AI Can Help Decarbonize Global Logistics

Global transportation is responsible for a significant portion of greenhouse gas emissions (estimates range from 16-25%), with a significant portion (7-8%) coming from freight logistics.

A recent white paper, Intelligent Transport, Greener Future, from the World Economic Forum and McKinsey & Company, concludes that the sector has a pivotal role to play in global decarbonization.

The report looks at three ways the logistics sector can approach this issue: through daily operating efficiencies, improving capacity utilization and transitioning to less carbon-intensive modes of transport.

AI as Tool to Reduce Carbon

AI can be a powerful enabler to drive deep emission reductions by optimizing operations, enhancing capacity use and facilitating modal shifts. Analysis conducted for the paper suggests that three specific levers, outlined below, could reduce total emissions from freight logistics by 10-15%.

Route optimization and asset management: AI can achieve up to a 7% reduction in emissions through route optimization and efficient asset management. By leveraging realtime data and predictive analytics, AI ensures that every journey is as efficient as possible.

Improved capacity utilization: AI solutions address empty capacity issues by matching supply with demand and tackling market fragmentation. This improved capacity use can cut down on unnecessary trips and enhance overall operational efficiency, reducing emissions by up to 4%.

Modal shifts: AI can identify and implement the most carbon-efficient modes of transportation, shifting freight from, for example, road and air to rail or maritime options. This shift can reduce emissions by up to 4%.

The report notes that early technology adopters are likely to realize GHG emission reductions. "Other significant benefits will come from enhanced operational efficiency, allowing for lower cost structures and better capital deployment possibilities. AI adoption is poised to be a transformational shift in the industry’s journey towards a net-zero future."

Companies are advised to form partnerships between logistics providers, tech companies, regulators and governments are essential to drive systemic change. 

"Public-private cooperation to enhance rail infrastructure, for example, can help create win-win scenarios for all involved. While AI offers immediate operational gains, a comprehensive approach that includes long term strategies, such as investing in railroad infrastructure, fleet electrification and sustainable fuel adoption, is essential. Integrating AI now lays the groundwork for future technological advances and positions early adopters as industry pioneers."