Powering decarbonisation

Michelle Gardner, deputy director of policy at Logistics UK, shares insights from the organisation’s Electric Vehicle Report, which explores fleet operators current experiences of transitioning to electric vehicles and highlights the challenges to further uptake

The process of decarbonising operations is an ever-increasing priority for operators as deadlines draw closer, natural fleet replacement cycles continue and consumers place growing importance on sustainability methods. With electric vehicles (EVs) widely viewed as a commercially viable solution for light commercial vehicles (LCVs), many businesses have begun the transition to battery electric. In May 2023 Logistics UK published its Electric Vehicle Report 2023 which explores operator’s current experiences of transitioning to EVs and highlights the challenges to further uptake.
    
Those that have operated EVs for some time have adapted their operations to work within the capabilities of the EVs available, recognising that like-for-like replacement of existing diesel vehicles is not always possible. Feedback from those that have made the transition is positive, with 59 per cent of respondents reporting a good response from their drivers who are operating EVs, with only 10 per cent reporting negative or mixed reactions However, for those that are yet to make the switch, or are at the beginning of their journey, considerable barriers remain.

Financial considerations
Like many sectors of the UK economy, costs are a key concern across the logistics industry. Inflation has risen, total vehicle operating costs have increased, and energy support has been reduced. As an industry that operates on very narrow profit margins of around 1-3 per cent, businesses are under financial pressure and having to fully consider the cost of decarbonisation. Within the report, respondents reported estimated costs to upgrade their energy supply at depots of between £100,000 and over £1 million with volatile energy prices also a concern; one member quoted £5,000 for every additional megawatt of electricity. And, in addition to all respondents (95 per cent) reporting higher total costs of ownership (TCO), and 64 per cent reporting TCOs being two to three times more expensive than an equivalent diesel vehicle, the report also highlighted the rise in acquisition costs.
    
Long order lead-times and no viable scrappage schemes are putting heavy cost burdens on businesses, particularly SMEs. The lifecycle of a vehicle is carefully worked into any logistics business’ budget, to ensure continuity while keeping costs down. To transition part way through a vehicle lifecycle would be costly and in the view of Logistics UK, a supportive scrappage scheme is vital to support logistics businesses stay on the road.

The culmination of all these cost factors could be the key barrier to uptake; in 2022, EVs represented 0.9 per cent of the UK’s van fleet, a small increase from 0.3 per cent in 2019. However, in addition to costs, recharging infrastructure is also a key concern; all respondents cited energy supply as their top priority and a third of respondents highlighted power supply infrastructure as one of their biggest challenges for fleet electrification.
    
David Wells, chief executive of Logistics UK, commented: “The logistics sector is fully aware of its responsibilities to decarbonise and is keen to do so. However, with respondents reporting wide ranging costs to upgrade their energy supplies to depots – between £100,000 and over £1 million – a lack of meaningful scrappage schemes, acquisition costs on the rise and volatile energy prices, it is an uphill battle that cannot continue without increased support from government.
    
“Our industry operates on very narrow margins of around one per cent and with significant inflationary pressures, increased wage bills and the rise in total road vehicle operating costs, logistics businesses need supportive fiscal measures to be able to upgrade their fleets and energy supplies without having to pass on increased costs to customers.”

Charging barriers
As outlined in the report, there are a low number of public electric charge points suitable for commercial vehicles across the UK. As of 1 January 2023, there were a total of 37,055 public electric chargepoints recorded in the UK, an increase of just seven per cent when compared to 1 October 2022. For perspective, monthly installations would have needed to rise by 288 per cent to meet the 300,000 by 2030 target set by the DfT; a seemingly unlikely task.
    
Regarding the public chargepoints already installed, over half of respondents reported difficulties in finding a free and usable EV chargepoint space, with many encountering broken or inoperable chargers. There was much frustration among those who regularly use public chargepoints at the lack of reliable and up to date information about available working chargepoints, as well as issues surrounding their suitability for commercial vehicles. Logistics UK is therefore calling for an EV charging and refuelling infrastructure roadmap designed in collaboration with business to work for logistics vehicles, backed with clear guidance and incentives for local authorities. This must include an urgent accelerated rollout of public charging infrastructure – fully accessible to commercial vehicles – as well as clear milestones for minimum levels of suitable chargepoint provision.

Willingness to go green
Overall, there is a real willingness among industry to decarbonise, and there is a growing number of operators working to do so; of the respondents who have introduced EVs into their fleets, 58 per cent have done so in the last two years, with the majority – 62 per cent – of all respondents stating they plan to have decarbonised their van fleets by 2030. However, if the sector is to fully achieve government’s target of net-zero by 2050, further support is needed to not only support the transition, but to provide the necessary infrastructure for those that have made the switch. Logistics UK looks forward to continuing to work with government, members and the wider industry to initiate and engage in the discussion – and actions – that will accelerate the industry towards net-zero.