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Green is the New Gold: The upcoming electric revolution that will shake the logistics industry

By Contributing Author | 02/08/2019 | 5:22 AM

By Andrew Edwards, Process Assistant, Amazon.com

Paris is burning. The protests, known collectively as the “Yellow Vest Movement,” are in response to the new fuel tax in France that has caused gas prices to surge. The protests have now even begun to spill over into other European countries that also have rising fuel taxes due to the Paris Climate Accord. In the business world the protests shine a light on the rising costs of fuel worldwide and the battle against them. Some are looking at Tesla’s Electric Semi as the answer while others are looking at other electric modes of transportation. One thing is for sure though – green is the new gold.

Fuel taxes are no new thing, and certainly not just a European phenomenon. In the United States the first state fuel tax was enacted in Oregon in 1919, and a federal fuel tax went into effect in 1932 with its last increase being in 1993. The effects of the state and federal fuel taxes are different thought. While the federal fuel tax is an excise tax that is paid at the time of manufacture, state fuel use taxes are paid by the end-user styled as a “Highway Tax” which is paid based on the calculated amount of fuel used while passing through that particular state. This makes electric commercial vehicles all that more appealing. The questions going forward are how will states enact fuel taxes on vehicles that don’t use fossil fuels? And how many companies will buy into this new logic?

The secret has gotten out, though. Vehicle manufacturers realize that commercial electric vehicles are a sure bet for companies wanting to save money on fuel as well as wanting to lower their carbon footprint. On November 16, 2017, Tesla unveiled the prototype of their groundbreaking Tesla Semi with the first pre-orders coming in that very same day. This Class 8 tractor will run solely on electricity and will be backed up by a nationwide network of solar powered “Mega-Chargers” which will also be set up by Tesla. Tesla is not alone in the race for an Electric Semi’s, though. Plans for electric trucks have also been announced by companies such as Daimler/Freightliner and the new startup Nikola Motors, the latter of which already has its first pre-order from Anhauser-Busch.

This green revolution is not just happening on land, though. In December 2017 China’s Guangzhou shipyard launched the very first all-electric cargo ship – a 230 foot long vessel with a 2400 kWh lithium-ion battery to power it. Just like the fierce competition to push the world’s first electric Semi’s the battle in the ship building field is heating up among companies as well. In the Netherlands shipbuilder Port-Liner has received a €7million subsidy from the European Union to build what it calls “Tesla Ships” which it says will be capable of carrying 280 containers – with the goal of replacing over the road transport in the country. Another contender is a collaboration between Yara International (a Norwegian fertilizer manufacturer) and Kongsberg Group (a military and autonomous technology developer) to build the Yara Birkeland – a ship which will be able to carry 120 containers and be autonomous as well as being electric. Yara has also stated that their end goal is to reduce the number of over the road vehicles they operate.

Lest we forget, the race to build electric trucks and ships is not just about the cost savings, but about climate impact. There is a push among companies, particularly in the logistics field, to lower their carbon footprint with each company vying for the lowest emissions. UPS in the past two years has added more than 700 compressed natural gas vehicles to its fleet, spending more than $90million. Not to be outdone in the green arms race Amazon.com has spent over $1billion on green initiatives including using wind power for Amazon web services and 100% solar fulfillment centers in the United Kingdom. What is apparent is though there is a fierce debate over the impacts of climate change and global warming, companies want to reduce the effects of smog on large cities.

We are seeing the very beginnings of the green revolution, in some places boiling down to actual revolts. The protests in Europe highlight the fact that there will be a large price for the continued use of ever smaller reserves of fossil fuels. Meanwhile, the fight among companies has been to have the first or greatest green technology on land, sea, and now even air with aircraft such as the Boeing Fuel Cell Demonstrator. One thing this abundantly clear though – the field of Logistics will be the forefront and the battleground of this upcoming revolution.

 

Andrew Edwards is a Process Assistant at Amazon.com as well as a Logistics & Operations Management student at We

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Welcome to "One-Off Sound-Off," a blog page devoted to guest commentary on all things supply chain. This is a space where industry leaders can share their opinions and expertise with the logistics and supply chain community. If you have an article or commentary you'd like to share, please consider sending a guest blog proposal to feedback@dcvelocity.com.



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