Developments in the Freight Industry in Economic Development: the Growth in the Freight Transport Industry - Literature review Example

Introduction Developments in the freight industry have played a key role in economic development with major reasons for this growth in the freight transport industry mainly attributed to trade liberalisation, globalisation, falling transport costs, specialisation in production (Urbel, 2001). With this growth, much freight traffic have concentrated in major routes that serve airports, ports, and border crossings in a manner that that has greatly impacted the environment. The environmental footprint from the freight transport industry has been under great scrutiny over the past two decades with the industry facing increasing pressure to adopt ways through which to low its impacts on the environment. This is especially so with the continued rise in freight transport, especially road transport which produces unacceptable levels of emissions impacting the environment negatively. This can either be through adoption of transport modes that are less impactful to the environment, modes with lesser emissions and with higher energy efficiency or development of tougher rules of the emission standards. Of recently much of the focus has been mainly on effectiveness of intermodal shifts from less environment- friendly to more environment-friendly modes of transport (Behrends, Lindholm, and Woxenius, 2008). Indeed current trends show that there is continued increased in freight transport especially by road with such volumes expected to further rise in the future, further impacting the environment (Katsioloudis and Jones, 2012). There is therefore an urgent need for effective measures to be taken and efficient policies be developed against the backdrop of continued rise in freight transport in order to ensure a much more sustainable environment in the future. Objectives of the study The key objectives of this study are to evaluate the different ways that can be used to reduce the environmental impact of the freight transport industry thereby to be more sustainable. In this sense various research studies will be reviewed and analysed. The analysis will focus on whether the various actions used to reduce environmental impact of the freight transport are sufficient enough to bring change, especially in the road freight transport sector where there is increasing traffic by day, yet is deemed by scholars as the most unsustainable (Woodburn, 2003:241). This paper will specifically focus on how road freight transport can be reduced in favour of other modes of transport as a strategy in reducing environmental impact of the freight industry. It will analyse the suggested solutions in literature, and propose improvements to these solutions for reduction of adverse effects of the freight transport industry on the environment. Methodology In order to meet the objectives of the research, a literature review of past conducted research were analysed from peer reviewed journals and also from policy documents in how to reduce environmental impact in the freight industry. These works are then critically analysed and compared in order to determine possible suggestions that can further improve the available solutions. Scope of study The scope of this paper will specifically focus on how road freight transport can be reduced in favour of other modes of transport as a strategy in reducing environmental impact of the freight industry. This focus is given mainly because of the level of impact that road transport is noted to have on the environment than any other mode of freight transport. Katsioloudis and Jones (2012) note that the trucking industry produces 22% of all transport related emissions in the transport sector, with road freight transport accounting for 72% of all carbon emissions and energy use. With such statistics at hand, a focus on how to reduce road freight environmental impact is given precedence and how road freight transport can be reduced in favour of other modes of transport. Freight Transport Industry and the environment The freight transport industry The freight transport is mainly composed of five modes: waterways, road, railways, pipelines, and air transport. According to Pew Centre of Global Climate Change (cited in Katsioloudis and Jones, 2012), while all these modes of freight transport all contribute to the deterioration of the environment, the trucking sector leads the pack with 72% of transport sector emissions, air transport following in second at 10%, then water transport, rail transport and lastly transport through the pipeline. This order by which freight transport impacts the environment shows that some pressure can be take off the road and shifted to more efficient forms of transport in order to reduce environmental impact. These figures also show that finding sustainable ways through which to reduce the road environmental impact from the road is critical in reducing the overall effect of freight transport on the environment. Attaining a sustainable freight transport industry has been noted by Behrends, Lindholm, and Woxenius, (2008) as the key for environmental sustainability, economic growth and social welfare. Sustainable Freight Transport industry The sustainability of freight transport has been an issue of wide discussions among scholars. First and foremost Behrends (2011:20) defines sustainable transport as one which is capable of meeting current transport needs without compromising on the needs of future generations. From a wider perspective, this definition is based on the view that today’s systems impose negative effects to the environment and society in a manner that future societal needs may not be met due to today's actions. This view is narrowed by Elkington (2004:9) to a more focused impact on today’s actions on the future’s “bottom line” which are: the economy, society and the environment. He shows that