Sustainable Transportation: A Comprehensive Overview

Sustainable transportation refers to transportation methods that minimize environmental impact while still safely and efficiently moving people and goods. While the primary focus is on reducing greenhouse gas emissions (GHGs) and conserving natural resources, there is also an emphasis on promoting economic equity in supply chains. 

The transportation sector makes up more than a third of global energy use. In the U.S., transportation accounts for 28% of total GHG emissions according to the Environmental Protection Agency (EPA) — the largest source of emissions. 

The freight-hauling sector plays a significant role in emissions and energy consumption. Globally, the trucking industry is responsible for 1.8 gigatons of CO2 emissions every year, according to the World Economic Forum. Demand for trucking is only increasing, and WEF forecasts it will more than double by 2050.

Improvements in sustainable freight transportation can have a considerable impact. 

• Freight and Delivery Optimization: Sustainable practices in logistics, such as reducing empty truck miles and improving last-mile delivery processes, enhance overall efficiency in the supply chain.  

• Reduction of Air and Water Pollution: Sustainable transportation helps improve air quality in urban areas and reduces water pollution from runoff and spills. 

• Conservation of Natural Resources: Efficient use of resources and the adoption of renewable energy sources helps preserve natural resources for future generations. 

• Enhanced Public Health and Safety: Air pollution has been linked to a variety of diseases including stroke, heart disease, lung cancer, and chronic obstructive pulmonary disease. 

• Promotion of Economic Efficiency and Equity: Sustainable transportation systems promote more equitable access to mobility, job opportunities, and economic development across different communities. 

Many large shippers, such as Walmart, Amazon, and PepsiCo, have set ESG [Environmental, Social, Governance] and sustainability targets at the corporate level. To achieve these goals, they will need to reduce carbon emissions in their supply chains, including those from the trucking companies they work with and the private fleets they operate. 

Such a push from major corporations can help drive innovation and change throughout the freight industry. However, it will take more than just sustainable shipping practices. Even with the adoption of commercial vehicle electrification, there needs to be greener production of all fuel sources.

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Decarbonization Efforts 

The vast majority of fossil fuel production still comes from oil and petroleum products. To reach net zero emissions by 2050, the International Energy Association (IEA) forecasts that annual clean energy investments will need to more than triple by 2030. Developing more renewable energy resources for sustainable freight transportation is crucial.  

Government Regulations 

The freight industry is also subject to upcoming regulations designed to reduce emissions. This includes: 

• EPA’s NOx Rule: Aimed at reducing nitrogen oxide emissions, new rules go into effect starting with model year 2027 vehicles and increase compliance measures over time. The rule also includes the implementation of advanced emission control technology. 

• EPA’s Phase 3 GHG Rule: Also starting in 2027, this rule sets more stringent standards for CO2 emissions for medium-duty and heavy-duty vehicles. 

• CARB Advanced Clean Trucks (ACT) Rule: The California Air Resource Board (CARB) ACT rule requires manufacturers to increase the percentage of zero-emissions trucks (ZEVs), starting with 2024 model year vehicles, and ramping up through 2035. 

• CARB Advanced Clean Fleets (ACF) Rule: ACF focuses on fleet operation. Starting in 2024, fleet operators are required to transition to zero-emission trucks with a goal of zero emissions by 20245. 

However, several legal challenges are underway that may impact implementation. 

Sustainable Shipping 

Sustainable shipping companies moving toward green transportation are slowly increasing their use of cleaner fuels and technologies. For example, North Dakota recently took a big step with the state’s first renewable diesel facility dedicated to soybean production of biofuels. 

Further development of biodiesel, hydrotreated vegetable oils (HVOs), and biogas continues. Volvo recently expanded biodiesel usage across six heavy-duty models, projecting a well-to-wheel CO2 reduction between 30% to 70%. Other manufacturers have publicly announced zero-emissions goals. Navistar plans to have 50% of vehicles zero-emissions by 2030 and Cummins has pledged a 30% reduction in carbon intensity by 2030 with a zero-emissions target by 2050. 

