How do you successfully scale up electric freight operations?
How do you successfully scale up electric freight operations?
You’re ready to make the switch from diesel-based freight operations to sustainable freight operations based on electric vehicles. But where do you begin? Which lanes do you electrify first? And how do you navigate the technological complexities and infrastructure investments? In this article, we explain the success factors – both short and long term – for scaling up electric freight operations in a cost-effective way.
When it comes to unlocking cost-effectiveness in sustainable freight transportation, there are two critical levers that businesses should seize on: economies of scale and high asset utilization. By doing so, businesses can pave a resilient path towards sustainable movement of goods while reducing operating costs. This is especially important given the increasing presence of diesel penalties and outright bans in cities and regions around the world.
A successful transition to sustainable road freight is far from a one-size-fits-all solution. Electrifying in the best way will vary dramatically from business to business. It depends on factors such as the size and scale of the transport network, the operational prerequisites, and geographical factors.
To make the switch to electric a cost-efficient one, it's essential to have a tailored long-term roadmap that gives you a broad perspective on how your business will navigate the transition – in other words, how you will ramp up the electrification of your shipping network over the next 5 to 10 years. This roadmap should also tell you where in your network – down to which specific lanes – you should electrify first in order to yield the highest cost efficiency and curb the most CO2e emissions.
Lever 1: Economies of scale – Why it makes sense to go electric for good
Economies of scale refer to the cost advantages that a business can achieve as it increases the scale of its operations – and electric freight is one domain in which economies of scale certainly apply. This is not just about tomorrow. Indeed, battery electric vehicles and charging technology will further advance into the future, but shippers are already benefiting from going electric today.
To leverage economies of scale, you would ideally harness cost reductions relating to vehicle acquisition, charging infrastructure installation, and deployment of operations. This can – in part – be realized by collaborating with selected OEMs and infrastructure providers to secure favorable pricing as fleets grow in size and operations scale up.
A commitment to a long-term plan is thus advantageous to shippers. And that’s where Einride comes in: Einride helps shippers go electric – for good. It’s not just about running tests or pilots; it’s about overhauling operations through a business transformation that’s broken down into implementational waves.
But there is a way to further accelerate the benefits from economies of scale, such as by shipping within one of Einride’s freight mobility grids. These are networks of pooled infrastructure in which Einride moves goods for multiple clients, with all operations – from charging schedules to route planning to emissions reporting – digitally coordinated by an intelligent freight operating system.
Since Einride provides infrastructure for multiple businesses, it is able to acquire vehicles and charging hardware at more favorable prices and yield benefits from network effects. As a result, it is able to maximize the utilization of assets – especially when compared to the scenario of a shipper running their own private electric fleet.
Lever 2: Increasing asset utilization – The more you use, the less you waste
By implementing electric freight intelligently, the costs borne by the shipper can be reduced. This is because the more the vehicles and the charging infrastructure are used, the lower the operating costs per mile. Achieving a strong business case is thus dependent on high utilization of hardware, encompassing both vehicles and charging infrastructure. Key to both harnessing economies of scale and increasing asset utilization is digital intelligence. In fact, realistically, you can’t go electric without going digital.
When it comes to vehicles, utilization can be boosted by harnessing backflow utilization (avoiding a scenario of trucks “returning empty”), speeding up charging times, streamlining loading and unloading – to name a few possible measures. But above all else, increasing vehicle mileage and maximizing network capacity usage are the main drivers of increased utilization. These drivers would also increase the utilization of charging infrastructure, leading to a lower cost per kWh of charge.
Shipping scenarios that may be ripe for electrification
In due course, all road freight operations will be suitable for electric freight from the get-go. But as technology continues to advance and charging infrastructure continues to be rolled out, there are some scenarios that may be more suited to immediate electrification over others.
As a first step in making the switch with Einride, our solution developers can take a closer look at your own shipping network to determine how you should start your electrification journey and how you should scale it up in the most cost-efficient and impactful way.
High-density transport hubs
High-density transport hubs – like major ports or distribution centers – often serve as central points of origin and destination for goods, creating a concentrated flow of freight. By electrifying the transport connected to these hubs, there is the possibility of achieving economies of scale. Charging infrastructure investments become more advantageous due to the high volume of vehicles passing through, while the close proximity to urban centers means shorter travel distances, favoring electric fleet operations.
High-frequency FTL lanes
High-frequency Full Truck Load (FTL) lanes are those in which trucks are consistently loaded to capacity and travel frequently between fixed locations. These can be ideal for electrification because they offer consistent, predictable and steady transport demand. This consistency allows for efficient planning of routes and charging schedules, ultimately reducing operating costs and maximizing the utilization of electric vehicles from day 1.
Predictable volumes of freight are beneficial when aiming for cost-effective electrification. In industries with consistent shipping volumes – such as retail or manufacturing – it’s possible to forecast transportation needs with high accuracy. This predictability enables better route planning, load optimization, and charging management – thus increasing the utilization of hardware.
Backflow utilization refers to the efficient management and optimization of the return journey of vehicles – for example, the transportation of empty containers on the return journey. It aims to minimize empty or underutilized routes while maximizing the benefit from assets – thereby reducing costs.
Short- to mid-haul distances will generally mean no en-route charging is needed, which reduces operational downtime and contributes to lower overall costs for electric fleets. The most suitable flows for short/mid-haul distances are milk runs and shuttle runs.
Milk run tours include several stops; for example, a truck going from a distribution center or warehouse to multiple stores, which then heads back to its origin. Milk runs are usually characterized by short distances and repetitive tour schedules.
Shuttle runs are a direct run back and forth between two locations; for example, from a distribution center to a warehouse. Shuttle runs often entail high volume and high frequency, with the optimal setup including a round trip with high backflow utilization.
Ready for sustainable road freight? Einride is your transformation partner
Join some of the leading businesses around the world who are choosing to make the switch with Einride. By shipping with Einride, businesses can transform their operations in a stepwise and data-driven way, tapping into economies of scale in the near and long term while ensuring high asset utilization. In addition to operating some of the largest fleets of electric vehicles in the world, Einride also brings extensive knowledge of the regulatory environment, including specific requirements affecting heavy-duty transportation as well as potential subsidies.
For shippers, there are no costly CAPEX investments, as Einride absorbs the technology risk. Clients simply pay a transparent monthly subscription fee for freight capacity as a service. In other words, Einride moves the goods and provides all the necessary physical infrastructure (including vehicles and charging infrastructure), digital intelligence, and operational resources such as drivers and maintenance personnel.
When you get started with Einride’s Transformation Program, our solution developers will provide you with a tailored, end-to-end plan that is fueled by data and powered by AI. It will show you how to electrify operations now and over time with minimized cost and maximized environmental benefit. As soon as the wheels hit the ground from the first wave of electrification, you will tangibly – and measurably – curb your CO2e emissions.
Get started today
Kickstart – and scale up – your electric freight operations today, with Einride’s Transformation Program. You can take the first step by requesting an electrification assessment. Just leave your details and one of our solution developers will be in touch to provide tailored insights into how you can make the switch in a cost-effective and environmentally impactful way.
To learn more about the process of going electric with Einride, explore our guide: The 6 steps to intelligent, sustainable road freight.