individuals and entities need address various economic and social issues in a manner that is integrative if real environmental progress is to be attained. This goes quite contrary to conventionally held perceptions that society benefits and environmental benefits are often tradeoffs; you get one, you lose the other. On the other hand, Carter and Rogers (2008) have quite a contrary view. From their perspective, it is the combination of the three bottom lines that ensure a positive impact on the environment and society, and results to long run economic advantages. Despite the various views of what sustainability entails, where scholars generally content that sustainability should always entail long term stability in protection of natural resources and productive capital for both the present and future generations (Behrends, 2011; Quak, 2007; Whitelegg, 1994). Applying the above definitions to the freight transport, then a sustainable freight transport would be one which enabled the society to have quick and affordable access to means of movements, which operates economically fairly and does not emit harmful waste into the environment, while at the same time promote long term stability in protection of natural resources and productive capital for future generations. In practise though, it is difficult to have a freight that is truly sustainable in a manner it is both economically efficient and profitable while at the same time environmentally clean (Brehends, 2011:20). Freight transport is an integral component of any economy as it facilitates movement of goods and services along a supply chain. It is due to this fact that freight transport demand is often linked to economic growth or development. Indeed Behrends (2011:1) shows that in the period 1995 to 2008, freight transport in the European Union (EU) grew at almost the same rate as the economies at 2% while during the recent 2008 recession it dropped by 11.2% as the GDP of the EU member countries dropped by 4.2%. Since most countries seek to continually increase their economic development, in the same endeavour do also freight transport increase within an economy. This growth and development of freight transport has increasingly been a rising concern for sustainability, especially since road freight is noted for quite a number of negative influences on the environment, society and economy (Quak, 2007). It is for this reason the freight transport often finds itself in constant conflict between sustainable development and efficient logistics. While on one hand efficiencies in time of delivery, and security of products being transported is critical, on the other hand there is ever rising pressure to resolve and reduce environmental impact of the freight industry. This challenge is especially significant in the road transport which is the most preferred and fast, yet most unsustainable with higher space constraint and congested roads (Hesse and Rodriguez, 2004:177). Environmental impacts of the freight industry Despite the key role that freight transport play in economic development, it has been one of the major contributors to the environmental problems currently faced by people. From the ships on the ocean, to the trains, and the light and heavy trucks, all these emit large amounts of pollutants into the environment. Notably, the freight sector is the single largest contributor to air pollution. Other than air pollution, other environmental problems caused by the freight transport include, noise pollution due to the nature of the trucks, water pollution, waste generation and fragmenting of land used for road transporter (Andersson, 2005:10). Freight transport mainly uses fossil fuels for its energy needs and this has a great effect on the environment especially in terms air emissions. Air emissions are the key means by which the freight transport impacts the environment where the intensity of energy consumed plays a critical role. Trucks are noted to be the most consumers of fossil fuel and expellers of emissions (Andersson, 2010:10). Since different transport modes have different energy needs, then they are considered to vary in terms of environmental impact ranging from low energy consumers to higher ones. Andersson (2010:10) and Whitelegg (1994:5)show that carbon dioxide from heavy trucks may “rise as much as 138% by 2025”, while a shift from road freight towards rail freight by double may reduce such emissions by 10-15%. Heavier Lorries which weight 16 tones produce about 400kg of carbon dioxide emissions per 80km/hour speed, with such emissions rising drastically with higher speeds. Below is a table and graph showing the estimated emissions levels by three modes of freight transport commonly used in the world: Table 1: Estimates of Emission Rates by Mode of Transport, Grams per Tonne Kilometre Freight Mode CO2 CO HC NOx SOx PM10 Ship 10 0.011 0.008 0.253 0.144 0.021 Rail 17 0.092 0.024 0.3 0.022 0.011 Truck – 8 axle 33 0.49 0.04 0.83 0.02 0.004 Source: Lawson, 2007 Comparing emissions between Ship, Rail and Truck. From the graph above, it is noted that the CO2 emissions of trucks are about as twice as those of Rail and more than three times those of ship. The European Environmental Agency (2008) notes that the rise in traffic is one of the key factors that increase pollutants such as nitrogen oxides, sulphur oxides, and the carbon oxides. This not only impact human health but also destroys buildings. Most of these have been due to the rise in trucking activity. While over the past two decades most research have shown that a shift from road transport towards more sustainable transport modes is key to environmental sustainability, this shift has been slow. Sanchez-Rodriguez, Potter, and Naim (2011) in analysing why the UK freight transport sector is still unsustainable despite the incentive to adopt more environment friendly means of transportation found that factors such as delivery time or