Decarbonization Pathways for Urban Logistics Systems

Posted November 30, 2023 | Sustainability | Amplify
Decarbonization Pathways for Urban Logistics Systems
In this issue:

AMPLIFY  VOL. 36, NO. 11
Ani Melkonyan-Gottschalk and Maximilian Palmié recommend focusing decarbonization efforts on urban areas. Urban infrastructures cover only about 2% of Earth’s surface, but they consume roughly 75% of the world’s resources and 70% of global primary energy while emitting 50%-60% of the world’s GHG. Melkonyan-Gottschalk and Palmié describe the role of urban transportation systems in the decarbonization process and outline a comprehensive strategy designed to increase their overall sustainability. This includes integrating mitigation and adaptation tactics into a unified strategy, prioritizing strategies that go beyond technological improvements, optimizing the performance of multimodal logistics chains by prioritizing energy-efficient modes, and investing in the public-private cooperation necessary for decarbonization to enter a deep societal transformation process.


Decarbonization has become a top political agenda in many regions and countries thanks to global warming and the degradation of ecological systems. Decarbonization decreases fossil energy use by disrupting carbon sequestration with economically viable and socially acceptable alternatives.1

The largest part of the world’s energy supply is provided by fossil fuels (coal, oil, and natural gas), with the greatest share consumed by the industrial sector (including agricultural processes, chemicals, iron/steel, mining, construction, and forestry), the transportation sector (road, rail, air, and water transport), the residential sector (household heating, cooling, lighting, consumer products), and the commercial sector (commercial heating, cooling, lighting, refrigeration, offices, stores, hospitals, and schools).

Decarbonization requires a net reduction in greenhouse gas (GHG) emissions by 80% to 100% by 2100. A decrease of GHG emissions levels by 7% on average per year, consistent with the aim of the Paris Agreement, is required to limit the global average air temperature increase to 1.5°C by 2050. The Paris Agreement asks more than 110 nations to reach net zero emissions, but most countries have not adopted the stringent laws and policies that would be necessary to achieve this.

A few countries have reached negative carbon dioxide (CO2) emissions, including Bhutan and Suriname. Bhutan emits 1.5 million tonnes of CO2 annually, but around 6 million tonnes of CO2 are consumed by the forest cover (which is 72% of the country’s land mass), rendering Bhutan carbon-neutral.2 Even with this favorable progress, the country is still on a decarbonization journey, investing in renewable energy generation and logistics infrastructure, including electric automobiles.

Sweden, the UK, Germany,3 France, Denmark, New Zealand, and Hungary have adopted legally binding arrangements for decarbonization. Canada, South Korea, Spain, Chile, and the Fiji Islands are among the nations where legalization has been suggested.

The decarbonization process often goes further than a net reduction in GHG emissions, aligning with broader societal goals like climate adaptation, social equity/inclusion, and institutional transitions. Effective, socially acceptable decarbonization strategies must limit costs for industries and households (i.e., low abatement costs), be administratively manageable (i.e., low administrative costs), promote the development and deployment of new technologies (i.e., stimulate innovation), and contribute to broader socioeconomic goals, including the United Nations Sustainable Development Goals (UN SDGs).4 Thus, during the decarbonization process, fossil fuel–based infrastructures undergo a systemic change, relying on radical innovation in digital technologies, institutions, and societal behaviors. In other words, a new socioeconomic paradigm is created.

Focusing on Urban Areas

A significant concentration of economic activities (production and consumption systems), human resources, and resource overconsumption takes place in urban areas. Covering only about 2% of the earth’s surface, urban infrastructures consume roughly 75% of the world’s resources and about 70% of global primary energy while emitting 50%-60% of the world’s GHG.5

Rapid urbanization significantly affects regional population distribution, creating various-sized municipalities with distinct economic development patterns.6 The proportion of the population living in cities is projected to reach more than 68% by 2050.7

Diverse patterns in the global north and south drive significant changes in cities and infrastructures, with some regions facing population decline (shrinking cities), some showing peri-urbanization patterns (urban sprawl), and some taking advantage of digital transformations (smart cities).8,9

Given the varied urbanization patterns, decarbonization of urban systems will require flexible policy strategies focused on: (1) city cores and (2) embedding suburban and hinterland areas connected with energy and transport infrastructures into a holistic urban ecosystem.

