A focus on decarbonization in the transportation space can fuel significant sustainability gains for businesses.

Samuel Greengard, Contributing Reporter

March 26, 2024

5 Min Read
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rudall30 via Alamy Stock

As organizations look for ways to reduce carbon emissions and hit ambitious net zero targets, all roads lead to transportation. In the US, approximately 27% of energy consumption involves moving people and goods. About 90% of this energy is derived from petroleum products, according to a 2022 study conducted by the US Energy Information Administration. 

Although rapid advancements in electric vehicles (EVs), hybrids and even hydrogen powered vehicles are radically changing the sustainability equation, sorting through the options and deciding how, when and where to use different technologies can prove challenging. In addition, increasingly sophisticated telematics systems, software, and other tools introduce ways to use fleets, fuel, and resources far more efficiently. 

“We are seeing enormous advances in EVs and battery systems. They have reached the point where there is total cost of ownership (TCO) parity with conventional vehicles,” states Katherine Dixon, a partner at Bain & Company. Yet, it isn’t as simple as steering a company in the direction of EVs and alternative fuels. “There are quite a few considerations, particularly around vehicle range and charging infrastructure,” she adds. 

Companies that manage fleets of planes, trains, boats and automobiles face similar challenges, points out Jonathan Nipper, managing director and partner in the transportation practice at Boston Consulting Group. Yet, for businesses willing to explore the options, including using artificial intelligence and more advanced tracking tools, there’s an opportunity to turbocharge sustainability results and accelerate the journey to net zero. 

Related:A Portal into Sustainability

Fueling Progress 

Controlling transportation costs and improving fleet efficiency isn’t a new concept. Over the last few decades, businesses have turned to a variety of methods to reduce carbon emissions. This includes things as basic as promoting carpooling and vanpooling, the use public transportation when and where it’s feasible, work-from-home options, and incorporating hybrids and biofuels into operations. 

While these initiatives continue to play a crucial role in reducing emissions, a rapid acceleration in climate change requires more aggressive strategies. Dixon says that companies must begin to rethink the fundamental way they approach transportation investments. For instance, in many cases, it’s possible to reconsider how vehicles are used -- and even create smaller groups of specialized vehicles for different purposes. For instance, it might be possible to deploy EVs for local driving, and hybrids or hydrogen fuel cells for longer range requirements. 

Related:AI Elevates Sustainability

The US Postal Service, for example, has announced plans to add more than 66,000 electric vehicles to its fleet by 2028. This represents the single largest fleet of EVs in the nation. As part of the initiative, it will install approximately 14,000 EV charging stations at about 400 facilities. Meanwhile, Amazon has committed to purchasing 100,000 Rivian electric delivery vans designed to handle 50% of shipments with net-zero carbons by 2030, and UPS has signed a deal to buy 10,000 electric vans. 

Advancements in EVs and batteries are only part of the story, however. Telematics systems and fleet management software are also evolving rapidly, Nipper says. Companies like Geotab, Solera, and Verizon Connect introduce the ability to track vehicles and manage them in new and more holistic ways. AI and machine learning can spot efficiencies that humans simply can’t see. They can optimize operations in a similar way to how airlines now manage aircraft, flight logistics and crew scheduling. Moreover, these software tools are increasingly integrated deeper into business operations and sustainability initiatives, Nipper points out. 

Related:Reusing Waste Heat from Data Centers to Make Things Grow

For organizations looking to cut costs, maximize investments, and dial up sustainability, “There are many beneficial aspects to these systems,” Nipper says. These include predictive maintenance capabilities, route and vehicle optimization features, energy management tools that reduce fuel consumption and electricity costs, the ability to identify inefficient driving patterns, and analytics that deliver deep insight the use of vehicles across their lifecycle. 

What’s more, these software tools increasingly feed data into carbon tracking software and ERP systems. Combined with AI tools, analytics, and IoT frameworks, it’s possible to further automate and improve fleet management, and determine which types of vehicles, fuels or transport methods are the most efficient and cost effective for particular situations. At this point, an organization can determine whether to use planes, trains, ships or automobiles. 

Sustainable Transportation Takes Off 

Airlines, railways, shipping companies, and others in the transportation sector are also embracing technologies that deliver efficiency and sustainability gains. Among other things, these include electric batteries for aircraft and cargo ships --including the use of swappable batteries, hybrid vehicles, and various types of synthetic fuels that promote sustainability. 

Business leaders, including CIOs, should keep a close eye on the transportation sector, Dixon says. “EVs and batteries are advancing very rapidly, and the sustainability landscape is changing quickly, including costs and the return on investment.” Right now, it isn’t clear what role hydrogen fuel cells and swappable batteries will play for trucks and larger vehicles, for example. “You don’t want to underestimate the pace of change and the opportunities that come with it,” she adds. 

Companies must also take a more active role in policy engagement, Dixon argues. This includes advocating for better charging standards, a clearer carbon pricing framework and incentives for electric vehicles. “One of the biggest challenges right now is simply getting the infrastructure built out, particularly in regard to charging facilities.” She suggests that companies look for innovative ways to move forward, including collaborating with supply chain partners and others to build shared facilities. 

Businesses can also benefit from financial incentives and tax breaks, which currently include a $40,000 clean vehicle credit for medium- and heavy-duty vehicles, such as trucks and buses. In fact, these commercial vehicles aren’t subject to the same restrictions and conditions that apply to consumer vehicles, including where critical minerals are mined. “Even if a company can’t make a complete pivot to EVs, it’s often possible to begin a transition and think more broadly about biofuels,” Dixon says. 

To be sure, a move to a more sustainable transportation framework is all about dollars and sense. Existing technologies and tools can boost decarbonization efforts and deliver significant cost savings for an enterprise. Concludes Nipper: “Price points for EVs are improving, charging infrastructure is maturing, and telematics software and systems are advancing. Transportation plays an important role in reducing carbon emissions.” 

About the Author(s)

Samuel Greengard

Contributing Reporter

Samuel Greengard writes about business, technology, and cybersecurity for numerous magazines and websites. He is author of the books "The Internet of Things" and "Virtual Reality" (MIT Press).

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