The Future of Sustainable Freight
From electric trucks to internodal alternatives, Ofload provides a comprehensive look on what the next few years hold in the world of green logistics - and how your business can prepare.
Table of Contents
Introduction
Note: Explanations of sustainability jargon can be found in our blog post: Your guide to sustainability jargon in freight and logistics | Ofload
For Australia to achieve our Paris goals and transition to a clean economy, it’s imperative to decarbonise our road freight industry. Currently, 4% of Australia’s emissions result from trucks alone. Furthermore, road freight is the primary CO2 emitter of global trade-related transport, according to the World Economic Forum, with an emissions share projected to grow from 53% to 56% by 2050. Transport is on track to become Australia’s largest emitter. This represents a significant opportunity to transform the road freight industry, which will soon be characterised by optimised logistics, electrification, hydrogen vehicles and more.
Transitioning to clean, diversified freight and logistics brings security - it’s strategic financially, good for the planet, and helps to reduce scope 3 emissions. There is great momentum behind this transition, both from private investment, the trucking industry, government support, and legislation. Decarbonising supply chains and logistics is especially valuable in light of upcoming carbon reporting requirements for scope 3 emissions, something which is increasingly being recognised and addressed by corporations such as Amazon and Unilever in their sustainability strategies.
Now is the time to look ahead, and at Ofload we’re committed to eliminating waste in transport. This report will cover the most promising freight solutions of the future, and how they’ll fit into the market, starting with our favourite piece of the puzzle: optimisation.
Optimisation
One of the most effective ways for shippers to reduce emissions in their supply chains is optimisation. Currently, the Australian carrier network is fragmented, evident in this graphic by the Australian Trucking Association and Electric Vehicle Council:
← see infographic
This disjointed system results in lots of “empty miles” (distance driven with no load on board), which are neither cost-effective nor environmentally conscious. Approximately one-third of trucks drive empty at any given time, contributing to inefficiency and waste. At Ofload, we're tackling this issue by leveraging our network of over 1,600 carriers to match loads with suitable trucks, reducing empty backhauls.
Flexible pickup windows further enhance our ability to minimize empty miles, optimizing supply chains and cutting both emissions and costs. This approach is not only commercially strategic but also essential for achieving net-zero emissions in freight. At Ofload, we’re committed to driving a more efficient and sustainable future.
Electrification
Battery Electric vehicles (BEVs) have seen rapid growth in recent years, and the trucking industry has begun to embrace the change, with BEV trucks (from light duty to prime movers) available in Australia from a number of manufacturers, including Volvo and Daimler. This uptake is integral to reaching net zero emissions, and will bring significant benefits to air quality, health, jobs, transport operating costs and decarbonisation. This section uses recent insights from a report by the Electric Vehicle Council and the Australian Trucking Association, who are calling for the last combustion engine trucks to be sold by 2040 in order to meet emissions targets.
The case for BEVs
Road freight accounts for around 4% of Australia’s emissions, and in light of government commitments and consumer expectations, EVs have become a crucial aspect of supply chain decarbonisation. Electrification of freight has economic, comfort, safety and fuel security benefits.
Australian trucks are, on average, around 10-15 years old (compared to European countries with trucks aged around 9 years). These older trucks are more inefficient, which means they use more fuel per km, polluting more and increasing fuel expenditure. Another problem with the industry at present is that fuel accounts for roughly 35% of long haul operating costs (and 20% of more short haul, last mile costs). The price of diesel is volatile, rising and falling with market cycles and global events. For smaller operators (who make up almost 98% of carriers), it’s difficult to pass on these increases to shippers. Electrification, however, removes some of this volatility. It’s also cheaper, as detailed below:
Operationally, there are clear economic benefits. With policy incentives in place as well as market growth, the initial cost of each truck would also fall dramatically, so that the total cost of ownership is at parity with internal combustion engine trucks. Even now, without incentives BEV’s are cost competitive given the assets are utilised effectively. BEVs are quickly becoming a competitive and cost-effective freight solution.