delays, delivery constraints, inventory and demand management as the key reasons for the slow change to more environment friendly means such as rail transport. Measures for sustainable freight transport A wide array of studies have analysed measures that can be taken in order to ensure a more sustainable and environment friendly freight transport sector. Based on the European Commission best practises in freight transport sourcebook (2000), the key approaches with which to ensure environmental sustainability in the freight transport sector were elucidated as modal shift to environmental friendly transport modes, driver behaviour and training, adopting more energy efficient truck designs, cleaner fuels and engines for the transport vessels, increasing load factors for lorries, and more stringent regulations on freight transport emissions. On the other hand Murphy and Poist (2003) through survey of multinational companies across the U.S., Canada and Europe on their logistics management and freight activities noted that there were a number of ways to better manage environmental issues that arise from freight transport. These included redesigning more environment friendly logistic systems, carrying out environmental audits and training staff on environmental sustainability, especially the drivers of trucks. Some aspects of these conclusions are similar as those developed by the European Commission. From this view point therefore, the measures suggested by the European commission will be analysed based on existing literature. Modal Shift to Environment friendly transport modes Modal shift refers the shifting from one mode of transportation to another due to significant comparative advantages in the new mode. This can be in terms of environmental sustainability or financial sustainability. Numerous research have pointed to the lower levels of emissions that are a characteristic of shipping and rail transport as compared to road freight (Katsioloudis and Jones, 2012; Sanchez-Rodriguez, Potter, and Naim, 2011 ). For most organizations however, the shift from road to rail has not been a viable solution as they took into consideration factors such as control, flexibility, punctuality, security of their transported merchandise. Though research evidence shows that more and more companies are tending towards more efficient means of transporting their goods, the trend has been slow. Most of the changes have been mainly focused on developing efficiency in road transport, than actually shifting to rail transport with regard to on-land transportation (Sanchez-Rodriguez, Potter, and Naim, 2011). A number of literature have reviewed measures that can be taken to ensure and encourage modal shift from road use to other more sustainable modes of transport and the various barriers encountered in doing so. For instance, Lumsdon, Downward and Rhoden (2006: 141) ascertain that various initiatives such as informational campaigns should be undertaken to encourage the shift to rail transport usage. They point out that the modal shift will be successful if various segments of switchers are identified and specific strategies aiming towards those switchers are put in place to stimulate the shift. A number of Acts have also been enacted to ensure that there are enough optional sustainable modes of transport. Such an Act is the “Sustainable Transport Development Act” which seeks to shift present transport systems to new environment friendly and sustainable modes of transport (National Reports, 2008:3). Also included is the “National Intermodal Transportation System” policy which seeks to interconnect all modes of transportation to ease the shift from one mode to another (GAO report, 2007:1). It is noted that government actions and societal pressures is what will help in modal shifting and not just the technological advancements (Peeters, 2010: 87-90). A modal shift from road to rail, for instance, would help in combating and reducing the amount of carbon emissions released in to the environment and reducing the great congestion that is usually a characteristic of road transport. Rail transport has comparative advantages against road in terms of costs, environmental impact, efficiency and reliability (Woodburn, 2003:1). This modal shift is based on a variety of factors that may be viewed as costly or beneficial by the switcher. The factors may include the flexibility and reliability of the mode, the time it takes from one place to another, the costs involved and the image of that mode of transport. And though rail has been found to be an environmentally friendly way of transport and has quite a number of comparative advantages over road, the modal shift from road to rail has been slow, and transporters prefer using trucks to transport their goods. This is mainly because of the difference between what is socially desirable and what individual’s desire. This travel behaviour can be understood by looking at the various barriers to the shift (Halden, 2003). The barriers to the shift from road to rail can be categorized as hard, soft or complementary factors. The hard factors are the costs of travel in terms of money and time, the various land use policies and the levels of truck dependency and ownership. Soft factors may be lack of information on other modes of transport, safety of the various cargos being transported, the comforts of the shippers to use that mode, and the various attitudes that people have about that mode of transport. Complementary factors may include costs other than transport costs, for example, taxes, budgets and the impacts of various transport policies. Farrington (Halden, 2003:5) points out that, individuals are dependent on their trucks either because they have no other means of transportation or they do not want to transport their goods by other means even though they have the ability to do so. It may also be that they lack information on other better efficient