Sustainability is increasingly important for talent as well as company direction
When it comes to environmental, social, and corporate governance (ESG) roles and policies, there has been a notable emphasis on the ‘E’ part over the past few years. Consumers increasingly want to know that companies are doing their part to mitigate the climate crisis and protect the environment – and it’s no different for the transport industry. As this sector is one of most visible and recognisable greenhouse gas emitters, the conversation around sustainability in this sphere has never been more prevalent – which is beginning to play out, increasingly, in how transport and logistics companies consider their talent strategies. How different areas of the transport industry have approached this subject vary from one to another, with a number of new developments and trends to consider.
New technologies
Carbon emissions from trucking are particularly worthy of scrutiny given how often transport vehicles are left empty. In the U.S., coordination difficulties between drivers and shippers can make the proportion of vacant trucks on the road as high as 30%. In a country where approximately 70% of deliveries are conducted by truck, this is not a sustainable scenario, as Uber Freight head Lior Ron is keen to point out. He wishes to streamline trucking by using technology to help maximise capacity, as well as liaise between shippers and carriers. The concept is similar to how Uber works (i.e., ride sharing), and Ron believes that the company’s outline will allow them to grow exponentially in the next few years.
‘I envision a true end-to-end platform for logistics, probably cloud based, where we are connected at scale with every carrier and every shipper and every warehouse across the world,’ he said in an interview with McKinsey in October 2022. ‘We’ll have built a digital representation of the entire complex physical infrastructure. This capability will allow us to reduce costs for shippers and increase utilization and earnings for carriers.’ Driverless cargo trucks, meanwhile, may once have been the realm of science fiction, though they might not be too far away from becoming a reality soon.
Sustainable solutions
Rail is often seen as a greener alternative both as a method of transport as well as freight. While trains emit far fewer emissions than planes or trucks, traditional rail still carries a carbon footprint – which is why it’s heartening to see developments like Amtrak’s Airo trains, which will begin operating across the U.S. in 2026. These trains are much more fuel efficient than Amtrak’s current fleet, producing 90% less particulate emissions in their diesel operations. Heavy-duty trucks, meanwhile, are responsible for around one quarter of all carbon emissions in the EU, while there is a similar figure in the U.S. for medium- to heavy-duty vehicles, so this is a particularly prevalent area for green investment. Last year, Amazon announced it would invest over €1 billion into electrifying its European transport links in an effort to reduce carbon emissions, with Purolator announcing similar plans for Canada in March 2023. The courier aims to reduce Scope 1 and 2 greenhouse gas emissions by 42% before 2030, with a view to achieving net zero by 2050.
Air freight is notoriously carbon-intensive, with emissions around 50 times more impactful than sea transport. However, the proportion of emissions from freight-only flights is comparatively small; around half of items transported by air are carried in passenger airplanes’ holds. IATA advocates for net zero by 2050, and, at their recent AGM, Director General Willie Walsh noted that sustainable aviation fuel (SAF) would likely be a key part of this – though, at present, there is insufficient capacity to meet demand for it.
Shipping and supply chain developments
In shipping, meanwhile, the number of carriers attaining ESG certificates has grown slightly in recent years, while companies like Rhenus offer carbon footprint trackers, less-than-container lines, and services that are almost entirely carbon neutral. Anything shippers can do to ease pressure on already stretched supply chains is certainly welcome. Labour shortages exacerbated by the pandemic continue to linger on amid the effects of the cost of living crisis and the war in Ukraine. Indeed, if anything such pressures have shown that companies would do well to consider supply chains as a visible asset – not just a means of transporting items from A to B.
In recent months, rapid developments in AI have shaken up industries in every sector, and transport is no exception. Raft is just one example of a company using AI to improve logistics operations. Chris Gilliland, Vancouver International Airport’s Director of Innovation and Technology, recently spoke to the Venari Podcast about the ‘digital twin’, a virtual model of the airport that allows controllers to use AI and machine learning to understand not just what happens moment-to-moment, but also ‘what's going to happen today or tomorrow, next week or next year’, allowing employees to make data-based decisions quickly. It remains to be seen how prevalent such programmes might become in the industry – it will be fascinating to see how this develops.
Talent strategy has changed – but is it going far enough?
So, what do transport and logistics trends and developments around ESG mean for talent? That growing numbers of companies are making sustainability a key part of their vision reflects a desire from consumers to shop, travel, and live in ways that minimise environmental impact. Many businesses in the transport and logistics space are keenly aware of this, and, when much of the industry depends on carbon emissions to function, the optics of how they approach sustainability need to be handled carefully.
For example, we’ve seen plenty of businesses create new Head of Sustainability roles, which are often routes for internal candidates to progress. The problem, however, is that frequently these individuals will not have the right regulatory backgrounds and experience to enact genuine change from such a position. As such, transport and logistics companies looking to make a difference in sustainability will generally need to consider candidates who understand exactly how to approach this topic – both internally and, especially, externally. Renewed and refreshed ESG policies are not only good for the environment – they can benefit how a business operates, attracting like-minded talent and consumers, and even generating value and cutting down on costs in the long term.
Venari Partners are always happy to help
I’m excited to see how the conversation around the intersection of ESG and talent strategy develops in the next few years. Any companies in the transport and logistics sector that would like advice in this area are more than welcome to get in touch – I would be delighted to help.