Driver comfort and safety are also key elements of this transition. Currently, drivers sit above hot, vibrating, noisy engines, and when they get out of their vehicle, they breathe in harmful exhaust fumes - more people die of air pollution than road accidents annually in Australia. However, feedback provided in 2021 by ANC drivers to SEA Electric detailed that “delivery teams [testing electric trucks] found the quieter cabin environment a fantastic change to their day” and that communication with customers before arriving at the delivery site was “much easier to do in the new, improved cabin space.” EVs are a well-deserved change for Aussie drivers. Not only are EVs more comfortable and healthy for drivers, they have the potential to be safer too. Government mandates for safer vehicles would see safety tech in wider freight vehicles, including devices for indirect vision, advanced emergency braking, lane departure warning systems, blind spot information systems, etc. The environmental and health benefits of electrification could save Australia an estimated $324.8b by 2050.
Until 1st of July 2024, Australia was only able to hold about 20 days of diesel stock (with ambitions to increase the minimum stockholding obligation to 32 days). We depend on 2 remaining oil refineries (as well as imported oil) to supply food, medicine and products to shelves, and this dependency makes us vulnerable to geopolitical tensions, climate change and global events such as Covid-19. Ensuring a secure freight industry is imperative for the future, and shifting to electric vehicles allows this security. For the first time since the uptake of combustions engines, Australia has the opportunity to transition to an energy which can be produced locally, moved easily, made renewably and cheaply.
Upgrading fuel-guzzling internal combustion engine trucks to healthy, economical EVs is strategic and aids in meeting environmental commitments.
What’s next for EVs?
EVs are good news for the road freight industry industry - so what’s next?
Road freight in capital cities and urban centres currently make up about 30-40% of Australia’s road freight industry, and these lighter, local fleets are the most immediate, promising opportunity for electrification. Whilst hydrogen fuel cells appear to be a promising option for longer haul freight, it’s unlikely to be competitive against BEVs for lighter freight needs, since charging them is more feasible around cities. Further, BEVs are already available, and often commercially viable especially for last-mile and shuttle-run applications.
Shippers and carriers are both interested in the BEV transition: emissions reduction opportunities, and the reduction in total cost of ownership, have both driven demand and found the industry open to BEVs. Unfortunately, there are some challenges which drive a reluctance in uptake. Lack of suitable charging infrastructure, upfront cost, and Australian Design Rules are responsible for limiting the models available in the Australian market; policy and investment are needed to increase market confidence and accelerate the EV transition. However, we are seeing progress in many of these areas.
Firstly, Australian Design Rules have long been inconsistent with international standards. They limited the mass and width of heavy vehicles, as well as steel axle mass and other factors. This was a key barrier, since the policy was out of step with major global markets like the EU and US. The NSW government recently announced a 2 year trial, which will allow zero emissions vehicles with up to 8 tonnes on a single steer axle and up to 18.5 tonnes on the drive axle, where the overall gross vehicle mass of the prime mover does not exceed 26 tonnes. Transport Victoria has also recently mapped a heavy vehicle road network across the state in order for Volvo’s electric semi’s with higher axle weights of 7.5t and a GCM of 44t to be able to travel on. Furthermore, the federal government recently updated the maximum truck width limit from 2.50 metres to 2.55 metres. These are both great steps forward, and allow the market to import international models without costly re-design, accelerating the transition.
The government has also introduced a new Australian Design Rule (80/04) based on Euro VI vehicle emissions standards. It directs that all newly approved heavy vehicle models supplied from 1 November 2024, and all existing models supplied from 1 November 2025, must follow Euro VI standards. This has industry-wide support; it reduces noxious emissions and incentivises investment in newer, cleaner truck models. However this regulation, and the technology it necessitates, does not improve fuel efficiency or reduce emissions.