ways of transportation or they are located in areas out of reach to the rail mode of transport. Cost and time reductions in road freight, have made it a more attractive mode of transportation as compared to other modes of transport. Key steps that can be taken in order to make more environmentally friendly transport modes such as rail way freight transport more favourable is through developing these transport modes to meet the specific needs of the shippers so that it can be able to compete well with road freight. Such include developing rail freight to have collapsible suspensions and pockets for cranes (Rail Business Intelligence, 2009:1). Chaudhury (2006:320-326) note that for a sustainable modal shift from road to rail, it is important that the rail freight system be given a boost through subsiding the cost of rail transport and upgrading its facilities. Such measures should aim at providing almost similar advantages as those of road such as reliability, good connections, and access to remote areas. There are quite a number of companies that have successfully shifted from road transport to other modes. For instance the German chemical BASF has shifted more than 70% of its merchandise transportation on waterways, while others such as IKEA, the Swedish furniture maker uses a combination of both trains and lorries for both its supply needs and for transportation of its finished products (European Commission, 2000). Driver behaviour and training Driver behaviour and trainings also another measure that has been viewed to help counter environmental impacts of road freight. The rationale behind this is the view that a knowledge driver will know how to driver in manner that minimum emissions are released while they take the shortest route to deliver the goods in order to reduce the level of emissions released per kilometre covered. The European commission (2000) notes that effective driver training on fuel management systems, and shorter routes to take through map reading is critical in ensuring fuel efficiency to an extent and also ensuring that the least emissions are availed into the environment. Coyle (2000: 11-12) analyses the impact of driver training programme and the impact it has on miles per gallon covered and in essence environmental efficiency. In this study it is concluded that successful driver training programs introduced in companies not only helped cut fuel efficiency by 10%-15%, but also enabled the drivers be able to understand various routing software that enabled them choose the shortest route thus also lower environmental impact of the vehicles. While driver training does not seem to receive a lot of attention from research literature, it has though caught the attention of a wide array of companies which try to save on fuel consumption. For instance the logistics and transport company EVO trains its drivers on ways to drive various trucks economically in a manner that reduces fuel consumption and this way also reduce the impact into the environment. This is similar to British Blagden Packaging Ltd which saves up 18% of fuel consumption in the company (European Commission, 2000). Since most use fossil fuel, this can be deducted as a positive impact to the environment. The degree of effectiveness to this approach as a measure of reducing environmental impact of the freight transport may be questionable, anecdotal evidence shows that the saving on fuel, can be related to environmental sustainability approach. Energy efficient trucks and increasing load factor for Lorries Since most shippers have still insisted on road freight due its advantages such as security, monitoring, fastness and even remote reach, while the shift to other means has been slow, it is imperative that the solution also be taken to the road vessels and develop more green and efficient trucks that are more friendlier to t he environment. The European Commission (2000) through its best practices reports notes that effective and energy efficient truck designs that use less fuel, release less emissions, make less noise and which can carry more load is essential is reducing environmental impact through reduction of air pollution, noise pollution, and the number of trucks on the road. It is within the interest of freight companies to carry as much as possible in one trip using the smallest number of views. Purchasing wider capacity trunks which are also energy efficient, despite their cost, it’s often a good investment in the long run. In his analysis Coyle (2000:12) notes that increasing truck efficiency through installation of vehicle routing and load planning software also plays a critical role in environmental improvement. In an analysis of on how such software impacted fuel usage and distance travelled, it was noted that from the sample observed that the distance travelled dropped by 25% from 3.2 million km to 2.4 million. This is a significant decline with a potential high impact on the level of emissions released into the environments. Cleaner fuels and engines Urbel (2001) notes that indeed two key determinants of externalities are fuel consumption and emissions. These can be controlled through redesigning the vessels that use the fuel, and emit the wastes. Indeed technological advancements of the vessel engines and exhaust controls, changes in the combustion conditions, and changes in the engine design are the key to lowering environmental impact of freight transport. While development of engine improves all modes of transport, they especially impact road freight since it is in this sector that competition is highest. Linc Logistics Information and Navigation centre (2011:2) give a number of strategies that help to cut back freight carbon emissions. One of the key measures supports the need for better efficient track where the paper suggests the take up and purchase of cleaner engine technology such as hybrid trucks. Though such trucks may be expensive, they