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Alan McKinnon – Professor of Logistics

THE 
LOGISTICS BLOG

Current issues in logistics and transport

Skilling-up for the Decarbonisation of Freight Transport

The decarbonisation of freight transport and logistics has been extensively researched, but relatively little thought given to its human resource requirement.  I had the opportunity of talking about this at a session in the European Parliament organised by its Transport and Tourism Committee on the 23 January 2024. I began by briefly reviewing of employment and skill trends in logistics before considering the labour implications of the EU target of cutting CO2 emissions from transport by 90% between 1990 and 2050. This will affect the total demand for labour, its diversification by gender and age, and the skills required across all occupational levels from operative to senior manager.

My university, KLU, undertook a global study of logistics labour and skills for the World Bank in 2017.  The research found that in many parts of the world, including the EU, logistics businesses were finding it difficult to recruit and retain staff, particularly truck drivers.  This was attributed mainly to salaries and career structures being uncompetitive, inferior working conditions and the sector having a negative image especially among younger people.  The skill levels across much of the existing workforce were deemed inadequate, mainly with respect to IT, partly reflecting under-provision of training at all levels of employment.  Many of these labour and skill deficiencies were exacerbated by the pandemic and are now proving harder to rectify. 

There is a need to professionalize logistics employment by providing greater training, accreditation, career progression and job enrichment.  It also needs to be rejuvenated by increasing its appeal to the younger generation.  This is the aim of an industry-government initiative in the UK called Generation Logistics whose mission is ‘to find and engage the next generation of logistics talent’.   Within this sector, however, there is a counteracting pressure to casualize employment, particularly in so-called last-mile logistics, where, within the ‘gig economy’, large numbers of low-skill, insecure and often poorly paid delivery jobs are being created.  Increasing digitalisation and automation are also exerting conflicting upskilling and deskilling pressures across the broad spectrum of logistical activities.

It is against this background of issues, trends and initiatives that the decarbonisation of logistics is imposing new labour and skill demands.  I reviewed these demands with respect to the five main ways in which freight transport can be decarbonised, the so-called five decarbonisation ‘levers’.

1. Manage total demand for freight transport:

In the European Commission’s 2020 Reference Scenario, freight tonne-kms grow 42% between 2020 and 2040, with 62% of this increase on the road network.   The European Academies Science Advisory Council has suggested that to meet decarbonisation targets it may be necessary ‘to contain the growth of total freight transport’, though this is not currently being considered as a policy option.  This growth may, however, be inhibited by labour shortages in the freight sector. The International Transport Union (IRU) has predicted that the percentage of ‘unfilled truck driver positions’ in Europe will rise from 7% in 2023 to 17% in 2028. A third of truck drivers are over 55 and the flow of new recruits into the haulage industry is falling short of the number needed to replace retirees.  If a shortage of labour restrains the growth of freight transport it may actually help the sector meet its carbon reduction targets.

2. Shift freight to lower carbon transport modes:

Rail and waterborne freight services have both lower carbon intensity and higher labour productivity per tonne-km.  Modal shift from trucking could therefore simultaneously cut emissions and ease the truck driver shortage. In the Commission’s 2020 Reference Scenario rail tonne-kms are expected to increase by 71% between 2020 and 2040, though this would still leave the rail network with only 19% of the EU freight market by 2040.  Achieving forecast growth of this magnitude will require, among other things, a major expansion of intermodal services, digitalisation of the railfreight market and improvements in service quality, all requiring reskilling of the workforce.  The size of this workforce is unlikely to grow in proportion to rail freight traffic levels, as many haulage, transhipment and handling operations will probably be automated over the next 10-15 years.

3. Improve the utilization of freight transport capacity

Under-loading is widespread across all freight transport modes. For example, 22% of truck-kms were run empty in the EU in 2022 while the average weight-based utilization of trucks estimated to be around 60%.  Raising these vehicle load factors would restrain the growth in truck-kms, save money, cut carbon emissions and ease labour requirements in the road freight sector. It could be done by promoting greater sharing of logistics assets across supply chains, expanding the use of digital load-matching platforms and modifying business practices, all requiring upskilling of the logistics profession.

4. Increase the energy efficiency of logistics operations

 This decarbonisation lever has an important labour dimension. Training truck drivers to operate their vehicles more energy-efficiently, monitoring their behaviour and providing ongoing guidance is one of the most cost-effective ways of decarbonising logistics, yielding fuel savings of 5-15%.  A KLU/SFC survey also revealed a need for greater managerial advice and training in energy efficiency across the EU’s highly fragmented road freight sector, comprising around half a million small carriers.

5. Transition to low-carbon energy in the logistics sector

BCG recently forecast that 77% of new trucks in the EU will be electrically-powered by 2035, with the main employment impacts felt in the manufacture of these vehicles (job losses) and the supporting infrastructure and utilities (job gains).  The operation of these vehicles may also affect the road freight labour market in several ways: accommodating battery-charging into delivery schedules will alter driver working-times, the new generation of smart, clean, low-maintenance vehicles may attract a more diverse workforce and encourage a shift in employment from garage services to driving.  Truck drivers will also need to be re-skilled to operate vehicles running on low-carbon fuels and electricity.

Within low-carbon logistics systems the greatest need for upskilling will be at a managerial level.  Of 90 logistics executives in Europe-based companies surveyed in 2020 only 10% felt that current skill levels in sustainable logistics were adequate. They identified 5 areas where training was required, including emission auditing, strategy development and promoting stakeholder ‘buy-in’.

From my work with freight and logistics businesses over many years, I have identified a set of ten competences that managers can acquire to help them manage the decarbonisation process effectively. These include having an appreciation of the climate science, an ability to measure and report emissions and to derive realistic carbon reduction targets, an awareness of government climate policies and relevant advances in technology, a knowledge of logistics decarbonisation initiatives and their relative carbon mitigation costs, skills in securing ‘green finance’ to fund these initiatives and, finally, the capability to manage change in the pursuit of ‘net zero’ logistics.

I concluded my talk to the Parliamentary Committee by making four general observations.  The labour challenges of decarbonising freight and logistics will be superimposed on longer term employment trends, exacerbating some and easing others.  The first three decarbonisation levers (managing demand, modal shift and improved utilisation) should ease labour pressures in the road freight sector while cutting CO2 emissions, offering a potential win-win.  Intelligent, low-carbon vehicles and equipment may help to make logistics a more attractive career option to a more diverse workforce.  Finally, logistics executives and managers responsible for the transition to low-carbon freight transport and logistics will require new and regularly updated skill-sets.

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© Professor Alan McKinnon 2025

Kuehne Logistics University
Hamburg
Germany

contactme@alanmckinnon.co.uk

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© Professor Alan McKinnon 2025

 

Kuehne Logistics University
Hamburg
Germany

 

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