Study on trends in logistics: Fossil energy still indispensable until at least 2035

  • Share of renewable energies expected to reach 75 percent in twelve years
  • Standards and norms required for the circular economy
  • City logistics: Last mile becomes more expensive due to personnel costs and strict regulations

Sustainability has become one of the most important premises in the logistics and transport industry - and continues to gain in importance. The top executives from relevant logistics and transport companies and renowned scientists surveyed in the current Horváth study agree on this. Business models and processes are being fundamentally adapted to this, and transport is increasingly being shifted from road to rail, for example. However, there are limits to progress on the road to "true" climate neutrality. In the view of the experts surveyed, technical hurdles, long asset lifetimes, (insufficient) availability of resources and, in some cases, insufficient financial profitability will make fossil energies indispensable for the industry until at least 2035. Even in twelve years, according to the forecast, their share will still be around a quarter.

Among the biggest hurdles on the road to climate-neutral logistics are the still limited range of transport vehicles with alternative drives and the insufficient charging infrastructure. Climate-friendly fuels are also scarce or expensive. This is a particular problem in low-margin logistics. Added to this is the long service life of large, expensive transport vehicles. "In many cases, it simply doesn't yet pay off to prematurely retire conventionally powered vehicles that haven't yet paid for themselves," says Christian Schnöbel, a logistics expert at management consultancy Horváth. "However, decarbonization in the logistics and transport industry has important other dimensions besides CO2-free transport, in which the industry will make great strides in the coming years. As our study shows, for example, work is going full steam ahead on establishing circular economies and regional trade flows."

Call for standards and norms for the circular economy

In the view of the industry experts surveyed for the Horváth study, the reuse of raw materials, packaging and loading aids is another major lever on the road to climate neutrality, alongside the use of electric and rail vehicles. More than two-thirds of the respondents attach great importance to it. "While the circular economy, for example the recycling of packaging, is relatively easy to implement in the B2B segment, it is more difficult in the consumer market. The reasons are highly individualized packaging, as well as the large number of suppliers," says Horváth expert Schnöbel. The heterogeneity of products and processes also makes it more difficult to establish a circular economy overall. From the point of view of the interviewed representatives from industry and science, it is therefore urgently necessary to establish new standards and norms. Three quarters of the interviewees see this need. "The setting of standards can be done by industry associations, cooperating transport and logistics companies or government institutions. The main thing is for market participants to take the initiative," Schnöbel said. "The circular economy dimension is becoming increasingly important as an ESG criterion, not least for investors and capital providers, which puts companies under pressure to act," says the Horváth expert.

Closely linked to the topic of circular economy is also the regionalization of trade flows, which the majority of study participants see as a continuing important trend. Due to crisis-related supply bottlenecks and supply chain disruptions, companies have again regionalized their procurement and sales channels to a greater extent. Re- and nearshoring, increased inventories and diversified procurement are cited as important adjustments in this context. In addition to the so-called resilience achieved as a result, sustainability benefits also result from shorter transport routes and greater transparency due to stronger overall monitoring.

Downtown logistics: last mile to become more expensive

According to the industry experts surveyed, the last mile in city centers will continue to become noticeably more expensive. "The last mile accounts for more than three quarters of logistics providers' total transport costs. More than 90 percent of the last mile is personnel costs, and these are rising significantly due to inflation, among other factors. But operating and standby costs are also skyrocketing due to increasingly stringent regulatory requirements," says logistics expert Christian Schnöbel of Horváth. These include transport-related sustainability targets, immission control, road and building regulations, technical specifications, and data protection and liability regulations. The fact that these requirements also vary from region to region makes standardized solutions more difficult and makes the processes even more expensive. There are various ways to reduce costs, including the delivery of several parcels at one point, route consolidation through improved route planning, and optimized shipment handover. In the view of the respondents, however, there is a fundamental need for innovative and environmentally friendly solutions for all inner-city logistics - i.e., concepts that include rail transport, parcel hubs (for example, in parking garages), cargo bikes, delivery robots and also drones. Startups are seen as playing an important role in this as investor-funded drivers. "Purely reacting to new regulations will not move urban logistics forward; companies must actively shape their transformation," says Schnöbel.

Transformation expertise is becoming increasingly crucial

The impact of megatrends on the transport and logistics industry up to 2035 is thus far from complete. Overall, the experts surveyed by Horváth identify ten urgent fields of action in this study, "Corporate Transformation in the Transport and Logistics Industry." "Whether strategy, business model, organization, processes or leadership - the changes resulting from the trends must be implemented holistically in almost all areas of the company, which requires enormous strategic, structural and cultural adaptability on the part of the companies and their employees. This transformation competence can be mapped, acquired and further developed," summarizes Horváth expert Christian Schnöbel.


About the study

For the study "Corporate Transformation in the Transport and Logistics Industry", more than 25 experts from business and academia were surveyed in personal interviews on the most important industry trends, including top executives and strategists from major logistics and transport companies (including DB Cargo, DB Schenker, dpd, Hapag-Lloyd, Hermes, Lufthansa Cargo, Post CH). The surveys were completed in December 2022.