Transport and Logistics: how will telematics solutions evolve in a low-carbon world?

Over the past years, with success of movies like “An inconvenient truth” from AL Gore or “Home” from Yann Arthus Bertrand, we have seen a growing commitment to reduce greenhouse gaz emissions (GHG). With the transport sector accounting for more than 13% of CO2 emission worldwide (IPCC2007ⁱ) and with road freight transport as the major and growing portion, there is a real focus of policy-makers and citizens-customers who are demanding for more information and regulation. We can observe here and there a global consensus on how to mitigate the GHG: from “hard” regulations like the road user charging systemsⁱⁱ, via disclosure of “carbon footprintⁱⁱⁱ” to more voluntary solutions like fuel monitoring. In one word, there is a need for more environmental-aware supply chains requiring the use of smart and innovative solutions.

In an energy-constrained world, what supply-chains will require?

What will be the next direction to take for telematics designers in Transport &Logistics (T&L) sector?

Recently, the sudden peak of oil price in summer 2008^iv has obviously contributed to trigger a greater adoption among T&L sector for telematics solutions enabling the “fuel consumption monitoring” and the success of new policy for improvement of driver education like “eco-driving”. Truck OEMs and Fleet management System vendors have developed a large portfolio of solutions for reducing the energy consumption. Car OEMs will propose more and more in new car models similar features. But that’s only one side of the problem. Key takeaways I would like to share here are based on analysis of the end customers from the T&L sector in conjunction with the feedback from company fleet managers.

Oil prices will very likely continue to increase and so will the use of alternative fuels, however neither is likely to revolutionize the T&L sector. If oil price volatility is a significant risk for the sector, one thing is really sure, supply chains will evolve in the direction of ensuring that cost of emissions is paid by the causer.  Whether or not, the one who designs telematics, see it as a business opportunity,  T&L providers and fleet managers will need to track, document and declare their CO2 emissions (the so-called “carbon footprint”) in the future and thereafter, other types of emissions such as Nitrogen Oxyde, noise, etc. On every company level, the monitoring of carbon footprint will require introduction of “mobility account” for employees which implies a mileage reporting solution for the entire fleet.  In parallel of mobility accounts, “CO2 tickers^v” would have to be calculated in order to document all carbon emissions caused during the production and transport of manufactured goods. CO2 tickers could become standard for all consumer products since the overall objective is to influence consumer behavior. Companies having seized this opportunity early enough will gain a competitive advantage and have a significant marketing and PR value (on the opposite of the green washing).

Another key trend in supply chains is the need of continuous real-time control of the flows of goods.  Such systems bring benefits to supply-chains in terms of greater visibility and better flexibility, preventing the risks of external disturbances. For example, telematics can help in detection of unplanned stops and delayed deliveries. Another key service offered by telematics provided by truck OEMs is remote diagnostics enabling a greater uptime and means for preventive maintenance. In the rail sector, GPS localization of shuttle trains and single wagons are critical information for insuring good timing in deliveries. In addition, telematics can help for insuring security of high value goods transported with adapted sensors. The value of such services is automatically increased with the oil price risk.

In conclusion, to coping with a low-carbon world requires tackling new challenges. The Transport and Logistics providers and the fleet managers would have a greater interest in adopting telematics solutions giving a good bundle of benefits including not only the immediate savings with fuel monitoring but as well the facility to track and document all emissions, plus capacity of real-time monitoring.

Footnotes
i IPCC: Intergovernmental Panel on Climate Change. http://www.ipcc.ch/

ii Some cities have adopted congestion schemes like Singapore, London and Stockholm. Many countries have road charging systems, but only few have the capacity to create a toll system based on level of emissions: the Toll Collect in Germany since 2005, Slovakpass since 2010 and the future Eco-taxe in France to be launched in 2012.

iii France has recently adopted in 2010 a law ”Grenelle de l’environnement II”, requiring all  companies of more than 500 employees in France to declare annually and progressively from January 2011 their carbon footprint and CO2 ticker for manufactured goods.

iv On July 11, 2008, oil barrel price rose to a new record of $147.27. http://en.wikipedia.org/wiki/Price_of_petroleum

v CO2 ticker is the idea of putting a label identifying the emissions caused during the production and transport. Initial examples are already in place. For CO2 ticker, the challenge is to agree on a future industry-standard. For transport sector, Association of European Vehicle Logistics (ECG) is working on development of a common carbon calculator. http://www.eurocartrans.org/

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