Opinion | The impact of electric vehicles on the logistics industry

‘Logistics is the backbone of any economy’ – This is an often discussed but underestimated fact. The fact that logistics is a key contributor to social and economic progress is not new. The magnificent Pyramids of Giza built about 4,500 years ago, were largely a result of efficient transportation of materials and flow of information. Throughout history, numerous wars have been won and lost, largely attributed to logistical might and capabilities – or the lack of it. Providing relief materials including clothes, medicines and food across the Roman empire in 400 BCE during the famine would not have been possible without an efficient logistics and transportation mechanism. 

With a market size of INR 15 lakh crores, ranked currently at 44th position on LPI (Logistics Performance Index – a World Bank tool) and handling multi-billion tonnes of goods transport annually. India is rightly poised to become one of the world’s fastest-growing major economies largely driven and fuelled by the Logistics industry. However, this unparalleled growth comes with a direct correlation to environmental impact. In business-as-usual scenarios, India’s cumulative energy consumption from freight transport in the next couple of decades is expected to be around 5.8 billion tonnes of oil equivalent. CO2 emissions from freight transport are projected to increase by 400 per cent to about 1200 million tonnes with road transport being the biggest contributor.

While we are geared up for a multi-fold growth in the logistics industry, sustainability is the need of the hour and is the most pressing point. Hence, balancing all the elements of ‘Triple Bottom Line’ – People, Planet and Profit, is of utmost importance. That is where the use of electric vehicles and alternative fuels steps in.

Several factors are promoting the use of Electric Vehicles.

(i) Large organisations and businesses have committed and pledged to reduce their carbon footprints;

(ii) High variability of ever-rising oil-based fuel costs comes with a long-term cost risk;

(iii) Government subsidies have been made available to reduce the acquisition costs of the electric vehicles;

(iv) Total cost of ownership of electric vehicles has almost reached parity with diesel vehicles used for logistics and transportation.

Accelerating India’s journey towards Fleet Electrification by EV deployments can help reduce 10 Giga tonnes of carbon emissions, 500 kilo tonnes of Particulate Matter and 15 million tonnes of Nitrogen Oxide caused by the Logistics and Transport industry. It can also help trim down our oil dependency by at least 950 million tonnes in a couple of decades. While the share of EVs in the Logistics sector is extremely low, however, electric vehicles have been able to break through into the Last-Mile Delivery segments largely due to faster deliveries, shorter distances and fixed-route – characteristics that fit very well with electric vehicles currently available in the market.

The only advantage an ICE (Internal Combustion Engine) vehicle has over an Electric Vehicle is ‘technology maturity’. ICE vehicles have been intensely and frequently researched and improvised. They have been in use for about two centuries now. Engine technology, fuel efficiency and other major improvements in an ICE vehicle have reached the saturation point. On the contrary, EVs have become one of the major research areas across the automotive industry globally. Disruptions in battery technology, longer range, faster charging, connectivity and similar new-age technologies are imminent. New developments and advancements are made indigenously, especially in electric cargo vehicles. Newer electric vehicle specifications are made to either meet or beat the existing ICE vehicles specifications with a clear intent to replace and switch to cleaner mobility.

Clearly, the markets are always in a constant state of dynamic change and adaptation. The next few years will see rapid progress in EV options for larger heavy goods vehicles, alongside the deployment of supporting infrastructure. It is evident that the use of sustainable energy sources in road logistics and transportation is more necessary than ever. With charging infrastructure under rapid growth, battery and electric vehicle prices reaching parity with ICE counterparts, combined with the agility and swiftness of an electric vehicle, mandatory for intra-city operations, EVs show a promising trend yet to be explored in its full potential.

While the logistics industry is bound to go through paradigm shifts in decades to come, at present, the use of electric vehicles and alternative fuels will largely lead to better employment opportunities, a cleaner environment, better public health, and higher economic growth and productivity.

The overall electric vehicle sales in the past 3 months saw a 40% increase quarter-on-quarter and a massive 199% increase in electric vehicle sales in year-on-year figures. Interestingly, while the electric cargo vehicles are witnessing multi-fold growth in sales, at the same time, there is a steep drop in their ICE counterpart sales figures implying the shift in trends of electric vehicle adoption in the logistics and transportation industry. The TCO of an electric vehicle, especially in last-mile transportation, has achieved a total parity with their Combustion Engine counterparts. Progressive businesses now prefer operating electric vehicles since it helps them save costs to a tune of 10 – 20% with a higher utilisation rate, at approx 100 km run per day.

Written by – Darryl Dias, Co-Founder & Director of Operations, EVET by Magenta. EVET is currently operating 400 EVs across major metros and provides an integrated electric vehicle + charging depots + software solution. The charging depots can charge up to 50 to 80 vehicles parallelly with load demand and balancing technologies. The depots are strategically placed within 2 – 3 km around the Distribution Centres and Warehouses of the transportation companies.