The essence of green logistics

“Green“ logistics is the implementation of environmentally sustainable practices in transportation and distribution processes to reduce carbon emissions, minimize waste, optimize routes, and introduce environmentally friendly technologies and fuels. In the global context, green logistics plays an important role in mitigating the effects of climate change.

Due to the growing environmental concerns around the world, companies and policy makers are facing great pressure to reduce the negative impact of logistics activities on the environment and increase their environmental friendliness.

The European Union's latest carbon emission guidelines for different vehicle categories require a targeted 55% reduction in emissions for passenger cars and 50% for vans by 2030. The ultimate goal is to achieve a 100% reduction in emissions by 2035.

Challenges of implementing green logistics

The current challenges of the global supply chain - geopolitical tensions, the effects of the pandemic, climate change, and economic factors - are forcing logistics companies to focus more on the timeliness and quality of deliveries than on sustainable transportation.

Logistics service providers admit that protecting the environment and reducing carbon dioxide emissions remains crucial for them. However, the challenge of overcoming the immediate supply chain crisis is taking precedence. Companies are cautious about the high investment costs of environmentally friendly transportation projects. That is why the priority is not to purchase greener transport, but to implement flexible solutions to control costs and improve transport efficiency.

The 2023 industry report showed that about 65% of logistics companies reported supply chain disruptions that slowed their progress in sustainable logistics. Freight forwarders and logistics companies say they will continue to invest in green technologies, especially in research and development of environmentally friendly transportation solutions.

Alternatives to green logistics

Technology and green logistics are closely linked, with technological advances playing a crucial role in ensuring sustainability and efficiency in the logistics industry.

Optimization

The foundation of this synergy is transportation optimization. Advanced routing and scheduling software powered by artificial intelligence and real-time data allows companies to plan more efficient and shorter delivery routes to avoid heavy traffic, congestion, reduce vehicle downtime, and minimize mileage.  In this way, efficient route planning helps reduce fuel consumption and carbon emissions. 

Multimodal transportation

As logistics productivity improves, organizations can strategically shift from environmentally harmful modes of transport to multimodal transport, such as road and rail systems.  Optimized transportation infrastructure reduces carbon emissions, energy consumption, and transportation costs compared to traditional road transportation.

Multimodal transportation reduces emissions by balancing efficiency and environmental impact. Rail and water transport emit less carbon than road and air, so combining these methods where possible can significantly reduce a company's carbon footprint.

Digitalization

Real-time data from GPS, weather forecasts, and traffic information further improve route efficiency. Big data and AI analytics are used to optimize transportation processes and increase efficiency. They allow logistics companies to track the impact of each route on fuel economy.  

Examples of green logistics implementation

Improved logistics productivity directly contributes to sustainability, enabling organizations to better plan and execute logistics operations, significantly reducing resource waste and inefficiency. By achieving greater resource efficiency, carriers contribute to a more sustainable supply chain while increasing their competitiveness in the marketplace.

For example, 

• in 2022, FedEx expanded its last-mile delivery fleet by adding 150 electric vehicles from BrightDrop;

•  in 2023, Bolloré Logistics, a subsidiary of Bolloré SE, expanded its fleet in India with commercial electric vehicles.

• Amazon is investing heavily in green logistics. They have committed to using 100,000 electric delivery vans by 2030 to reduce carbon dioxide emissions.

• Furniture giant IKEA has optimized its supply chain to shorten transportation distances, resulting in lower fuel costs and emissions. In addition, they use rail transport for long-distance transportation to reduce their carbon footprint. 

• Coca-Cola has increased its use of rail for long-distance transportation to reduce its dependence on trucks.

Prospects for the green logistics market

The green logistics market is growing under the influence of increased corporate social responsibility of carriers, stricter environmental regulations and legislation, as well as the growing role of artificial intelligence (AI) in the global logistics industry.

On the one hand, high costs of environmentally friendly transportation, dependence on fossil fuels, and lack of infrastructure are hindering market growth. On the other hand, the demand for green warehouses and the increased environmental awareness of end-user industries are creating excellent opportunities for market growth.

With this in mind, it can be assumed that while the green logistics market was estimated at $1.3 trillion in 2022, it will grow to $2.9 trillion by 2032. At the same time, three-fifths of the global green logistics market's revenue came from the distribution segment. Thus, it is expected to retain its leadership. Industry experts believe that with technological advances and regulatory support, eco-friendly transport will become the norm in the transportation industry.

The largest growth in the global green logistics market is expected in the Asia-Pacific region. This is naturally caused by the number of people and the level of investment in electric vehicles, clean energy sources and smart transportation systems.