Three steps to electrify and automate shipping in the FMCG industry
The fast-moving consumer goods (FMCG) industry is experiencing unprecedented change. The public voice is urging businesses to go green, retailers are pushing for faster deliveries, and advanced technologies such as autonomy are ripe for adoption. These changes pressure companies to direct their resources and efforts where it counts. Exploring how to effectively manage sustainable transport operations plays an important role both for financial success and environmental welfare.
The COVID-19 crisis has accelerated production activities within the FMCG industry as the demand for consumer packaged goods such as food and pharmaceuticals has shot up. Additionally, growing e-commerce following the pandemic means that the world will likely experience an increase in transport needs, but current freight solutions are not sustainable or intelligent enough to meet emission reduction goals. Today road freight transport accounts for over 7% of global CO2 emissions. By 2050 trucks alone are predicted to contribute to a 15% increase in total global CO2 emissions These environmental concerns are posing a distinct challenge for the FMCG industry as sustainability awareness among consumers is heightened. Intense market competition combined with increased pressure from retailers is forcing FMCG companies to rapidly innovate their business processes, especially when it comes to freight.
Improving transport capacity while simultaneously emitting less CO2 has been high up on the agenda among FMCG companies during the last decade, but the solutions have been few and far between until now. The only way to make the future of road freight cost-competitive and sustainable is through electrification and automation. The transition requires a step-by-step approach including digitizing supply chains and freight activities, preparing transport for cost-competitive electric operations, and setting the foundation for a future of freight that is fully autonomous.
Improving flexibility and efficiency with transport digitalization
The FMCG industry is experiencing a wave of new entrants to the market increasing the competitive tension. At the same time, consumers are changing their product preferences faster than ever before. Missed delivery windows lead to retailer fines, making secured transport capacity a continuous priority among FMCG companies. This pressures companies to improve operational efficiency in their transport activities as well as improve sustainability through electrification, something that can only be achieved with an intelligent freight mobility platform.
A freight mobility platform works as a fundamental enabler for realizing electric autonomous transport systems while improving efficiency. By tracking and analyzing historic routes, distances driven and shipping volumes a platform can achieve both significant emission reductions and cost competitiveness throughout entire freight networks. Unpredictability in demand can be handled by investing in forecasting systems. However, once a company has attained 75-80% forecast accuracy, it is smarter to then invest in reactive capabilities. A freight mobility platform allows for increased flexibility by tracking factors such as the weight of transported goods, variations in topography, and traffic conditions, among countless other factors.
The digitalize phase is essential for getting the necessary digital infrastructure in place for electric trucks. An intelligent operating system can suggest customized recommendations on where in the supply chain electrification would have the greatest impact, and how to effectively implement an EV charging infrastructure. Besides setting the basis for electrification, the long term goal of a freight mobility platform is to improve the business case exponentially through automation.
Decreasing environmental impact with intelligent electrification
Electrification provides a competitive advantage for FMCG companies, as consumers are increasingly using sustainability as a purchasing criterion. Consequently, the big FMCG players will need to trumpet green initiatives, as new entrants to the market are positioning themselves as increasingly trendy local producers, a strategy that particularly appeals to millennials. As consumers are beginning to inspect the entire supply chain, ensuring sustainable transport therefore creates positive customer associations which results in stronger sale figures.
Before implementing electric trucks, companies must consider the availability of current electric charging infrastructure near FMCG production sites, as well as how to operate electric transport for maximum efficiency and cost-effectiveness. Since electrified trucks will not be effective if treated as a direct replacement for diesel trucks, an intelligent system is necessary to identify where electrification will make the most impact in the transportation network, as well as account for specific considerations such as the toll refrigeration takes on estimated electric vehicle range.
As variations in FMCG product assortment will only increase in the future as a result of fragmented customer demands, operating electric trucks becomes relevant because of the need for smaller and more frequent transports. Employing these transports will not only mean advancing beyond the breakeven point for the upfront investment in electric transport in a short amount of time, it will also make room for greater shipping flexibility, especially considering impending restrictions or bans on diesel vehicles in many major urban areas. Through coordinated planning and execution tailored to individual supply chains, electric trucks cannot only reduce emissions significantly at the source, but also remain cost-competitive compared to diesel freight. While transport electrification coordinated by a freight mobility platform has more immediate benefits, the implementation of autonomous vehicles improves the business and sustainability case exponentially.
Eliminating emissions and reducing freight costs through automation
In order to stay on top of demand FMCG companies must adopt an agile approach, implementing state of the art technologies such as autonomy. As many transports occur within fenced areas where public road legislation seldomly applies, this helps actualize AET for widespread use even sooner. By utilizing the combination of platform and electric infrastructure, AET can substantially reduce both emissions and transport costs.
Logistics costs are a top concern among leaders in the industry, as FMCG companies bear 60% of the costs from production to retail. Implementing AET will enable much needed cost savings. This is in part because AET solutions are excepted from hours-of-service regulations that determine how long a truck driver shift can be. Combining AET with increasingly autonomous production activities also means that both production and transport operations will effectively be able to run continuously, leading to improved efficiency and ability to meet growing demand.
Today AET solutions like the Einride Pod are being operated at FMCG sites in Sweden, leading to increased scheduling rates and improved optimization, ultimately enabling faster supply chains and essential cost reductions. With a tiered approach to implementation, the Pod can be operated autonomously in more controlled environments, but also piloted remotely in situations that are more complicated, such as a busy urban area or loading dock. AET also addresses the ongoing global truck driver shortage. Full scale AET solutions will not only eliminate the need for a driver onboard every vehicle, it will also create new job opportunities and transform existing roles, easing anxiety around the future of work
How to get started
While the FMCG industry is constantly evolving and innovating, current transport solutions have lagged far behind, and will not be able to keep up with sustainability goals and demand without significant change in the form of AET. The transition to a more sustainable and cost-effective world of freight is a step-by-step process. With deep insights into industry-specific challenges Einride offers functional solutions customized to suit individual transport networks, and has already implemented these technologies at customer sites. The future of freight mobility is already here.