Given the international push to reduce CO2 and harmful emissions, manufacturers are concurrently improving engine efficiency across various markets. As a result, Australia stands to benefit from access to more fuel-efficient engines. For instance, truck and bus manufacturers report that their latest Euro VI engines are up to 10 percent more fuel-efficient than previous Euro V models. Additionally, some pollutants, such as nitrous oxide, are not only harmful emissions but also more potent greenhouse gases than CO2. The adoption of Euro VI standards will therefore contribute to reducing these greenhouse gas emissions. With Australia recently passing fuel efficiency legislation that will take effect on January 1, 2025, the market is set to see an influx of more fuel-efficient vehicles.
Also necessary for BEV scale-up is infrastructure for charging; this ought to be widespread and frequent, in service stations across the country and within cities. One of the key barriers to uptake is limited frequency of charging stations: shippers and carriers can’t risk trucks running out of battery on the road. There are companies who are looking to take on this challenge, such as NewVolt, who aim to build megawatt (~15 minute) charging along major freight arteries. Government policy and investment in charging infrastructure is critical.
Financial support is also important. The trucking industry has tight profit margins, and a new truck is a big investment even if it’s run on diesel. The initial cost of EV trucks is higher, sometimes much higher, than their diesel counterparts. Purchase price incentives/subsidies could increase sales, driving supply and eventually lowering the price to be competitive with diesel trucks. These incentives could be gradually phased out as the market gets stronger, but at the moment would be useful to aid the transition.
It’s possible that in the future, BEV trucks won’t have a curfew. Truck curfews exist to limit operational hours, due to the noise of the trucks, especially in residential areas. Some organisations are calling for an exemption from this rule, arguing that since BEVs are quiet, they should be permitted to operate outside of normal hours; this would reduce peak hour congestion and improve efficiency. However, unlike ADRs, charging infrastructure and financial support, this is less integral to the scaling of EV trucks.
BEV uptake is stifled mostly by lack of education. It’s not as simple as purchasing an electric truck and sending it on it’s way, it requires thought through operational and commercial analysis and a solid understanding of market offerings to pick the right equipment for the right application.
BEVs are a fantastic, economic and sustainable development, which are sure to become the backbone of the freight industry in the near future, especially with the necessary policy.
Hydrogen
Australia is also looking to hydrogen as another alternative to reduce emissions in the transport sector. Hydrogen is considered an attractive proposition to reduce emissions for linehaul movements as they are able to travel further than many of the BEV’s that are currently in the Australian market and the refuelling process is much shorter than the current charging times for BEV’s.
Hydrogen is produced in a process called electrolysis, which uses energy to split water into hydrogen and oxygen. Trucks fill up with hydrogen, and their fuel cells add oxygen to reverse the chemical reaction. This creates energy which powers the vehicle, and leaves only water vapour as a waste product. There are other ways to fuel the truck, such as burning the hydrogen directly, or combining it with diesel, but the best and most efficient solution is a fuel cell EV.
The case for hydrogen
The case for hydrogen mirrors the case for electric vehicles in the shift away from diesel trucks toward cleaner alternatives. Hydrogen is energy-rich by weight, with 1 kilogram of hydrogen producing the equivalent energy of 3 kilograms of crude oil. Although hydrogen, being a gas, takes up more volume, it is often compressed and remains an effective energy source.
Hydrogen is also colorless, odorless, and non-toxic, and its only byproduct is water vapor, which contributes to improved air quality. Refueling a hydrogen fuel cell electric vehicle (HFCEV) currently takes about 20 minutes, making it relatively comparable to diesel refueling. The range of HFCEVs varies between 200 and 800 kilometers.
Importantly, hydrogen can be produced using 100% renewable energy. The Guarantee of Origin scheme verifies that the hydrogen is generated from renewables, ensuring it is emissions-free. The hydrogen industry is rapidly growing with support from multiple sectors, and hydrogen has the potential to decarbonize various industries, as highlighted in the chart from IRENA. Hydrogen trucking is just one aspect of a broader hydrogen-powered future.
What’s happening in the world of hydrogen?
