Assess the State of the Freight Industry

Operating conditions within the freight sector vary greatly from country to country. The business strategies and incentives that work for freight companies in one country may not necessarily work in another.

How do your region’s freight shippers and carriers operate? Examine their practices and technologies so you can identify ways in which your program can add value. Consider the following:

  • What are the primary economic considerations of freight carriers in your region? Because a significant portion of freight industry capital is invested in commercial capital expenses such as vehicles and vessel, freight companies pay close attention to the total capital costs (purchase and operation). In emerging markets where the freight industry is relatively young and expanding rapidly, the purchase price of a vehicle plays a more significant role than in mature markets such as Western Europe, where vehicle service and repair costs are higher. Understanding the key economic factors influencing freight carrier investment decisions will allow you to target your green freight strategies more effectively.
  • Consider the industry growth rate, the mix of new and used vehicles, and the technology profile of the carrier fleets when developing an engagement strategy for equipment manufacturers, retrofit providers, and the carriers themselves. The existing freight sector and number of shippers and carriers will have a significant impact on the design of your program. In emerging markets, such as China and India, demand for commercial freight movement continues to grow rapidly, with international and domestic vehicle manufacturers increasing production to accommodate demand and increase market share. A rapidly expanding fleet may offer opportunities for introducing advanced fuel efficiency and low emissions technologies through regulation of domestic original equipment manufacturers (OEMs).
  • Recognize and be responsive to services (e.g., fleet management services, third- and fourth-party logistics providers, etc.) that are major players in your region. Added-value services pay a major role in the provision of green freight technologies and offer additional opportunities for collaboration. These services, such as sales for spare parts, vehicle rentals, used vehicle sellers, and fleet management services provide important opportunities for coordinating technology adoption and promoting participation in your program.

Also collect baseline industry statistics, such as the following:

  • Number and Size of Shippers and Carriers. These are the most significant factors influencing fuel use and emissions, indicating the overall scale of the industry. Carriers may be “owner operated,” often operating only one or a small number of trucks, or larger firms that have fleets of hundreds of vehicles or more.
  • Freight Activity Levels. Historical freight activity levels inform future projections. Growth can be measured by total revenue or profit, distance traveled, tonnage hauled, or containers shipped. Identify shippers who are responsible for the greatest share of freight movement to help you recruit shipping companies with the greatest influence over potential carrier members.
  • Predominant Operation Types and Transportation Modes. Different freight operation types and modes have their own distinct environmental and fuel consumption impacts, so they may require different program incentives.
  • Vehicle Characteristics Such as Vehicle Engine Size, Fuel Type, and Age Distribution. In general, larger, older diesel engines will have higher PM and NOx emissions than newer and/or smaller diesels.
  • Emissions and Fuel Efficiency Standards. Technological innovations can reduce freight carrier emissions but environmental standards may increase direct costs to manufacturers and vehicle operators.
  • Fuel Quality. Many advanced emissions control technologies can only function with clean fuel such as ultra-low-sulfur diesel fuel.
  • Penetration of Technology and Fuel Efficiency Retrofits. The availability and prevalence of technology and fuel efficiency retrofits vary depending on the relative cost of fuel as well as your freight industry’s stage of market development.

To collect industry statistics, consult the following resources:

  • Trade associations
  • Vehicle registries
  • Government sources
  • Academic institutions
  • Industry consultants
  • Emissions and other models
  • Online data sources and survey results
  • Private data services