Dynamic Route Optimization 

Dynamic route optimization is also helping improve sustainable transportation for gas-powered vehicles. Algorithms adjust routes automatically based on real-time information, such as traffic congestion, route modifications, and weather. 

Commercial Vehicle Electrification 

Fleet electrification is underway for major freight carriers and truck manufacturers, but concerns remain about costs and infrastructure. While playing a significant role in reducing emissions, battery-electric trucks have a much higher upfront cost. 

Battery-powered vehicles also have a more limited range compared to diesel trucks, making them suitable mainly for local, short-haul, and some regional use cases. The battery packs also increase the vehicle's weight, reducing payload capacity. While Class 8 trucks are usually limited to a maximum loaded weight of 80,000 pounds, this limit increases to 82,000 pounds for EVs, which only partially compensates for the added weight. 

One of the biggest challenges goes beyond the trucking industry. While EVs produce no tailpipe emissions, the source of the electric power remains largely using non-renewable energy sources. There are also emissions associated with manufacturing EVs, including the mining of materials used in batteries. 

Alternative Fuel Technologies 

Besides electrification, other technologies are in process, such as: 

• Hydrogen Fuel Cell Electric: Offers longer range and faster refueling compared to battery-electric vehicles but faces challenges in hydrogen production and distribution. 

• Renewable Diesel (HVOs): A drop-in fuel that can significantly reduce emissions without requiring new engine technology. 

• Hydrogen Combustion: An emerging technology that uses hydrogen in internal combustion engines, offering a potentially cleaner alternative to traditional fuels. 

• Biofuels: Including biodiesel and ethanol, these fuels can reduce carbon emissions but face challenges in scalability and land use. 

• Natural Gas/Renewable Natural Gas): Offers lower emissions compared to diesel, with renewable natural gas providing an even more sustainable option. 

• Improvement of Diesel Fleet Efficiency: Enhancing the efficiency of existing diesel fleets through better aerodynamics, engine improvements, and driver training.

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 Aerial view of highway and city skyline of Charlotte, North Carolina. (AscentXmedia/Getty Images)

The industry is moving forward with implementing sustainable transportation measures such as: 

• Urban Consolidation Centers: These facilities help consolidate deliveries, reducing the number of vehicles entering city centers. 

• Micro-Fulfillment Centers: Smaller, localized distribution points that reduce the distance goods need to travel for last-mile delivery. Retailers like Target are increasingly using store locations as fulfillment hubs. 

• Low and Zero-Emission Vehicles: The adoption of electric delivery vehicles, battery-electric and hydrogen fuel cell-electric trucks for zero tailpipe emissions. 

• Cleaner Combustion Engines: Utilization of drop-in fuels like biodiesel, renewable diesel, compressed natural gas and renewable natural gas, and hydrogen combustion engines. 

• Route Optimization: Advanced algorithms to plan the most efficient delivery routes, reducing fuel consumption and emissions as part of a green transport strategy. 

• Freight Consolidation: Combining shipments to maximize vehicle capacity and reduce the number of trips. 

• Reduction of Returns: Implementing strategies to minimize product returns, which can significantly reduce unnecessary transportation. For example, automated Return Goods Authorization (RGA) can often reduce return rates by double digits. 

• Sustainable Packaging Materials: Using recyclable, biodegradable, or reusable packaging to reduce waste procures less waste and more sustainable freight. 

• Green Urban Warehousing: Implementing energy-efficient practices in warehouses and distribution centers. 

Key Examples

Powering America’s Commercial Transportation (PACT), formed by Daimler Truck North America, Navistar Inc., and Volvo Group North America is advocating to accelerate the construction of the charging and refueling infrastructure necessary to support commercial vehicle electrification and sustainable freight transportation. 

DHL now has nearly 30,000 electric vehicles in service globally. Amazon has installed 17,000 delivery van chargers at 120 warehouses — more than any private company in the U.S. 

