Why small road carriers are a big part of the solution to decarbonise freight
Partnerships in sustainability
Complex problems can’t be solved alone. This also goes for climate change. In the ‘Partnerships in Sustainability’ series, we talk about how Kuehne+Nagel is becoming a trusted sustainable supply chain partner. How our partners and customers are working to reach their ambitious sustainability goals. And how we come together to tackle this challenge.
As the National Sustainability and Social Impact Director at Kuehne+Nagel UK, Kate Broome not only affirms that her goal is ‘bringing about real change’. Kate means business. Sustainable business. One of the big challenges on her plate is helping Kuehne+Nagel’s road carriers to decarbonise. We spoke with her to learn why that matters, and how we go about it.
Kate, to set the scene, can you tell us who Kuehne+Nagel’s road carriers are and explain how we work with them?
Kate: Of course. Firstly, it’s fair to say that road freight underpins the prosperity of our economy, both here in the UK as well as in Europe and beyond. In fact, over 80% of freight in the UK and Europe is moved by road, making it a vital sector.
For our road freight customers, we’ll move goods on our Kuehne+Nagel trucks, but just as often, we’ll use our hauliers; our road carrier partners. They’re an integral part of our service to our customers and a valued part of our supply chain.
Something that really surprises people is how fragmented the sector is, with over half a million road carrier companies in Europe alone – and almost all of these are small or medium sized companies (SMEs). According to research from the Kühne Logistics University (KLU), 99% of road carriers in the UK and Europe have fewer than 50 employees*. Research also shows that these businesses are operating with slim profit margins and can typically have very limited bandwidth or green skills to consider long term investment into something like decarbonisation. Without support for these SMEs, decarbonising our sector will be very challenging indeed.
At Kuehne+Nagel UK, you have set out on a mission to help these carriers in their decarbonisation journeys. Why?
Kate: We believe leading companies like us can be accelerators of decarbonisation because we have deep expertise, and the scale to make an impact. It’s important that we use that strength to give a voice to our smaller partners, providing things like knowledge sharing, practical support, and advocacy on behalf of our industry with government and policy makers.
And the challenge is huge. There are around thirty million vans in the UK and Europe, and around seven million heavy-duty vehicles (HDVs). These are almost entirely diesel vehicles right now, and with the freight sector forecast to continue to grow over the coming decades, the carbon footprint of this fleet would take us off track to meet our global decarbonisation goals if left unchecked.
As our customers focus more and more on their Scope 3 carbon emissions, it’s clear that we will need to ensure our carrier partners are willing and able to join us on the decarbonisation journey, and we believe that means working together to help deliver change.
Do they need that support from us?
Kate: Absolutely. We’re already working alongside our partners to understand and address the barriers to decarbonising our sector; things like how we finance the deployment of new zero-tailpipe-emission vehicles, how we speed up grid connectivity to deploy charging infrastructure, managing energy, developing green skills and so on. If we don’t specifically consider SMEs within this work, the transition could be very bumpy for small operators.
And we simply can’t afford for that to be the case, as our customers and communities are relying on us to meet our decarbonisation goals.
What are some questions or concerns our carrier partners specifically struggle with?
A common challenge for SME carriers is access to financing to be able to bring in low-emission vehicles and infrastructure. An electric heavy-duty vehicle can currently cost between two and three times that of a diesel equivalent and needs investment into charging infrastructure to support it. The UK’s Green Finance Institute estimates that around £100bn is required to transition the UK’s half a million HDVs to zero-tailpipe-emissions (which includes new vehicles, plus charging infrastructure requirements). Looking at ways to help SMEs navigate the total cost of ownership of electric trucks, and to access support to finance them, is incredibly important.
Our SME partners can also struggle with the complexity associated with a change of this scale. Moving from diesel to zero-tailpipe-emission trucks isn’t just a straight swap–it requires new ways of working, new skills, new operating and financial models. In the near term, this complexity of change means it’s likely that large companies like Kuehne+Nagel will move first, and SMEs will follow our lead, and will require specific and sustained support to do so.