The Australian Government is investing heavily in hydrogen as part of their “Future Made in Australia” plan, with over $8 billion being earmarked for various hydrogen initiatives and tax incentives as announced in the 2024 budget which ladders up to Australia’s 2030 stretch targets.
Hydrogen seems to have a place as an energy of the future. This is not unique to Australia; the Australian 2022 State of Hydrogen report examined the priorities of a range of countries who are investing significantly in hydrogen development. It found that heavy-duty vehicles are the only sector prioritised by all countries, which demonstrates the world-consensus around hydrogen being part of a solution for sustainable transport.
Though hydrogen does seem like a very attractive way to move Australia towards zero emissions freight, it does currently have it’s challenges which need to be overcome.
It currently takes around 3x the energy to produce hydrogen than it does to charge a BEV. This creates added strain on an already strained grid. Hydrogen fuel cell vehicles are also much less efficient and use more energy than BEV’s.
Hydrogen still suffers from the fact that a fuel needs to be transported or produced at a fixed point which makes it slower to get up and running. It’s also facing a bit of a “chicken and egg” scenario in Australia currently with some companies investing heavily in refuelling stations, but not having the offtake to support it.
With hydrogen refuelling at scale still being a few years off, it’s yet to be seen how successful it is destined to be. In the meantime, BEV’s are driving further distances and charging in much shorter times. If hydrogen isn’t able to scale up in the market in the short term, there is a chance that BEV technology will surpas it before it’s had a chance.
Fuel alternatives (Bio-fuels)
Regardless of how successful EV and hydrogen technologies are, the reality is that there are still going to be internal combustion engine (ICE) trucks on the roads well into 2050 considering the average age of a b double prime mover on Australia's roads is 15.2 years.
Alternative (drop-in) fuels are a way of decreasing emissions in ICE trucks. They’re produced using food waste products and vegetable oils, which are more renewable and less carbon intensive to use. The two main fuel types available are hydro-treated vegetable oil (HVO) and 100% biodiesel (B100).
The benefit of these fuels is that they make use of existing internal combustion engines, whilst still reducing emissions, rather than having to retrofit trucks with new batteries or fuel cells. Furthermore, development of biofuels is promising for other sectors such as aviation, which is hard to abate otherwise.
Fuel alternatives remain a transitional option, and aren’t feasible as a future freight solution. This is partially because the fuels still generate some emissions, but mostly because they’re not scalable. Powering our transport sector with soybeans or rapeseeds (for B100) would require an enormous amount of agriculture, and this would compete with valuable crop and grazing space. Meanwhile, HVO requires used cooking oil or industry waste, which is difficult to collect on a large enough scale for the freight industry.
Bio-fuels are not currently produced in Australia so the benefits are negated due to the increased emissions to bring them onshore. The price point is also ~2.5x higher than diesel, meaning the commercial viability is not there at the moment either.
Intermodal - Rail
Road freight is not the only option for supply chains; rail routes are a cost effective, reliable and low-emissions alternative for logistics in Australia. In light of this, the federal government is developing an Inland Rail route alongside a series of major, open-access intermodal precincts. The future of Australian freight will therefore include a significantly higher proportion of rail freight. Diversifying a supply chain with intermodal segments is often overlooked in favour of the door-to-door convenience of trucks, but remains a sensible and promising option for reliability and frequency, especially with intermodal precincts making the process of unloading cargo onto trucks for the last mile much easier.
Transporting freight with rail over long distances makes sense. The Australian Government’s National Intermodal site reports that for every tonne km of freight moved:
- Rail freight produces 16x less carbon emissions than road freight, valued at 1c per tonne km
- Road accident costs are 20x higher than rail. A single container of freight switched from road to rail, between Sydney and Melbourne, would reduce accident costs by around $109
- Rail freight generates 92% less PM10 than road freight, valued at 1c per tonne km. For every 1% of the national freight task that moves to rail, there are health benefits of around $72 million per year
National Intermodal is currently developing three major, open-access intermodal terminals in Sydney, Melbourne and Brisbane, complete with warehousing and supply chain management capabilities. These will be accessible to all accredited freight operators, and should result in fewer loading/unloading processes, lower risk of cargo loss, reduction in transportation costs, lower energy consumption and reduced worker injury. The terminals are to work alongside the Inland Rail project.
