As the effects of climate change continue to worsen, governments around the world are taking a harder line against carbon emissions. A case in point would be the Carbon Border Adjustment Mechanism (CBAM), the EU’s latest tariff on carbon-intensive products that aims to incentivize exporting countries to step up their decarbonization efforts.
The expectation of rising emission costs as a result of expanding emissions regulations means that a company’s competitiveness will hinge on its readiness to stay ahead of environmental, social, and governance (ESG) regulations.
Within Southeast Asia, transport emissions are a significant contributor to the region’s carbon footprint, accounting for 40 percent of global greenhouse gas emissions. In the urban last-mile delivery space, emissions are projected to increase by over 30 percent by 2030 in major cities globally if no action is taken.
In response to rising consumer demand for eco-friendly services, companies across Southeast Asia are stepping up to take the first step towards greenifying their operations. Electric vehicles (EVs) stand out for how they produce zero emissions, helping to reduce both air pollution and greenhouse gas emissions in an industry reliant on vehicle-based cargo transport.
That said, industry-wide efforts remain scattered and limited. With transport emissions being a key contributor to the logistics sector’s carbon footprint, transitioning to electric fleets can be a significant driver for meaningful environmental progress. However, adoption remains slow, with many companies reluctant to make the switch to EVs due to a variety of reasons, from high upfront costs to infrastructural challenges.
With the hesitance in the adoption of EVs already posing a challenge in the industry, is the switch to EVs enough for a more sustainable future in logistics, and what other measures can logistics companies explore in order to ensure a more sustainable future?
Challenges of adopting EVs to meet operational needs
One of the foremost barriers to EV adoption is cost – replacing a fully functional fleet of vehicles may not be the most profitable short-term decision. The initial upfront costs for commercial EVs are also often substantially higher compared to conventional diesel vans and trucks. Moreover, establishing charging infrastructure can be expensive, especially for companies with large fleets. The problem becomes more acute in markets where EV charging infrastructure and accompanying regulations remain nascent.
While EV technology is rapidly improving, current battery limitations translate to a shorter driving range compared to traditional vans and trucks, which can be problematic for both long-haul and last-mile logistics. Even for shorter distances, drivers who are uncertain of their vehicles’ range tend to make fewer trips and take more breaks to ensure smooth vehicle operations. This in turn increases the number of trips each driver has to make, creating inefficiencies.
That said, the transition to EVs comes with long-term environmental benefits and potential cost savings that are hard to ignore. In order to strike a balance between profits, efficiency, and achieving sustainability goals, it is vital for logistics companies to have in place a realistic strategy for adoption.
Benefits and Infrastructure available to support the switch
Despite the various challenges to EV adoption, there have been moves by governments and private companies to establish the necessary infrastructure required for widespread adoption.
Within Southeast Asia, the Thai, Indonesian, and Vietnamese governments have been prioritizing local EV production to bring upfront costs down. Singapore, on the other hand, continues to be a trailblazer in terms of regulation, leading the charge in introducing the Carbon Pricing Act and developing infrastructure to support EV adoption, including those used by logistics companies. In fact, the city-state intends to establish 60,000 EV charging points by 2030 in public car parks and private premises and has in place a slew of financial incentives to further encourage commercial EV adoption.
For companies in the logistics and transportation space, this means that concerns over the availability of charging points can abate over time as charging points become more ubiquitous.
Alternative forms of emissions management within the logistics industry
While multiple countries in the region appear primed for the switch to EVs, the question remains – will the switch to EVs be enough to secure our future?
Apart from EVs, intelligent autonomous vehicles are shaping up to be another viable low-emission option for logistics players. Within Southeast Asia, global logistics provider J&T Express has implemented vehicles able to plan the overall speed, predictive cruising, and intelligent throttle and gearbox control, helping to reduce fuel consumption with better route planning and optimized driving habits.
While transportation takes up a huge part of the logistics process, it is vital to consider other contributors to carbon footprint, such as warehouse processes and packaging. Within the logistics industry, the onus is on companies to ensure consistency in terms of green practices across the supply chain.
This could look like investing in green packaging, which builds upon the goal of minimizing waste and keeping resources in use for as long as possible. Instead of relying on single-use packaging, logistics players can look to employ reusable packaging solutions, such as crates, pallets, and containers. This reduces the demand for new materials and the carbon emissions associated with producing them.
In terms of procurement, logistics companies can implement initiatives geared towards minimizing carbon emissions, such as giving preference to products that meet recognized green standards, as well as setting internal environmental performance targets to measure criteria such as energy efficiency, water conservation, and end-of-life management. Organizing training sessions to educate internal staff on best habits when it comes to integrating environmental considerations into the procurement process will also be key in driving change from the bottom up.
Towards greener business pastures
In the ongoing battle against climate change, businesses across all verticals need to take a firm stance towards the cause or risk being eliminated. Ultimately, EVs are simply the first step towards greenifying business processes. Instead of looking at sustainable practices like EV adoption in isolation, companies will do well to consider them as part of their long-term action plans.
Kaiser Lee is the Branding Director at J&T Express Singapore, a leading last-mile logistics provider in Southeast Asia. With a deep understanding of the ever-evolving logistics industry, he spearheads the development and execution of branding strategies that build on market presence and brand awareness. Defined by a commitment to excellence, Kaiser has a keen eye for emerging trends across the Southeast Asia region, and is committed to pursuing impactful, results-driven strategies.
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