Loaded trucks on the road, photographed from behind.

Decarbonizing Logistics in Lower Income Countries (Part 1)

by Prof. Alan C. McKinnon
Loaded trucks on the road, photographed from behind.
Loaded trucks on the road, photographed from behind.

Most of the research on the decarbonization of logistics relates to the developed world. Forecasts suggest, however, that over the next few decades freight traffic and its related carbon emissions will grow much more rapidly in lower income, non-OECD countries. We need therefore to look more closely at their decarbonization challenges and possible lessons they can learn from more developed countries. I do this in a report for the World Bank, focusing mainly on non-urban freight movements within low and middle-income countries (LMICs).

The report adopts the 5-lever logistics decarbonisation framework, comprising demand management, a shift to lower carbon transport modes, improved utilization of freight capacity, increased energy efficiency and the switch from fossil to renewable energy. For each of these five levers, I examine recent trends in LMICs, potential carbon savings, implementation barriers and relevant public policy instruments.

A key question is whether LMICs are destined to follow the same logistics development path as pursued by European and North American countries, which generally leads to much greater carbon intensity. Alternative pathways could help LMICs avoid locking into highly centralised, time-sensitive, road-dependent logistics systems, thereby easing future decarbonisation pressures.

In this brief summary of the report, I review the application of the five levers to logistics within LMICs.

1. Moderating the growth in demand for freight transport

Historically there has been a close correlation between freight traffic growth and economic development.  LMIC governments are therefore reluctant to restrain freight movement and thus risk jeopardizing much-needed economic growth. Improvements to transport infrastructure which accompany this growth promote the centralisation of production and storage operations and expansion of market areas, spatial processes that generally make logistics more carbon intensive. Several land-use planning measures, such as clustering logistical activities in ‘freight villages’, promoting localised break-bulk operations and encouraging the development of factories and warehouses in rail-connected locations, can help to mitigate the effect of these processes on carbon emissions.

2. Increasing the proportion of freight moved by lower carbon transport modes

In African, Latin American and South Asian countries the proportion moved by rail has dropped from 90% in the 1950s to under 30% today and in some countries, less than 10%. As the carbon intensity of moving goods by rail is, on average, 3-4 times lower than transporting them by road, this is a trend that should be reversed.  Past efforts by governments in European and Asian countries to redress the road-rail imbalance have largely failed. Taking account of this experience, the report recommends making modal shift policies more holistic in distorting the freight market and fuel taxation in favor of rail; more targeted by sector, commodity and corridor, recognizing that not all segments of the market are contestable; and multi-faceted in deploying a broad range of public policy instruments – fiscal, regulatory, infrastructural and advisory.

Continue reading at Part II.

More information:

Alan C. McKinnon

Alan C. McKinnon is Professor of Logistics and Honorary Senator at KLU. He has been part of the KLU faculty since 2012 and has been lecturing, researching and advising on logistics since 1979. Over the span of over foru decades he has undertaken research on a broad spectrum of logistics topics. A long term interest in the environmental impact of logistics has culminated in recent years in research on the opportunities for decarbonizing logistics and need to adapt logistics systems to climate change.

Connect with Alan McKinnon on LinkedIn or learn more here.

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