are better investment decisions in the long run, as enable they not only enable lowering of costs for the company through law compliance, but also immediately substantially lower fuel costs and carbon emissions in the environment. Apart from this, cleaner alternative fuels in terms of biogas and bio fuels also play a critical role in the strategies to reduce the impact of freight transportation on the environment. In London’s Freight plan (2011) for a more sustainable freight distribution, policy B34 is specifically dedicated to using bio fuels in the freight transport industry in order to reduce carbon emissions by 50%. With such a plan covering till 2025, the reduction of fossil fuels in favour of bio fuel would substantially shift the freight transport industry into a more sustainable industry especially with the continuing growth of the sector. Policy measures and regulations Urbel (2001) notes that the key to providing companies with incentives to take measures that will aim at reducing their environmental impact is through establishing stringent policy measures for instance taxes to control the level of permissible pollutions. In this manner pollution taxes, subsidies or permits that are paid for pollution abatement would tent to align to a given goal of a city, or a country. Applying this within the freight transport industry, since it is mostly the fossil fuels that impact the environment negatively, then different tax rates need be levied on different fuels, where more polluting fuels pay highly than less polluting ones in order to provide disincentive from vastly using the highly pollutant fuels in freight transport. The success of using taxes has been noted in various countries such as Sweden, and the UK (Urbel, 2011:22-23). Chaudhury (2006:320) on the other hand views this differently and rather prefers that the government need enforce the charging duties on heavy vehicles as a way of reducing the congestion they cause. These charges, she noted, should be aimed at discouraging the use of road transport as the preferred means of freight transportation, and thereby reducing the barriers existing in using rail transport and instead the funds utilized in repairing of roads damaged by overloading trucks. While these two authors take a different view to how policy measures and regulations need be handled, Urbel’s view looks more practicable in being able to reach out to the widest population efficiently, and also highly provide incentives to firms as they seek to cut their costs of doing business. Conclusions and Recommendations In view of the above review and analysis on reducing environmental impact of the freight transport industry, it can be noted that the bigger efforts in reducing such impacts have in the pasts heavily relied on modal shifts from road freight which is the most polluting, to other modes such as rail, shipping or waterways. The shift though has been slow, with the focus over the recent past now aggressively turning on the road freight and how to make it more sustainable despite its continued growth. Primary focus has been on heavy taxes on heavy trucks and pollutant fuels, and strict regulations concerning truck conditions on the road, and better engines that are less impactful. In view of all these factors the following recommendations are drawn: Distance based taxes for heavy trucks Distance based taxes for heavy trucks though not yet fully functional, is a key strategy that can used to shift much traffic from the roads to the rails or water ways, or to encourage an intermodal system of transport where the longest distance are covered by other modes while shorter distances are covered by road. This would act as a disincentive to road freight thereby either encouraging intermodal transportation using other modes such as rail transport. This would also evenly distribute the demand in the freight industry at the same time lowering environmental impact. This shift from tax based on the trucks to that based on the distance covered by the truck would be an incentive for firms seeking to save on costs of doing business. Advancing rail transport facilities while lowering costs For a sustainable modal shift from road to rail, it is important that the rail freight system be given a boost through subsidizing the cost of rail transport, upgrading its facilities, developing engines that make it faster, and providing desirable conditions for shippers. Such measures should aim at providing almost similar advantages as those of road such as reliability, good connections, and access to remote areas, and these would make rail transport more desirable in freight transport. A shift from road to rail would lower environmental impact. Adoption of web based tools that calculate the shortest routes to take With the ever rising developments in the technology sector especially web based tools, a web based tools that can be accessed anytime anywhere similar to the recent University of Delaware web tool (Dube, 2010) aimed at calculating environmental cost of freight transport, should further be modified to be able to calculate time, distance and potential fuel to be used by a truck in various possible routes that the truck can take, in order to determine the most efficient. These automatic web tools would not only enhance efficiency in the company, but will also promote environmental sustainability by seeking to save on mileage, fuel and reduce emissions. Vessel clean up and maintenance Cleaning up the trucks, trains and other transportation vessels is essential in ensuring that the engines do not give out emissions that impact the environment. 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Woodburn, AG 2003, 'A logistical perspective on the potential for modal shift of freight from road to rail in Great Britain', International Journal of Transport Management, 1, 4, pp. 237-245, Business Source Complete, EBSCOhost, viewed 9 May 2012 Read More