Urban Transportation’s Role in Decarbonization Process

Urban ecosystems integrate urban and rural mobility, production, consumption, and distribution systems. Both material and information flow across corridors of transportation and energy utilities, connecting urban regions into a global supply system.10

These flows are regulated by the complex structure of transport corridors. For example, Trans-European Transport Network (TEN-T) aims to develop coherent, energy-efficient, multimodal, high-quality transport infrastructures across the EU.11 It comprises railways, inland waterways, short sea-shipping routes, and roads linking urban nodes, maritime and inland ports, airports, and terminals. Unfortunately, transportation and mobility systems across these types of corridors are vulnerable to disruptions caused by geopolitical instabilities, intensified global trade, new business models across logistics chains, and more frequent climate disasters.

Meanwhile, urban transportation systems lead to a substantial increase in urban energy demand, accounting for almost 30% of energy consumption globally, mostly from fossil fuels. Urban road transport accounts for 40% of all CO2 emissions and up to 70% of other pollutants (including nitrogen dioxide and particulate matter), highlighting the importance of investments in renewable energy infrastructure, improved battery technology, sustainable biofuels, and synthetic fuels.12 The transportation sector also causes negative socio-environmental externalities, such as traffic accidents, congestion, waste, and land-use changes.

Acknowledging this, the European Commission developed the European Green Deal, which includes an ambitious policy roadmap for sustainable economic transformation, particularly in transportation systems.13 According to this policy, logistics service providers must offer sustainable, high-quality, reasonably priced delivery services within increasingly growing and complex supply chain networks while following the EU supply chain law (EU Supply Chain Act).

Beyond the assumed ecological externalities, urban logistics and mobility have widely known issues related to operational efficiencies, including fragmented flows, high delivery frequency, unpredictable demands and returns, and additional investments by fulfillment networks to increase resilience in critical urban infrastructures.

When it comes to internalization of externalities, such as internal carbon-pricing programs or the EU supply chain law, implementation of these measures is generally associated with a high level of administrative efforts, a knowledge gap about efficient decarbonization strategies (especially for international companies acting in regions or countries with different economic structures, political levers, and laws for decarbonization), and various external disruptions like climate-related weather hazards.

The Relationship Between Urban Density & Transport-Related Energy Consumption

Different rates of urbanization and decarbonization in various regions and countries cause transport corridors to become a subject of global competition across transportation modes, increasing both ecological unsustainability (high energy consumption and related GHG emissions) and system vulnerability.

The ecological (un)sustainability and vulnerability of transport systems are usually analyzed either by the topological properties of the transport networks (articulation nodes, served by the corridors), which are highly dependent on urban density, or by studying the demand and supply side of the transport chains (flows) to assess the impact of the disruptions for the users, society, and governments at regional, national, and international levels.

Dependence on energy use by transportation systems is reminiscent of the Newman and Kenworthy “urban density and transport-related energy consumption” hyperbola, showing an exponential decrease in transport-related energy consumption with an increase in urban density.14 This can be explained by the fact that high urban density allows for efficient planning of multimodal transportation systems for both passengers and goods, reducing transport-related carbon emissions.

Decarbonization Strategies for Transportation Systems

Urban transportation decarbonization relies heavily on emissions monitoring. Most cities currently focus on Scope 1 (GHG emissions from sources within city limits) and Scope 2 (indirect GHG emissions related to the purchase of electricity, steam, and heating/cooling produced outside the city limits but consumed within the specific boundaries of a city).

Communities seriously working toward efficient decarbonization must also consider Scope 3 (all other GHG emissions generated outside the city limits as a result of activities within the city limits) to transform the entire urban ecosystem.

This is already being done by industries that are considering the impactful implementation of the EU Supply Chain Act. Scope 3 emissions should be considered while developing internal carbon-pricing mechanisms to be ahead of political regulations of CO2 pricing, which is currently €30 per ton (about US $32). Forty-four Organisation for Economic Co-operation and Development (OECD) and G20 countries, which are responsible for about 80% of the energy-related global CO2 emissions, had a carbon-pricing score of 19% at the €60 benchmark (about US $64); that is, 19% of emissions are priced at a level that equals or exceeds the benchmark of €60 per tonne CO2.15

In 2018, Switzerland, Luxembourg, and Norway reached a carbon-pricing score of close to 70%, acting as leading countries on the transformation pathway. They achieved this score because fuel taxes for road transport are often entirely invested in the road infrastructure; there is a significant CO2 tax for the use of fossil fuels in private households and commercial enterprise; and electricity supply is significantly decarbonized, leading to low industrial emissions.

