What Massive Changes They Are Bringing
The landscape of road transportation in the European Union is on the verge of a significant transformation. As we look towards this and the next decade, with an eye on 2040, a series of technological developments and demographic changes, combined with the stringent environmental directives established by the EU, promise to reshape the industry to be more sustainable and efficient. This article explores the challenges and opportunities that lie ahead, providing food for thought for stakeholders and the public.
The EU’s Green 2040 Vision…
The EU has set ambitious targets for reducing greenhouse gas emissions. Specifically, for heavy-duty vehicles, it has adopted strict standards aiming to reduce emissions by 50% by 2030 compared to 2021 levels. Rapid adoption of zero-emission vehicles (ZEVs), including electric and hydrogen fuel cell heavy-duty vehicles, is deemed essential. Although 90% of the world’s electric commercial vehicles are in China, the EU is swiftly making strides to bridge the gap, proposing CO2 standards for new trucks to reduce pollutant emissions by 90% by 2040.
Technology and Sustainability
It is estimated that in the coming years, battery electric vehicles, plug-in hybrids, hybrid electric vehicles, and fuel cell electric vehicles are expected to significantly displace internal combustion engines in the heavy-duty vehicle (HDV) sector. However, this transition is not as straightforward as it sounds and presents serious challenges, including the high initial cost of acquisition, the development of charging infrastructure, and battery production limitations.
Regarding battery production limitations, despite projections that demand for batteries from electric trucks could reach high levels, private companies’ battery production plans seem sufficient to meet forecasted needs.
In terms of developing charging infrastructure, the EU’s Alternative Fuels Infrastructure Regulation (AFIR) includes mandates for installing rapid charging stations every 60 kilometers along the Trans-European Transport Network (TEN-T) and specific charging capabilities for both light and heavy vehicles, signaling the creation of 279,000 charging points for trucks. This infrastructure will undoubtedly significantly impact Europe’s electric grid, requiring upgrades, while the demand for electricity from vehicle charging is expected to represent about 6% of the total electricity consumed in the EU by 2030. The financial commitments reaching €280 billion highlight the magnitude of the project.
To make the cost of initial investment more accessible, the EU offers incentives for electric trucks in the form of tax exemptions, purchase subsidies, and funding to support heavy-duty charging infrastructure.
Technology and Efficiency…
The evolution of technology in the sector not only contributes to its sustainability but also offers a plethora of automation enhancing productivity, efficiency, and safety.
Over the past decade, we’ve seen automakers equip their vehicles with advanced systems such as autopilot, sophisticated automatic transmission systems, automatic braking systems, etc., which have significantly improved the quality of work for drivers and, primarily, safety. Significant additions have been made by GPS trucking service providers, who, besides tracking vehicle position, offered remote monitoring services, adding sensors at every critical point of the vehicle. Finally, we’ve seen the emergence of various MaaS platforms aiming to improve scheduling, booking slots, and facilitating payments for certain services like fuel, parking, and some ferries-tunnels, etc.
However, emerging technologies in the market can skyrocket the sector’s productivity and efficiency, upgrading existing services and providing opportunities for new ones to appear. The long-term goal is an end-to-end supply chain, including road transport, which significantly lags behind other parts of the chain.
Artificial intelligence has firmly entered our daily lives with a plethora of applications, yet there’s a significant rise in AI applications adoption by organizations. Specifically, global AI is growing at a CAGR (Compound Annual Growth Rate) of nearly 40%, and this rate is expected to maintain at 37.3% by 2030, indicating the continuation of this rapid growth. In road transport, AI can contribute with solutions such as automated driving, traffic congestion prediction, and traffic management, solutions that are expected to make the sector smarter, safer, and more sustainable, playing a central role in its development.
Furthermore, an eagerly anticipated technology is the emerging Fintech, which, although not yet fully embraced by road transport in Europe, is gaining ground on the other side of the Atlantic. Fintech could have multiple applications, from simple everyday fuel payments to live freight payments, upgrading the sector’s financial system and contributing simultaneously to KYC and AML, resulting in a more efficient, transparent, and stable payment system.
Youth and Drivers
So far, a concise yet substantial review of technology’s evolution in the coming decades has been provided. Changes that cannot stand on their own unless accompanied by the right human factor. The cornerstone, the one who implements the final transport service, is the vehicle driver and/or operator. The aging of drivers and operators is an immediate challenge as a large portion approaches retirement. Specifically, by 2035, just under 5.4 million drivers and operators will leave the industry due to retirement, of which 5.2 million will need to be replaced by newcomers, while only 140,000 will not require coverage due to the sector’s restructuring.
Taking into account the technology that will be adapted to the sector in the coming years, in conjunction with the lifestyle and work standards of younger generations, two serious challenges arise. The first concerns the training of staff remaining in the sector, while the second, more demanding challenge involves restructuring the sector to attract a younger workforce. This would require improving working conditions, increasing remuneration, opportunities for advancement, and leveraging technology to make the profession more attractive to millennials and Gen Z. Bridging this gap must significantly concern the sector to smoothly achieve the replenishment of 5.2 million.
Challenges or Opportunities: It Depends on the Perspective
As one can easily ascertain, the coming decades will bring huge changes to the road transport sector in Europe. From different perspectives, these changes can be seen as challenges or opportunities. From our standpoint, these changes represent opportunities for innovation, sustainability, and economic growth. The major challenge is the barrier to technological adoption and the resistance to change that permeates not just the industry but the people who constitute it.
As the road transport sector in the EU reaches a crossroads, the direction is clear and unequivocal: forward. We embrace innovation, invest in sustainable practices, and prepare the workforce for the future. We are perhaps facing the greatest opportunity for growth the sector has ever seen. There are no excuses; having all the tools in our hands, we can collectively place the sector in a rightfully deserved position among the most developed sectors of the market, proving the high importance of road transport not only in the supply chain but also in the global economy at large.
Invitation to the Future…
With the above thoughts, we invite stakeholders in the sector, policy makers, and the public to actively and substantively participate in shaping the future of road transport in the EU. Iccentra takes the baton, embodying the culture of change and free thought, and makes the first step towards the road transport of tomorrow…will you follow?
REFERENCES
ACEA (2022). European Electric Vehicle Charging Infrastructure Masterplan
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