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Sustainable transport is driving change and benefits for businesses

Discover how implementing sustainable transport practices can yield economic and operational benefits.
Discover how implementing sustainable transport practices can yield economic and operational benefits.
28 June 2024 •

Transportation plays a fundamental role in global commerce, facilitating the movement of goods and people across vast distances. However, conventional modes of transportation, characterized by fossil fuel dependence and high carbon emissions, have contributed significantly to environmental degradation. In 2022, the transportation sector contributed to a staggering 20 percent of carbon dioxide emissions globally.

In recent years, Asia Pacific countries have increasingly focused on sustainability initiatives, enacting stringent regulations aimed at curbing carbon emissions. Singapore, for example, imposed a carbon tax on businesses to incentivize carbon footprint reduction, a first for Southeast Asia in 2019. Since then, a fivefold raise to S$25 (€17) per ton in 2024 has been announced. India now requires its top 1,000 listed companies to also disclose climate-related information.

The increasing need for sustainable transport

Such developments reflect a shift towards environmental stewardship and signify a collective effort to combat climate change. It also signals the pressing need to adopt green mobility solutions, amidst the burgeoning consumption of goods sourced from more distant origins than ever.

Today, sustainable transport stands at the forefront of modern business practices. Encompassing strategies and technologies aimed at minimizing the ecological footprint of transportation activities, businesses are looking to such solutions to reshape the conventions of the transport sector. Some examples include investing in green technology, replacing existing vehicles with ones that run on biofuel, and even using logistics to track, measure and reduce the pollution emitted by modes of transport.

With the uptake of such practices, small local businesses and multinational corporations stand to gain from many benefits.

Improved reputation and brand image

In a hyper-competitive business landscape, strategic positioning is important for businesses to excel. More than just the product or service, consumers and investors consider brand values and practices in purchase decisions.

A Bain & Company study on Asia-Pacific consumers revealed that 90 percent of respondents are willing to pay a premium for products with a positive environmental impact or those deemed healthier. Investors are also more inclined to support entities that demonstrate a steadfast commitment to sustainability. In 2022, 78 percent of global investors from the same Bain & Company study said that they place more emphasis on Environment, Social and Governance (ESG) than they did five years ago, and 65 percent believed ESG matters would become standard practice over the next five years.

As sustainability-driven operations and supply chains resonate with the increasingly eco-conscious consumer base and stakeholders, businesses can leverage sustainable transport to bolster brand loyalty and market differentiation. Technologies like blockchain, for example, are increasingly being leveraged to provide transparent and traceable supply chain networks. Even as consumers and stakeholders are provided visibility into the sustainability credentials of products, the company using these technologies becomes a socially responsible entity.

Optimized operations

Sustainable transport empowers businesses with the ability to optimize their operations. With rapid technological advancements and innovation, integrated logistics solutions allow for greener route optimization methods like intermodal and multimodal transportation that do not compromise speed and efficiency. Companies can make conscious and well-informed decisions such as coupling train freight and inland water transport along traditional road freight. Businesses enjoy accelerated cargo delivery and streamlined end-to-end transport processes, while minimizing environmental damage.

Beyond operational enhancement, sustainable transport is also critical to risk mitigation amidst uncertain and volatile times. Climate change poses significant risks to supply chains, with the Carbon Disclosure Project (CDP) projecting that companies could face losses of up to US$120 billion (€110 billion) due to environmental disruptions by 2025. Fluctuations in oil prices highlight the uncertainty and potential risks associated with traditional fuel sources. Despite experiencing unprecedented lows during the pandemic, oil prices rebounded sharply, nearing US$100 (€92) per barrel in 2022 amidst a stronger economic recovery.

Factors like geopolitical tensions, supply chain vulnerabilities, and ongoing inflation concerns further underscore the importance of transitioning towards sustainable transportation solutions for long-term viability. By diversifying transportation networks and reducing reliance on finite resources like fossil fuels, businesses can safeguard themselves from volatile commodity markets and reduce their vulnerability to disruptions and bottlenecks. This builds a resilient supply chain and sets businesses on the fast and right track for enduring success.

Cost savings and profitability

In the long run, sustainable transport options offer compelling financial advantages. A Deloitte Global survey conducted in 2019 and 2020 revealed that more than half of the companies saw a positive impact on revenue growth and increased profitability since taking steps to green their businesses.

By embracing eco-friendly transport solutions, businesses unlock a host of cost-saving opportunities. Alternative fuels used in sustainable transport options are often more fuel-efficient and may lead to substantial savings on fuel expenses over time. Moreover, vehicles designed with sustainability in mind typically boast lower maintenance requirements. Electric vehicles, for example, do not require oil change, and uses less parts, thus requiring less regular servicing. This translates to decreased upkeep costs throughout their operational lifespan.

Governmental bodies also support greener transportation practices and encourage businesses to switch by providing tax breaks, rebates, and reduced registration fees. For example, the South Korean government provides a range of enticing tax incentives and subsidies to businesses investing in electric vehicles (EVs). Coupled with operational efficiencies, sustainable logistics winds up driving down overall logistics expenses.

Pushing through the roadblock

Despite the compelling benefits, sustainable transport often takes the backseat in a long list of priorities as businesses may face obstacles in transition. Starting sustainable logistics can be daunting, with high upfront investment costs, infrastructure limitations and technological barriers.

Sustainable logistics requires an in-depth understanding of the origin, journey and impact of products. The implementation of green practices could look wildly different depending on the size of the business, industry and unique needs. As sustainable transport is not a one-size-fits-all concept, businesses may be quick to pump the brakes on implementing changes that do not guarantee worthwhile gains.

Thus, partnering with a third-party logistics provider (3PL) may be useful for businesses adopting sustainable transport practices. By outsourcing logistics to a reputable 3PL, businesses can tap into their wealth of expertise, resources, and infrastructure.  From route optimization and vehicle electrification to carbon footprint tracking and emission reduction strategies, 3PLs offer comprehensive solutions tailored to each clients' sustainability objectives.

The road ahead for sustainable transport

Sustainable transport is not just a fleeting trend. At its core, there is a fundamental shift towards a future where economic growth and environmental stewardship go hand in hand.

International agreements and collaborative efforts between countries are helping set common goals and standards. Simultaneously, innovations in battery technology, alternative fuels, and energy-efficient designs are paving the way for more sustainable transport options.

While the journey ahead is filled with opportunities, businesses must recognize their pivotal role in enacting change. By embracing eco-friendly transportation practices, businesses can transcend mere environmental obligations to yield substantial economic and operational benefits.