At the urban level, Oslo, Stockholm, Tokyo, Copenhagen, Berlin, London, Seattle, Paris, San Fransico, and Amsterdam are considered the most sustainable cities in the world.16 These cities focus intently on energy efficiency, electric mobility, decarbonization of urban logistics, greening buildings, enhancing urban-farming activities, waste management systems, and designing efficient and smart infrastructures.

Digital technologies help companies and communities improve delivery times and optimize supply chains. For example, a project to digitize China-based Huawei’s supply chain focused on mapping real-world objects like contracts and products to the digital world, automatic recording of real-time business processes and operations like cargo transportation, and managing business rules for complex scenarios using digital solutions (e.g., inventory cost accounting and order-splitting rules).17

One of the projects in the 2014 United Arab Emirates Smart City program involves tracking, shipping, and delivering imported and exported goods using blockchain technology. Technologies like big data, Internet of Things, augmented reality, artificial intelligence, robotics and autonomous driving, and digital twins are also being implemented to help achieve decarbonization in logistics systems and are being actively used in Dubai Harbour.

In general, technology helps cities design resilient (physical and digital) infrastructure through:

  • Implementing efficient multimodal transport chains, which means moving cargo in a single container from door to door by combining land transport (road or rail) and maritime or river transport (vessel or barge) in one optimal transportation chain, which is cost-efficient and saves CO2. A good example of this is how UPS and DHL created services along China’s Belt and Road Initiative so goods could move multimodally from Asia to Europe.18

  • Bundling material flows in multifunctional smart hubs, connecting transport nodes, subway lines, click-and-collect points, pickup and drop-off points, stores, retail galleries, commercial areas, conference centers, lounge areas, restaurants, shops, office areas, coworking spaces, fitness clubs, housing, cinemas, and underground parking garages. Examples include the Arnhem Central Transfer as a gateway and transport node among the Netherlands, Germany, and Belgium; the Oculus in New York City; Rotterdam Centraal Station, the Netherlands; West Kowloon Station in Hong Kong, China; Anaheim Regional Transportation Intermodal Center (California, USA); and Transbay Transit Center in San Francisco, California.19

  • Designing energy-efficient warehouses by applying alternative energy sources and building information modeling. This technology helps designers simulate and analyze buildings in a virtual environment prior to construction.

  • Implementing hydrogen energy for line-haul trucking. For example, Toyota Motor Europe used its fuel cell technology to decarbonize the Toyota logistics network, reducing the company’s overall carbon footprint and setting it on a path to full carbon-neutrality by 2040.20 However, the economic viability of this technology is uncertain. It is estimated that fuel cell long-haul trucks can reach total cost of ownership parity (considering diesel fuel prices, road tolls, and other taxes) by 2030 in Europe if the at-the-pump green hydrogen fuel price is around 4 €/kg.21 This can be achieved by strongly subsidizing the technology, which is not efficient. Thus, proper carbon-pricing programs should be implemented. Some of the largest shipping companies are introducing new frameworks of efficient internal carbon-pricing programs.

  • Leveraging autonomous driving systems, including drones and droid deliveries. For example, Volocopter offers an additional layer of transportation for passenger and heavy cargo that will be highly efficient in megacities.22

  • Applying ultra-quiet equipment and electric vehicles to reduce delivery noise during off-hours operations. For example, the Eco Truck, launched by Lawsons in the Greater London area, is a 26-tonne flatbed truck powered by a natural gas engine that generates 50% lower noise and 99% fewer particulates than an equivalent diesel engine.

  • Improving traffic and transportation management systems through route optimization and vehicle (re)routing. For example, Germany-based SEVAS provides data on priority route networks and restrictions for truck traffic;23 Tiramizoo offers app-based services to the logistics service providers and municipalities to help them visualize and optimize their last-mile routes;24 and the Transport for London program used Siemens’s real-time optimizer to reduce traffic delay by 13%, which is expected to generate £1 billion (about US $1.2 billion) in benefits by 2036 by reducing delays for all road users.25

  • Applying collaborative platforms to be shared among logistics service providers. These platforms help providers share their resources (e.g., free capacities in warehouses or tracks), which strongly supports decarbonization of urban logistics.26 The overall goal is a transition from individually managed supply chains to open supply networks enabling structural collaboration. Companies like LOGISTEED and Collaborative Urban Logistics & Transport (CULT) offer a variety of functions to be shared, including order reception, transport, delivery, and consolidation of volume and storage.27,28

  • Producing selected components in local additive manufacturing (also known as 3D printing) stations. Switching from a central factory to local 3D printing lets manufacturers produce components close to their destination. For example, Thyssenkrupp Marine Systems aims to produce components for its submarines in local fjords.29 Manufacturers can build their own distributed network of 3D printing stations or outsource the production of some components to a third party. Compared to traditional manufacturing techniques, 3D printing can be relatively flexible, which supports contract manufacturers in bundling the production tasks of multiple partners. In addition to shorter transportation distances, local 3D printing arrangements enable component designs that outperform conventional solutions.