Reporting
Climate reporting rules have recently passed the senate, which means large companies will need to measure and report their climate related risks from the 1st of January 2025, with smaller companies reporting obligations phasing in over 2026 - 2027.
Businesses will have to disclose relevant information about climate-related risks and opportunities that could reasonably be expected to affect an entity’s prospects, including for their scope 3 emissions. This new reporting obligation solidifies the existing expectations of businesses to be transparent about their carbon emissions and strategies. Scope 3 emissions are difficult to measure, which makes them hard to report on and manage.
Ofload has developed a Carbon Emissions Platform which gives shippers visibility into their scope 3 emissions. Details about the tool are below.
Measuring and transparently reporting carbon emissions is a crucial part of the future of freight. Shippers can understand their impact, hold themselves accountable, and see firsthand the effects of their sustainable logistics decisions.
Key Takeaways (Our Outlook)
The transport industry in Australia needs to undergo transformational change for us to reach our net zero targets, but as we’ve outlined here, there is opportunity in innovation, and Ofload aims to be the best sparring partner we can be to help shoulder some of the risk and responsibilities around the uptake of these technologies. We are also focused on ensuring that we can support our carrier partners, primarily owner/operators in making the right decisions for their fleets and helping them assess the viability of investing in newer, and let’s face it, riskier technologies.
Ofload utilises trucks in our network in the most efficient way to reduce waste in capacity and empty km’s driven.
We are presenting scope 3 emissions in our Carbon Analytics Platform to our shippers to help build an understanding of the impact of their supply chains and help them prepare for mandatory emissions reporting, as well as take actions to reduce their emissions.
We have partnered with Hiringa and Countrywide to bring offtake and operational experience to support hydrogen networks along Australia’s main freight arteries to give hydrogen the best chance at becoming commercially viable for the long term.
Ofload is working with shippers and carriers to understand existing electrification opportunities in their networks with the technologies that are already on the market. There is a lot of last mile freight which is suitable for the BEV trucks that are already on the market.
We have always preferred intermodal as a transport solution wherever possible and will continue to do so.
Reducing waste and making the transport industry more sustainable is at the core of Ofload’s mission and we will continue to work to create as much impact for people and the planet as we can.
Insights from Nat Road Zero Emissions White Paper
- Decoupling growing emissions and growing economy → has been done with noxious emissions
- High productivity freight vehicles (HPFVs)
- Link between road user charges and road funding / zero emission vehicle fundingsome text
- Temporary and partial use of the funds for zero emissions incentives
- States ought to implement new ADR in a consistent manner, it’s unnecessarily complex at the moment
- We must upgrade road and bridge infrastructure so that (heavier) zero emissions vehicles can use those routes
- EV charging must be frequent, since this means batteries don’t need to be as heavy, which reduces upfront costs and also the risk of payload loss
- Hydrogen refuelling infrastructure provides investment certainty that hydrogen truck models should be sent to Australia
- Truck tolls ought to be reduced to 1.5x for HPFVs and abolished for zero emission vehicles (mmmm they are heavier though so they degrade the roads… but they pay road user charges… hmmm)
References:
Electric trucks: Keeping shelves stocked in a net zero world
Road Freight Zero: Pathways to faster adoption of zero-emission trucks
A technical summary of Euro 6/VI vehicle emission standards
Euro VI Standards for New Heavy Vehicles | One Planet network.
Sustainability Content - Ofload - Gaetan Review_Sept'23
JOINT STATEMENT THE TRANSITION TO ZERO-EMISSION ROAD FREIGHT TRANSPORT
Helene handover sustainability OCT2023
Carbon Offsets vs Carbon Insets: What’s the Difference? | Impactful Ninja.
SLAYFUL finance data on the transition Media Release: NatRoad calls for $3.5 billion investment in truck decarbonisation