The business climate for manufacturing industries is rapidly changing, driven by technological advancements, increasing complexity of value chains and supply-side disruptions. As the industry is still grappling with the consequences of the COVID-19 pandemic, stakeholders are urging companies to act upon environmental efforts to ensure a sustainable future. Additionally, changes in customer expectations in the B2B landscape is challenging industrial companies to revisit operations in the entire supply chain.
At the same time, road freight transportation is in need of a drastic change to become sustainable, as today it accounts for 7% of global emissions of greenhouse gases. The EU climate strategy aims for net-zero emissions by 2050, but diesel trucks are predicted to surpass passenger cars as the major oil consumers, contributing to a 15% increase in total global emissions over the same period. Industrial companies are major contributors to the global carbon footprint, with production and logistics accounting for more than half of global CO2e-emissions from fuel combustion. Challenging the negative impact requires new business models with a focus on sustainability throughout the supply chain.
Smart logistics has been recognized as a key factor to drive cost-competitive and sustainable growth, but the benefits cannot be achieved with current transport solutions. The only way forward for freight is autonomous electric transport (AET), but the transition will require a considered, step-by-step approach. Electric trucks are ready to be implemented into supply chains, but must be coordinated digitally in order to be both sustainable and cost-competitive. Autonomous transport is the final step in ensuring digital advantage across entire value chains. Here we will explore in more detail how AET can be implemented, and what challenges and opportunities the industrial manufacturing industry will face during the transition.
Digitalizing shipment flows allows for flexibility and future-proofing
Access to real-time data is creating new ways to manage logistics and distribution. The next generation of manufacturing companies need to be data-driven and agile to meet shifting market demands and secure long term goals. The ongoing fourth industrial revolution (4IR) has opened manufacturers’ eyes to the substantial cost-savings that can come from implementing new digital technologies. As manufacturing industries are entering uncertain times, it is more important than ever to keep the momentum going. Investments in digital technology to further digitize the product life-cycle are an important step to assert competitive advantage and reduce supply-side risks. Furthermore, the increased visibility into operations that comes from going digital allows for a faster response to future opportunities or threats.
Digital forwarders in manufacturing are recognizing the benefits of implementing a smart logistics system, with many putting it as one of their top priorities. With higher levels of integration in supply chains and many external transactions, logistics are becoming increasingly complex. Tomorrow’s logistics managers will draw insight from smart logistics platforms rather than optimize transportation networks manually to account for the increasing volatility of today’s business environment. By adopting an intelligent freight mobility platform, it is possible to optimize performance in the entire supply chain,
Digital infrastructure is necessary to implement AET, as the new technology is increasing the number of factors to consider. The tonnage transported, speed limitations, battery wear, and variations in topography are only a few of the aspects that affect the range of electric trucks. Moreover, company-specific shipping demands, loading slot availability, and scheduling considerations need to be taken into account. With a digital platform designed for electric freight, manufacturers can ensure a successful and cost-competitive implementation starting now, and build a foundation for the transition to autonomous transportation.
Electrification works for heavy industry with the right approach
More manufacturing companies are targeting ambitious goals for fossil-free freight. Electric freight will significantly lower CO2 emissions from transportation compared to diesel vehicles. This is not only beneficial for the environment but also a way to show visible action to reach sustainability goals, as stakeholders are putting pressure on companies to act. Research indicates that 42% of buyers purchasing industrial products have initiated business relationships because of a positive perception of the company's commitments to sustainability, and it is equally important for talent acquisition. The Royal Swedish Academy of Engineering Sciences (IVA) recognizes the acceleration of transport and industry electrification as one of the top 9 priorities for a sustainable recovery post-pandemic, urging policymakers and industry to take necessary action and drive innovation.
Achieving cost-competitive electric transport is possible with the integration of a digital mobility platform. Digital insight can provide recommendations on which part of the supply chain is most suitable for electrification, and how routes can be optimized with electric charging infrastructure. Research on U.S freight transportation in 2015 found that most industrial goods are transported by truck in short-haul routes, less than 160 km from origin to destination. Short-haul routes are a good starting point when transitioning to electric freight, as it enables high utilization and can be cost-competitive with today’s battery capabilities.
Heavy-duty application poses a challenge to many industrial companies looking to invest in electric trucks. However, a recent report concludes that electric transportation is the most realistic way to lower CO2 emissions from heavy-duty transport in the near future. Moreover, an intelligent planning and routing system can account for the specific challenges of heavy duty transport with electric technology that is available today, and take full advantage of future improvements in battery and infrastructure capability. Battery-induced loss in payload can be managed by achieving higher utilization elsewhere in the supply chain.
Autonomous electric transport significantly improves the business case
Transformation is nothing new to manufacturing industries. In the midst of the 4IR, industries can already see how automation can cut costs, improve the safety of workers, and increase efficiency. As both production facilities and warehouses are becoming increasingly automated, the next step is to automate transport, which is outdated and inefficient at the moment. Where digitalization and electrification result in immediate benefits, automation has the potential to increase connectivity in the supply chain while at the same time reducing environmental impact and transport costs.
Industrial manufacturers have the opportunity to cut costs from road freight by almost 30 % by 2040 with aggressive adoption of automated transportation. AET solutions are excepted from hours-of-service regulations which determine how long a truck driver’s shift can be, as there is no need for a driver on board the vehicle. Moreover, by removing the cabin, the weight of the truck can be reduced significantly, allowing payloads to increase and utilization to be maximized.
Naturally, a full-scale adaptation of autonomous transport will not happen overnight, the transition must be carefully managed and systems must be put in place to set the foundation. Manufacturers are already implementing AET, starting with inter-site transportation or nearby deliveries on public roads with limited regulatory oversight. This is suitable for the manufacturing industry given that most transportation of industrial goods happens on short-haul routes. Implementing AET today allows for a faster transition as technology and legislation evolve, paving the way for more complicated long-haul trucking in rural, highway, or even urban settings.
How to get started
Road freight transportation is changing as we know it. The manufacturing industry needs to consider how to establish sustainability across the supply chain ecosystem in the context of a future global growth in demand. Electric freight, realized by the digitalization of transport networks is the best way to reduce CO2 emissions while remaining cost-competitive. The eventual shift to autonomous will then improve the business case of electric trucks exponentially, allowing for more cost-efficient, safer and smarter transport. Einride is already installing these technologies at customer sites, working to realize industry freight specification and build for tomorrow’s intelligent transport solutions.