A joint venture between Daimler Truck, Traton Group, and Volvo Group opened a heavy-duty vehicle charging hub in Venlo in The Netherlands.  

Recently, the Shell Starship 3.0 truck completed an 840-mile loop through California. The class 8 vehicle, equipped with a Cummins X15N natural gas engine, performed 2.5 times better in freight ton efficiency (FTE) on a tons-miles per gallon basis, registering a 70% improvement in fuel economy. 

Mobilizing sustainable transport for the development of net-zero supply chains requires a commitment to reduce emissions at each stage of the logistics process. This necessitates a rethinking of the supply chain for efficiency and sustainability. Navistar is doing that with the adoption of a sustainability code where every supplier in its supply chain is given a sustainability score with a goal of cutting emissions globally in half by 2030 and achieving net-zero emissions before 2050. 

This process is challenging in itself. Companies trying to align practices with the United Nations’ 2030 agenda, for example, would need to meet 17 development goals and track 247 KPIs. 

Economic Impact of Sustainable Transportation 

The shift toward more sustainable transportation has a significant economic impact. 

Sustainability in the transportation industry fosters innovation, providing companies with a competitive edge and generating employment opportunities — contributing to overall economic growth and development. This particularly benefits sectors such as clean energy and the manufacturing of electric vehicles. 

It also enhances a company's value creation, market positioning, and consumer trust, impacting consumers' price sensitivity and market share. These decisions resonate with environmentally conscious consumers, further bolstering the company's brand reputation. 

At the same time, a 2024 report from the Clean Freight Coalition projected the commercial vehicle industry would need to invest $620 billion in charging infrastructure to transition fully to electric trucks. This would also require an additional $370 billion to upgrade utilities and grids to accommodate the increased power demands. As such, it's likely that battery-electric vehicles will be just one of several technology pathways for decarbonizing trucking. 

There are also macro and micro-level impacts of freight sustainability.

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Macro-Level Impacts of Transportation Sustainability 

• Economic Growth and Resource Allocation: Sustainability in the transportation industry can drive overall economic growth by creating new industries and jobs while optimizing resource use. 

• Environmental Benefits: Reduction in carbon emissions and environmental degradation leads to long-term economic savings by mitigating the costs of climate change. 

• Public Health: Improved air quality results in reduced healthcare costs and increased productivity. 

• Job Creation: The sustainable transportation sector is a significant source of new employment opportunities. 

• Infrastructure Development: Investments in sustainable transportation infrastructure can stimulate economic activity and improve overall transportation efficiency. 

• Energy Security: Reducing dependency on fossil fuels decreases vulnerability to energy price fluctuations and geopolitical risks.

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Micro-Level Impacts of Transportation Sustainability 

• Operational Efficiency: Sustainable practices often lead to improved operational efficiency and resilience for businesses in the transportation sector. 

• Driver Acceptance: Electric vehicles are popular among drivers due to their smooth operation, quiet performance, and lack of diesel fumes. 

• Cost-Benefit Analysis: While initial costs for sustainable technologies can be high, long-term benefits often outweigh these investments. 

• Long-Term Savings: Renewable energy vehicles and efficient logistics practices can lead to significant cost savings over time. 

Electrification Advancements 

PepsiCo Inc. and Estes Express were recently awarded Sustainability Pathfinder awards from Transport Topics in recognition of their efforts to curb emissions and eliminate waste in freight transportation. PepsiCo recently took delivery of an additional 50 Tesla Semis at its Fresno, CA facility along with 75 Ford E-Transit vans. Schneider celebrated one million zero-emissions miles carrying customer freight in November 2023 and currently has 92 battery-electric trucks in operation. 

These initiatives are just a few examples of the many freight haulers trending toward becoming sustainable transportation companies. 

UPS & FedEx Innovating Green Logistics 

Both UPS and FedEx have made significant strides in sustainable transportation. 

