Accelerating a low-carbon trajectory for road freight

The ecological collapse will survive the COVID-19 sanitary crisis. What is at stake is of first order and there is no silver bullet, containment, vaccination or else that will solve the problem.

What has been happening for too long is inescapable: recurring bleaching of the Great Barrier Reef, melting of glaciers, depletion of pristine forests from the Amazon to the boreal regions of Russia, vulnerable animal & plant species turned into endangered then extinct ones. Closer to our residential urban areas, small particle emissions damage our children’s lungs and there is a scarcity of green spaces and fewer birds on the trees.

The major drivers of this situation are the way we eat through agriculture, the way we produce goods through the industry, the way we shelter from rain and cold through real estate, the way we produce energy to fuel all of this, including the way people and things move around.

This last driver is travelers and more importantly the transportation of goods, called freight. It goes on planes, boats, trains and trucks. Trucks are of primary importance as they represent 70% of goods transportation over land. The COVID-19 proves this point day in and day out with food and health supplies being moved from suppliers to dispatch warehouses and then distributed mostly by truck.

In terms of CO2, trucks represent about 25% of road-related emissions in Europe (behind individual cars) and 6% of total EU CO2 emissions* resulting from all the factors mentioned above (agriculture, industry etc.). Long-distance road freight accounts for about 80% of the truck activity (ton per kilometer). It follows from the above that long-distance trucking activity accounts for 5% of total CO2 emissions.

This clarifies what is at stake for a digital freight forwarder like Everoad who wants to change the way road freight transportation is managed through technology while protecting the planet.

Operations to match the demand and supply of trucks are still mostly based on manual processes. Dead miles continue to represent at least 20% of total kilometers driven. Green investments made by carriers are not necessarily rewarded by the market, hence of limited magnitude, especially for the long tail of small fleets that represent the majority of the supply. And there is also the question of measurement: “if you can’t measure it, you can’t improve it” Peter Drucker famously said. Well, most shippers have a hard time measuring the carbon footprint of their transport plan with reasonable accuracy.

Everoad is active on three main fronts to improve the CO2 emissions of road freight:

• Reduce dead miles
• Market value-added services to empower carriers to “do the right thing”
• Properly measure and compensate remaining CO2 emissions

Reducing dead miles through optimized matching of supply and demand of freight.

Only a data-driven and digital product can achieve this. The current level experienced in the market results from the technology we use: two-way communication by phone, email and sometimes even fax or simple digital platforms mimicking Excel sheet optimization.

Digital freight forwarders don’t operate this way. They qualify carrier needs with detailed information on preferred lanes, technical description of vehicles and types of goods that can be handled. Second, they analyze the performance of each carrier to better understand their travelling patterns and quality of service. This data collection and ingestion is replicated on the demand side, for example, to surface and rank the detention time at each warehouse (where goods are either collected or delivered).

A thorough onboarding process of both carriers and shippers, as well as constant data collection based on the transport activity, is fundamental.

At Everoad, algorithms take optimization to the next level. They are a set of rules used by our computing infrastructure to query well-documented databases (see above). A much larger supply capacity can be leveraged to match the appropriate technical requirements, picking and delivery locations and give optimized dynamic pricing for each booking made on the platform. Indeed, quality of service ranking is also used to ensure carriers who are always on time receive more opportunities than average performers. We also proactively debunk scenarios that increase dead miles, for example through calls to a new carrier who has to deliver a load to a tricky location (“tricky” dimension being informed by recorded experience). Flow optimization or Load optimizer tools, in the hands of our operational teams also allow us to match demand with an optimized supply (less trucks, less kilometers and less empty spaces in trucks). All this reduces the CO2 emissions of freight operations.

Our product can push CO2 reductions further with the connectivity of trucks. Each truck connected to our platform provides additional datasets to deliver optimization on steroids, for example, automatized tour optimization that reduces the ecological footprint. We could also consolidate qualitative information (e.g. actual diesel or alternative energy consumption) on a given carrier to promote greener supply.