Recommendations: Key Elements to Achieve Decarbonization

Even though there are solid examples of decarbonization attempts at company, city, and country levels, a comprehensive decarbonization strategy is needed to increase the overall sustainability of urban logistics ecosystems and decrease vulnerability from external global shocks. Steps in this strategy are:

  1. Integrate mitigation and adaptation tactics into a unified strategy. We surveyed 20 companies in North Rhine-Westphalia, Germany, about climate mitigation and adaptation in the freight sector and found that companies active in inland shipping, road-freight transport, rail-freight transport, and the courier/express/parcel industry place equal strategic importance on climate mitigation (50.3%) and adaptation (49.7%). However, notable differences were observed in the efforts being made regarding climate protection and adaptation. Nineteen of 20 companies have implemented climate-mitigation measures (although variations exist in the number of measures implemented and level of investment). The survey indicated that as specific GHG emissions increase, so does the level of investment in climate mitigation. In contrast, although climate change has had a significant impact on 50% of the surveyed freight companies, only 30% have invested in climate-adaptation measures. This may be due to a failure to integrate mitigation and adaptation tactics into a unified strategy, particularly regarding tradeoffs and synergies of practices that could improve overall performance.30

  2. Prioritize strategies that go beyond technological improvements to effectively address and mitigate the environmental impact of freight transportation. For example, the growth of overall freight transport outpaces the positive impact of technological advancements in reducing transport-related GHG emissions. In Germany, although there has been an 8.5% decrease in kilometer-related CO2 emissions from trucks since 1995, the continued increase of truck traffic has offset these gains, leading to a significant 23% increase in total direct CO2 emissions from road freight.31

  3. Optimize the performance of multimodal logistics chains by prioritizing more energy-efficient modes. In 2011, the EU outlined a plan on transport and mobility to shift 50% of road freight over 300 km to alternative modes like rail or waterborne transport by 2050.32 Unfortunately, progress toward this goal has been limited so far. Between 2011 and 2021, there was minimal change in the modal shift potential of long-distance road freight (over 300 km) in containers.33 Our findings align with this: only 30% of freight companies in our survey are considering modal shift in their climate actions.

  4. Invest in the public-private cooperation needed for decarbonization to enter a deep societal transformation process. Satellite imagery and remote sensing are valuable for detecting and monitoring infrastructure changes rapidly and frequently (especially in remote regions); gathering data on transportation networks in a fast, affordable, precise way; and for designing more sustainable material routes. However, these technologies are too expensive to be implemented by a single company given the decentralized character of transportation facilities. Additionally, sensor data is often missing from geospatial databases. We need to develop guidelines for the compatibility of geospatial transportation data, prioritize specific transportation security requirements, and establish a transfer hub to rapidly transmit the satellite image results to users.


1 Bernstein, Steven, and Matthew Hoffmann. “Climate Politics, Metaphors and the Fractal Carbon Trap.” Nature Climate Change, Vol. 9, November 2019.

2 “Bhutan Steps Up Electric Vehicle Drive.” United Nations Development Programme (UNDP), 6 March 2023.

3 “Climate Change Act 2021: Intergenerational Contract for the Climate.” German Federal Government (Die Bundesregierung), 25 June 2021.

4 D’Arcangelo, Filippo Maria, et al. “Framework to Decarbonise the Economy.” OECD Economic Policy Papers, No. 31, February 2022.

5 Madlener, Reinhard, and Yasin Sunak. “Impacts of Urbanization on Urban Structures and Energy Demand: What Can We Learn for Urban Energy Planning and Urbanization Management?” Sustainable Cities and Society, Vol. 1, No. 1, February 2011.

6 Simmons, Geoff, et al. “Uncovering the Link Between Governance as an Innovation Process and Socio-Economic Regime Transition in Cities.” Research Policy, Vol. 47, No. 1, February 2018.

7 “The New Urban Agenda.” United Nations Conference on Housing and Sustainable Urban Development (Habitat III), 20 October 2016.

8 Marshall, Fiona, and Jonathan Dolley. “Transformative Innovation in Peri-Urban Asia.” Research Policy, Vol. 48, No. 4, May 2019.

