Global road freight is expected to explode in the coming years, with BloombergNEF’s (BNEF) new “Electric Vehicle Outlook 2021” report predicting demand will increase by close to two-thirds by 2040. To satisfy that growth, the market for commercial vehicles will more than double over that time. For several by-now obvious reasons, the majority of those vehicles will be electric, with electric vans accounting for nearly 60% of light commercial vehicle (LCV) sales in just under two decades, according to BNEF. To electrify fleets at such a massive scale within a compressed time frame will require a level of coordination, regulation, and collaboration unlike any the transport industry has previously experienced.
Global delivery fleets are now at the forefront of electrification. DPD, FedEx, and UPS, and retail actors requiring additional logistic support such as IKEA & Amazon, are just some examples of businesses that are now accelerating electric fleet pilots in anticipation of upcoming carbon-cutting regulations. That’s especially true in European and UK city centres, where fossil fuel bans affecting more than 62 million residents begin taking effect as early as 2024. But mandates alone won’t be enough to convince smaller logistics carriers and independent drivers (as well as many of the larger service providers that contract with the industry giants) to electrify.
Historically, there has been less immediacy and little incentive for smaller fleets to invest in electric vehicles (EVs) and EV infrastructure. With fewer resources and tighter margins than the big brands, electrification has long seemed far in the future for many. Some may have even recently upgraded diesel or petrol vehicles as they scrambled to keep up with consumer demand during the COVID-19 pandemic. But, as noted by several global fleet leaders in a new report from GreenBiz, the “tipping point” for electrification is within sight. IKEA’s head of Sustainable Mobility, Angela Hultberg warns fellow fleet professionals, “If you are not on this journey, you are at real risk of being left behind.” Fortunately, there are a number of forces aside from ICE vehicle bans that are coalescing in favour of faster electrification.
Coordination with smart technology
Smart, integrated, optimised and user-friendly software is crucial to scaling an electric fleet. Advanced electric fueling networks like ChargePoint are able to gather data from multiple systems (including telematics platforms and utilities), facilitate payments for third-party fleets and can prioritise chargers or vehicles or both. Smart software also can manage both charging time and speed to optimise efficiency and lower the total cost of ownership (TCO) for infrastructure. FedEx, which expects that 50% of its fleet vehicle purchases will be zero-emission by 2025, is one of the early adopters that shared best practices in the GreenBiz report. FedEx Express managing director, Russ Musgrove, said of smart software, “It is kind of the key. It becomes critical that we use software to facilitate each route and manage the energy available at each station.”
Regulations and incentives
In addition to the diesel and petrol bans noted above, an abundance of new regulations will make it all but impossible to operate a fossil fuel-powered fleet in the upcoming era of electric transport. In Europe, Parliament is on the cusp of approving the Commission’s Euro 7 emission standards, which are expected to replace the current rules in 2025. Additionally, the UK’s planned 2030 ban on the sale of internal combustion engine (ICE) vehicles, is expected to comply with the new standards, which may include “real-world emission monitoring” over the life of a vehicle. But there are plenty of factors to offset the stick of regulations, including numerous vehicle grants and tax incentives such as the UK Government’s “super-deduction,” which lets qualifying fleets claim a 130% capital allowance “on qualifying plant and machinery investments” such as EV charging infrastructure.
Collaboration amongst stakeholders
Collaboration is key to success with any large and important endeavour. That’s especially true when it comes to fleet electrification. Not only must fleet managers work together with internal stakeholders such as executives, purchasing agents, budget directors and facilities, engineering and sustainability teams (as well as drivers and their unions); they must collaborate with outside partners including logistics and delivery contractors and charging providers, industry groups and even NGOs (who can help them tap into incentives). There are also the automakers, utilities, policymakers and other Government entities to consider. It can be dizzying. “There are so many different stakeholders involved, and we have to keep all of them front of mind when you work through it,” says PepsiCo’s Senior Director of Fleet Operations in the GreenBiz report, “to pull all of it together, it takes a lot of blood, sweat and tears from a lot of great team members to make it happen,” he says.
Nobody ever said that taking on such a huge and complex problem like climate change would be easy. A combination of coordination, regulations and collaboration isn’t just necessary, it’s imperative. It will take everyone, from the pioneering global fleets who are leading the way to Government mandates and incentives to partnerships with multiple stakeholders to reinvent transport for a new, cleaner era. But take it on we must and there is no time to waste.