UPS has invested in a fleet of more than 13,000 alternative fuel and advanced technology vehicles, including electric, hybrid electric, hydraulic hybrid, ethanol, compressed natural gas (CNG), liquefied natural gas (LNG), and propane vehicles. 

FedEx has designated $2 billion to focus efforts on vehicle electrification, sustainable energy, and carbon sequestration with a goal of carbon-neutral operations by 2040.

Transformative change requires a holistic approach that crosses industries and governments. While companies are redesigning supply chains to optimize for sustainability, there’s a significant cost to do so. Increasingly, businesses are making decisions about upstream and downstream supply chains based on sustainable practices. 

Without substantive progress, the freight industry will increase emissions, especially with the continued growth of eCommerce. While Amazon reports that its carbon emissions dropped by 3% in 2023, much of these savings came from construction and equipment purchases, data center energy improvements and renewable energy credits.

As a whole, the transportation industry is in a state of transition. While sustainability is an increasingly important focus, there are also barriers to adoption. 

Current Challenges and Barriers 

Most sustainable technologies have a high upfront cost, meaning much of the development will occur at larger companies initially. There’s also a slower return on investment. While operations of more sustainable transport may produce long-term savings, payback periods are currently lengthy. 

Besides the need to increase charging and alternative fuels infrastructure, especially for long-haul transport, there remains a dependence on oil. This requires widespread changes in behavior and business practices. 

Promoting Sustainability 

In addition to company initiatives, there are an increasing number of government regulations and incentives. Stricter emissions standards are pushing manufacturers and fleet owners to develop and implement cleaner technologies. 

There are also tax credits, grants, and financial incentives for purchasing low-emission or zero-emission vehicles. Government funding for alternative fuels and sustainable technology development continue as well. 

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Urban areas present unique challenges. Cities are increasingly promoting the use of electric and low-emission vehicles for urban deliveries. Cities like London, Berlin, Paris, Amsterdam, Milan, Tokyo, and Beijing have established low-emission zones (LEZs), restricting use or implementing fees for emitting vehicles inside certain areas. 

Optimizing city logistics, however, also requires collaboration between stakeholders. Smart city technology can help minimize idle times and traffic congestion. Coupled with real-time data about vehicles and urban infrastructure, technology can help drive more sustainable urban freight. 

Examples of Sustainable Urban Freight Practices 

Urban centers are not friendly to semi-tractors, making sorting and last-mile delivery in smaller vehicles essential and driving the majority of delivery costs. Last-mile delivery has also been the most expensive leg of a shipment. 

An evolving concept is urban delivery hubs (UDH). Placing hubs near urban areas allows long-haul drivers to bypass regional distribution centers and cross-docking facilities, bringing freight directly to the hub where local delivery partners handle the last mile. However, this concept currently only works for high-volume shippers who serve large urban areas. 

Innovative Solutions for Sustainable Urban Freight and Last-Mile Delivery 

The last mile presents challenges and opportunities. Sustainable transportation companies are employing strategies such as consolidating goods and scheduling deliveries before or after normal hours to avoid congestion. 

Some retailers and warehouse operators are exploring options such as parcel lockers, collection points, and autonomous delivery robots. IoT devices and RFID tags can accelerate offloading to reduce dwell time while also helping maintain greater inventory accuracy. 

Still, the industry must constantly balance the customer's need for speed with the environmental impact. 

While significant progress has been made in developing and implementing eco-friendly practices, there are still significant hurdles. The transition to sustainable transportation requires significant funding and a collaborative approach, involving technological innovations, policy changes, and shifts in business practices. 

Key takeaways include: 

• The importance of reducing greenhouse gas emissions in the transportation sector 

• The emergence of electric and alternative fuel vehicles in freight 

• The critical role of urban logistics in creating sustainable supply chains 

• The need for collaboration between stakeholders to overcome infrastructure and cost barriers 

As the industry continues to evolve, the focus on sustainability will intensify. Continued developments in technology, policy, and consumer preferences will shape the future of sustainable transportation.