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Low-carbon Freight Logistics for the 21st Century


TCS Logistics

In the face of almost two-and-a-half fold growth by 2050, we estimate that the freight logistics industry can reduce its absolute greenhouse gas emissions by about 27% relative to today’s levels. Moreover, we expect this to net the industry financial savings of almost USD 1 trillion in 2050.

The decoupling of growth from carbon emissions can be achieved with industry investment, collaboration in the supply chain and support from policymakers. We have developed four possible scenarios for the freight logistics industry over the next four decades. From worst to best case, these scenarios are as follows:

Four scenarios for the freight logistics industry

The Business-as-Usual (BAU) scenario, which demonstrates the outcome likely to occur if no leadership, policy, or collaborative actions are taken.

The Industry Leads (IL) scenario, which explores the techno-economic potential for each transport mode. It assumes that the industry adopts available efficiency and alternative fuels measures that, at industry-level hurdle rates, would be economic over the vehicle’s lifetime.

The Policy Support (PS) scenario, which builds on the “Industry Leads” scenario. Policy measures include a modest carbon tax, a public capital support on alternative fuel technologies and an increased scrappage rate.

The Supply Chain Collaboration (SCC) scenario, which builds on the “Policy Support” scenario. It includes vertical collaboration along the supply chain, some industry horizontal collaboration and impacts from a pick-up in reverse chain activities.

The 2050 Estimates

In the best case SCC scenario, which includes the effects of all the other scenarios, we estimate the effects in 2050 to be as follows:

Road freight has excellent potential for efficiency improvements, as well as multiple and competing low-carbon fuel options. By 2050, annual net incremental capital expenditure investment of US $71 billion is required to bring this to fruition, while annual operational costs decrease by US $800 billion. There is significant improvement in capacity utilization, but truck manufacturers nevertheless experience significant demand growth: due to the value of new technologies, the market size multiplies by a factor of 2.7 times from today. The efficiency improvements lead to falling trucking prices, meaning that road increases its market share, mainly at the expense of rail. As this has a small but detrimental impact on absolute emissions and may lead to demand for new roads, a thoughtful regulatory response is recommended (not modeled).

Ocean freight emissions are significantly reduced through investments in technological efficiency mainly following the IMO’s introduction of the Energy Efficiency Design Index (EEDI), which is due to start mandating fuel efficiency standards for new vessels in 2013. Liquefied Natural Gas (LNG) is well established as a low-carbon fuel across the shipping sector. Ocean freight demand for bulk vessels is expected to decrease as a result of the growth in reverse logistics.

Rail freight requires improved infrastructure to deal with the increased demand in the sector. Costs can be significantly reduced though investments aimed at addressing interoperability issues and poor service levels, particularly in Europe. In addition, new cost-efficient technological pathways need to be explored, particularly with regard to revolutionary technologies such as magnetic levitation trains.

Air freight efficiency can be improved through airspace decongestion and horizontal collaboration. Technological improvements are also an important part of the story: a 20% efficiency improvement is expected on each generation of planes. With a slightly accelerated turnover, the fleet can be replaced every 20 years. 2050 annual capital expenditure is increased by USD 2 billion, but operating expenditure decreases by USD 81 billion.

In each mode, there are gains that can be made at the long-term strategic planning stage, through energy efficiency improvements, and finally through the adoption of low-carbon fuels. Changes made at the individual company level, the collaborative level and the policy level can have benefits in all of these areas.

The overall effects of all improvements are summarized in the following table:


Increase in Demand*

Emissions Intensity Reduction*

Absolute Emissions Reduction*

Net Annual Incremental Savings , 2050 (USD Bn)

Road freight





Ocean freight





Rail freight





Air freight





* Increase in Demand, Emissions Intensity Reduction and Absolute Emissions Reduction figures are 2050 vs. 2010.

Learn how companies are already embracing collaboration with freight exchange platforms, lane trading, slowing down supply chains and maximizing reverse chain opportunities, all for business reasons, and reaping its rewards.

Read White Paper: Low-carbon freight logistics for the 21st century