The direction is clear though–the UK Government has already set end-of-sale dates for new HDVs that have tailpipe emissions. Sales of those trucks up to 26 tonnes will end in the UK from 2035, and then all new HDVs sold will have to be zero-tailpipe-emission vehicles from 2040.
What specific actions have you taken already?
Kate: About two years ago, the UK Government started exploring a road freight decarbonisation grant initiative called the ‘Zero Emission HGV and Infrastructure Demonstrator Programme’ (ZEHID). Even ahead of its launch, we engaged with policymakers and industry partners to make the case for shaping the scheme in a way that would support small and medium-sized carriers and not just the bigger players.
Within our own supply chain, we launched workshops, calls and meetings with a selection of around 30 of our carriers to tell them about the ZEHID initiative. We’ve tried to act as a gateway for those carriers to join the programme.
What has been the outcome of those efforts?
Kate: Late last year, we were thrilled to see the ZEHID programme officially launch, with over £200m in UK Government funding awarded via Innovate UK. In total four consortiums were successful, securing this grant funding to deploy around 370 zero-tailpipe-emission HDVs and infrastructure across the UK.
The exciting thing about ZEHID is that it is specifically aimed at the hardest to decarbonise end of trucking, so 40 tonne+ HDVs, and over long-distance routes.
We are in two out of the four consortiums on the programme, along with about a dozen of our SME haulier partners. Together we will be part of the deployment of a new network of public chargers for electric trucks, we’ll be exploring innovative Megawatt Charging technology, and running heavy-duty electric vehicles in real-world operational environments, thanks to this UK Government grant funding.
The programme will run until 2030, with electric HDVs hitting the roads over the next 18 months. Our East Midlands Gateway site, in Derby, is likely to be our main hub for charging infrastructure, with work already underway to develop our solution.
What are you expecting to learn from this programme?
We’re excited about the knowledge that will come out of ZEHID. We’ll be deploying these electric HDVs across different duty cycles and in different environments to find out how they perform under real-world conditions.
We’ll also gain great insights into how we can support our small and medium-sized carriers to come on this journey with us, ready to scale up our learning across our supply chain.
This unique project will be a great step forward for them, for us and for the entire industry. This initiative shows once again that collaboration between industry, government and policy makers is a vital part of the solution for decarbonising logistics.
Which other actions is Kuehne+Nagel taking to support road carriers’ transition?
Kate: As I said, we want to use our voice to drive change in our sector. So as of late last year, Kuehne+Nagel was invited to represent the logistics sector on the UK Government’s Net Zero Council. This forum brings together government, business, and finance to help identify and unlock barriers to decarbonisation across all sectors of the economy, with a strong focus on the needs of SMEs. We’re proud to represent our sector.
Outside of the UK, Kuehne+Nagel colleagues are active in similar initiatives, representing the needs of our SME carriers, for example in the World Economic Forum’s Road Freight Zero coalition.
And of course, our customers are what drive us to all of this. So whether on our electric trucks in France, or our electric vans and HDVs in the UK, we’re excited to continue to bring solutions to market and to help drive progress to a more sustainable future together.
Thank you Kate for the insights, and keep inspiring change!
*Source: https://www.klu.org/fileadmin/klu.org/media/landingpages/SMEstudy/SFC-KLU_report_v5i.pdf
With over 80,000 employees at almost 1,300 sites in close to 100 countries, the Kuehne+Nagel Group is one of the world's leading logistics providers. Headquartered in Switzerland, Kuehne+Nagel is listed in the Swiss blue-chip stock market index, the SMI. The Group is the global number one in air and sea logistics and has strong market positions in road and contract logistics.
Kuehne+Nagel is the logistics partner of choice for 400,000 customers worldwide. Using its global network, logistics expertise and data-based insights, the Group provides end-to-end supply chain solutions for global companies and industries. As a member of the Science Based Target Initiative (SBTi), Kuehne+Nagel is committed to sustainable logistics by reducing its own environmental footprint and by supporting its customers with low-carbon logistics solutions.