Decarbonizing Logistics in Lower Income Countries (Part 1)

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.

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.