Empower carriers to reduce their carbon footprint per tkm (ton per kilometer)

Everoad launched a suite of services in July 2019 to enable carriers to take advantage of affordable green innovation. Through our partnership with DAF, carriers can get the most recent Euro 6C trucks at a negotiated discount and cut the average fuel consumption of their fleets. Everoad carriers also benefit from a partnership with Bridgestone to get discounted retread tires from the Bandag family and reduce emissions by 30% per kilometer (vs new tire purchase). Carriers can also equip their fleet with Fleetpulse dongles to track their tires pressure and further reduce their fuel consumption. All these actions can reduce the CO2 emission per tkm materially. Digital platforms like Everoad can label carriers that take these actions, build scoring of ecological performance, as we do already with quality of service or, if the carrier consents to sharing the metric, track the actual consumption of each truck which is the output of many corrective actions.

Everoad is constantly negotiating new services to enrich its play in this area, with the two-pronged objective of empowering the carriers and allocating a greener supply to shippers. We strive to identify make-sense services, set virtuous models that deliver a quick return for carriers, build lower emission capacity and allow shippers to shift to a measured CO2 reduction trajectory.

Compensate CO2 emissions

We know too well that the ecological collapse requires immediate and at scale change. However, all the measures above can not deliver at scale overnight. And this is without taking the freight volume growth into account which is forecasted to be strong over the next 30 years in Europe (contrary to passenger car CO2 emissions that has begun to plateau and decline in many industrialized countries according to the International Energy Agency).

Everoad has therefore decided to leverage CO2 offsetting to help carriers and shippers, not only to reduce their emissions (say from 100 down to 80) but also to offset the large residual emissions that are left (80 in this example). We have recently launched co-branded fuel cards with DKV, one of the largest multi-brand fuel card player in Europe. All cards come with a Climate option that offsets 100% of the tank-to-wheel CO2 emissions resulting from diesel combustion for a limited fee. We have leveraged our scale to finance the increased cost per liter through negotiated rates for the carriers who want to adopt this service and differentiate in the market. The fees charged by DKV are used to fund deforestation limitation, reforestation and energy efficiency projects. Each project is audited by the highest standard in the market (Gold standard) to ensure that the projects are additional (they would not have been implemented without the funding) and quantifiable.

Everoad’s ambition is to empower carriers to adopt CO2 offsetting through the acquisition of our fuel cards. We will also be in a position to offset selected shipper transportation plans in the near future. The major shippers want their road-freight CO2 emissions to be properly measured and reduced according to their CSR sustainability commitments.

In conclusion, digital freight forwarders are uniquely positioned to accelerate the transition to low carbon road freight operations.

Only technology-based platforms can deliver solutions at scale, gather tons of relevant data, and build multi-attribute optimization engines. This also requires developing a loyal supply from carriers by eliminating the payback gap that allows them to implement CO2 reduction actions… and loyal shipper demand that allocate loads to platforms that can really cut CO2 emissions through reduced dead miles, greener supply and offsetting.

The manufacturers in the industry have made significant progress in recent years, cutting average diesel consumption from 60 liters in the sixties to 30 liters today (per 100 km), creating 100% biofuel, lower resistance tires and hybrid vehicles. The tightening of the emission standards (for example manufacturers will have to cut CO2 emissions for new vehicles by 15% by 2025 and 30% by 2030 in the EU) forces them to continue R&D efforts and implement innovations faster.

The green digital revolution is also happening on the operations side, with digital freight forwarders changing how truck capacity is allocated to shipper loads. They can provide more transparency in the market, make data-driven decisions, surface and reward good practices (e.g. alternative energy trucks, CO2 offsetting fuel cards, consumption ranking from bad to great, etc.) and separate the wheat from the chaff. Digital freight forwarders like Everoad have also started to build large networks of stakeholders (carriers, shippers, ecosystem suppliers) and deliver route optimization, combined cargo and the like that reduce the ecological impact of the road freight industry.

Everoad has been an active and successful catalyst for change for its clients. This is just the beginning of a long journey. Stay tuned for more green services and product features in 2020.

*(Source: European Road Transport Research Advisory Council, 2019; 7% of total global energy-related CO2 emissions according to OECD/IEA 2017)