security.

To this end, several autonomous ship projects launched over the last decade, with the electrification of propulsion systems, made it possible to shrink crew sizes.

Embracing the new economy

With the growing pressure to meet ecological standards while maintaining cost-effectiveness may be daunting, especially to SMEs, it is not all doom and gloom for the future of your business. Taking advantage of the ability to embrace new technologies that can enable your business to fulfil the aforementioned criteria will give you the edge you need to thrive in this new economy.

RSM's vertical industry knowledge puts it in good stead to empathise with business owners’ challenges and work with business owners to brainstorm and evaluate possible solutions that can put your mind at ease.