The Fuse

Data Holds the Key to a Lower Cost Energy Transition Across the Freight Sector

May 04, 2023

By Rachel Aland

One of the most transformative roles freight data can play is to accelerate the sector’s energy transition. By bringing digital technologies to scale and leveraging digitalization, we can bridge the efficiency gaps in supply chains and optimize freight movement while achieving broader sustainability goals.

To transition the transportation sector to clean energy, the U.S. and EU are investing record levels of resources—through the Bipartisan Infrastructure Law and Inflation Reduction Act in the U.S. and the European Green Deal and the deployment of alternative fuels infrastructure (AFIR) legislation in the EU.

As part of that transition, governments are pushing private actors in the freight sector—which accounts for 40% of transportation emissions—to accelerate efforts to adopt electrification technologies and alternative fuels across their fleets of trucks, trains, ships, and aircraft. However, the level of investment and long timelines required for this transition have caused executives to pushback and even question the feasibility of these goals, noting that the added expenses “can easily double or triple transport costs.”

The transition away from oil is necessary not only to abate the health effects from the pollution it causes and reduce climate impacts but for the long-term resilience and security of the world’s supply chains. To reduce the costs of this vital transition, the freight industry must leverage data to use existing fleets and infrastructure more efficiently as they invest in electrification and alternative fuels.

This dual transition—using data to move goods more efficiently with existing fleet and infrastructure while transitioning to more sustainable energy—will have immediate benefits and make the freight transport sector’s long-term transition away from oil faster and more cost effective.

Costs of Transitioning the Freight Sector to Alternative Fuels

It will be expensive to transition the freight sector away from oil.

Heavy-duty electric trucks are expected to cost three times what their diesel counterparts do. A California Energy Commission study determined that there would need to be nearly one charging station for every truck, or 157,000 fast charging stations in California alone to support 180,000 medium- and heavy-duty electric trucks. Simply installing truck chargers across the U.S. is estimated to cost $35 billion. We can expect technology to improve and costs to come down over time, but the transition will be costly regardless.

Beyond the charging infrastructure required, the grid impacts are substantial. Researchers estimate a rural truck parking facility with 60 parking spots servicing approximately 125 trucks a day would need the equivalent electricity of 5,000 households. The power demands of transportation charging infrastructure add to the growing electricity requirements for all sectors working on decarbonization—all of which will be competing for a volume of clean power that does not yet exist.

These high costs are not limited to electrifying the truck fleet—transitioning all freight modes to clean fuels will take a substantial investment. In the maritime sector, switching to low-sulfur fuels comes with a $50 billion price tag, the first step in a long road to cleaning ocean shipping’s fuel sources.

Taking the steps needed to get the sector ready for low- or zero-emission fuels will take a significant lift and funds dedicated towards technological advancement. Merely getting to a trial stage of zero-carbon fuel technology in the maritime shipping sector will take an estimated $5 billion in investment.

But these costs are based on how the freight industry currently operates, which includes significant inefficiencies caused by low levels of digitalization, outdated modes of communication, and a lack of standardized data exchange.

Better Quality Data Reduces Costs Now and For the Energy Transition

There is an opportunity to reduce the costs of the alternative fuel infrastructure serving the freight sector in the U.S. and Europe by increasing the sector’s efficiency with digital tools. ReMo’s research has shown that, if implemented today, standardized near real-time data exchange in the global freight sector would reduce emissions by 22% and costs by 6%. It would also eliminate the use of 2.5 billion barrels of oil a year and cut 40% of air pollutants in port communities. These results come from making better use of freight assets through improved information flows and more fuel-efficient navigation.

With the infrastructure demands and costs associated with the freight transportation energy transition, it is critically important that the capacity of the existing system be used to the fullest.

Trucks traveling empty for approximately 20% of their trips and spending 25% of their operational time per day idle means wasted energy now and higher energy transition costs in the future.

While truck congestion costs approximately $16 billion and wastes 7 billion gallons of fuel in the U.S. each year, this wasted energy translates to significantly higher costs once grid upgrading, electric truck vehicle costs, and charging infrastructure needs enter the picture.

To reduce energy transition costs and shorten timelines, the capacity of all freight modes—each individual truck, each maritime vessel, each train—can be maximized with the support of data and digital tools. Estimates include a 25% increase in capacity usage for some forms of container shipping and 15% fewer empty miles on trucks thanks to better bundling of shipments as a result of digital platforms.

The use of data to improve freight operations can ease the burdens of transitioning the freight sector to clean fuels by increasing operational efficiency and allowing the freight sector to do more with less. More transparency in freight sector operations can lead to improved decision making, more efficient use of freight assets, and a better understanding of where to target investments in clean fuel infrastructure.

Defining the Pathway to a Digital Transportation Sector

Beyond freight transportation, the benefits of improved digitalization and use of data on reducing the costs and accelerating the timelines of the energy transition for the entire transportation sector has the potential to be tremendous. The sector could transition to clean fuels faster and more cost effectively by making better use of digital technologies to develop a more connected and operationally efficient transportation system.

ReMo is working to identify the key gaps and roadblocks to transportation digitalization and to better quantify the impact that better use of data and digital tools could have on the transportation sector’s energy transition. By pinpointing these gaps and identifying ways to resolve these roadblocks, ReMo hopes to create a blueprint that could help spur a more cost-effective and efficient transition to sustainable fuels for the transportation sector.

Rachel Aland is the Freight Program Manager for the Coalition for Reimagined Mobility (ReMo).