9 Ullah, Fahim, et al. “Risk Management in Sustainable Smart Cities Governance: A TOE Framework.” Technological Forecasting and Social Change, Vol. 167, June 2021.

10 Liu, Kai, Yuji Murayama, and Toshiaki Ichinose. “Using a New Approach for Revealing the Spatiotemporal Patterns of Functional Urban Polycentricity: A Case Study in the Tokyo Metropolitan Area.” Sustainable Cities and Society, Vol. 59, August 2020.

11 “Trans-European Transport Network (TEN-T).” European Commission, accessed November 2023.

12 Nanaki, E.A., et al. “Environmental Assessment of 9 European Public Bus Transportation Systems.” Sustainable Cities and Society, Vol. 28, January 2017.

13 “The European Green Deal: Striving to Be the First Climate-Neutral Continent.” European Commission, accessed November 2023.

14 Newman, Peter, and Jeffrey Kenworthy. Sustainability and Cities: Overcoming Automobile Independence. Island Press, 1998.

15 “Effective Carbon Rates 2021.” Organisation for Economic Co-operation and Development (OECD), 2021.

16 “Sustainable Cities: Discover the Most Sustainable Cities in the World.” Iberdrola, accessed November 2023.

17 Lening, Xiong. “How Huawei Transformed Its Supply Chain in the Digital Age.” HuaweiTech, Issue 03, 2022.

18 McBride, James, Noah Berman, and Andrew Chatzky. “China’s Massive Belt and Road Initiative.” Council on Foreign Relations, 2 February 2023. 

19 “10 Best Multi-Model Transit Hubs Around the World.” Rethinking the Future, accessed November 2023.

20 “Hydrogen Fuel Cell Trucks to Decarbonise Toyota Logistics in Europe.” Toyota Europe Newsroom, 9 May 2023.

21 Basma, Hussein, Yuanrong Zhou, and Felipe Rodriguez. “Fuel-Cell Hydrogen Long-Haul Trucks in Europe: A Total Cost of Ownership Analysis.” White paper, International Council on Clean Transportation (ICCT), September 2022.

22 Volocopter website, 2023.

23 “SEVAS — Project Description.” SEVAS, accessed November 2023.

24 Tiramizoo website, 2023.

25 “Delivering the Next Generation of Urban Traffic Management.” Transport of London, 28 June 2018.

26 Garola, Giovanni, et al. “Sustainability in Urban Logistics: A Literature Review.” In Changing Tides: The New Role of Resilience and Sustainability in Logistics and Supply Chain Management — Innovative Approaches for the Shift to a New EraProceedings of the Hamburg International Conference of Logistics (HICL). Hamburg University of Technology, Institute of Business Logistics and General Management, Vol. 33, No. 3, 2022.

27 “Collaborative Logistics with Shared Platforms.” LOGISTEED, accessed November 2023.

28 Collaborative Urban Logistics & Transport (CULT) website, 2023.

29 “Submarine Components from 3D Printers Go into Series Production.” ThyssenKrupp, 24 July 2020.

30 Negri, Marta, et al. “Integrating Sustainability and Resilience in the Supply Chain: A Systematic Literature Review and a Research Agenda.” Business Strategy and the Environment, Vol. 30, No. 7, November 2021.

31 “Emissions from Transport.” Umwelt Bundesamt, 28 April 2023.

32 “Roadmap to a Single European Transport Area — Towards a Competitive and Resource Efficient Transport System.” White paper, European Commission, 28 March 2011.

33 “Freight Transported in Containers — Statistics on Unitisation.” Eurostat, February 2023.

About The Author
Ani Melkonyan Gottschalk
Ani Melkonyan-Gottschalk is Professor for Sustainability and Socio-Technical Transformation at TU Clausthal. Previously, she was Professor and Executive Director of the Centre for Logistics and Traffic at the University of Duisburg-Essen, Germany. She has been involved in research and teaching for over 15 years in the areas of sustainable economies and frameworks for transitioning toward both sustainable and smart governance. Prof. Dr. Melkonyan… Read More
Maximilian Palmié
Maximilian Palmié is Professor of Technology and Innovation Management and Senior Lecturer of Energy and Innovation Management at the University of St. Gallen, Switzerland. Professor Palmié also serves as Director of the Sustainability Innovation Lab (SIL), a center dedicated to overseeing sustainability transformations and technologies as well as driving the implementation of digital solutions for sustainability endeavors. Research findings are… Read More