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Decarbonisation of Logistic Sector
Decarbonizing India's logistics sector is critical for sustainable economic growth, given its significant contribution to greenhouse gas emissions and its pivotal role in the economy. The sector, which accounts for ~14% of India's GDP and 12-14% of its energy-related CO2 emissions, is dominated by road transport (66% of freight movement), followed by rail (31%), shipping (3%), and air (1%). With freight demand projected to grow fivefold by 2050, decarbonization efforts are urgent to align with India's net-zero goal by 2070 and reduce logistics costs from 14% to 8-9% of GDP. Below is an overview of strategies, recent developments, challenges, and opportunities for decarbonizing the sector.
Shifting to Low-Carbon Transport Modes:
Rail Freight Expansion: Rail is significantly less carbon-intensive than road transport, emitting near-zero emissions due to electrification. Increasing rail's freight share from 31% to 45-55% by 2030 is a priority, supported by Dedicated Freight Corridors (DFCs), which are 96% complete as of April 2024. DFCs reduce transit times and emissions while improving efficiency.
Inland Waterways and Shipping: Expanding inland waterways and adopting cleaner maritime fuels (e.g., methanol, ammonia) can reduce emissions from shipping, which currently handles 3% of freight.
Electrification of Road Transport:
Electric Vehicles (EVs): The government promotes EV adoption through initiatives like the National Electric Mobility Mission Plan (NEMMP) and Faster Adoption and Manufacturing of Electric Vehicles (FAME) Phases I and II, which incentivize EV demand and charging infrastructure. By 2030, EVs are projected to account for 35% of vehicle sales, with a target of 50% to align with net-zero goals.
Electric Trucks: Pilot projects for electric and fuel-cell trucks are being explored, though challenges like battery density and charging infrastructure persist.
LNG and EV Fleets: Companies like GreenLine Mobility Solutions are scaling LNG-powered and electric heavy commercial vehicles, with a $275 million investment in 2025 to decarbonize trucking.
Energy-Efficient Warehousing:
Warehouses, major emission sources, are adopting solar panels, energy-efficient lighting, and automation (e.g., robotics for sorting). About 60% of warehouses use robotics, reducing energy use and errors.
Sustainable Fuels:
Green Hydrogen: The National Hydrogen Mission aims to produce 5 million metric tonnes of green hydrogen annually by 2030, reducing reliance on fossil fuels for heavy-duty transport.
Biofuels and Power-to-X: Scaling biofuels and synthetic fuels for aviation and shipping is critical, though production capacity and costs remain challenges.
Digitalization and Optimization:
Technologies like IoT, blockchain, and AI optimize routing, load management, and inventory, reducing fuel consumption. IoT is used in 26% of warehouse management and 21% of inventory management.
The National Logistics Policy (NLP) promotes digital platforms and GIS-based tools like BISAG-N for real-time infrastructure mapping, enhancing efficiency.
Policy and Regulation:
Carbon Pricing and ETS: The Energy Conservation (Amendment) Act 2022 supports carbon markets and Emissions Trading Systems (ETS) to incentivize emission reductions.
National Logistics Policy (NLP): Launched in 2022, it aims to reduce logistics costs to 9% of GDP by 2024 and improve India's Logistics Performance Index (LPI) ranking to the top 25 by 2030.
GST and Infrastructure: GST has reduced cargo clearance times by 30%, while projects like Bharatmala (road connectivity) and Sagarmala (port modernization) enhance multimodal efficiency.
Infrastructure Investments:
Dedicated Freight Corridors (DFCs): The 2,843-km DFC project, nearing completion, supports double-stack container trains, reducing freight costs and emissions.
Multimodal Logistics Parks (MMLPs): The MMLP in Obalapura, Bengaluru, is among projects integrating road, rail, and air transport.
Vande Bharat Trains: These semi-high-speed trains, part of the "Make in India" campaign, improve rail connectivity and efficiency.
Private Sector Initiatives:
GreenLine Mobility: Raised $275 million in 2025 to deploy 10,000+ LNG and EV trucks, targeting heavy-duty trucking emissions (33% of transport emissions from 3% of vehicles).
Kuehne + Nagel: Introduced a Book & Claim insetting solution for EVs in 2024, enhancing sustainable road freight.
CEVA Logistics: Globally, CEVA reduced its CO2 footprint by 200,000 tonnes in 2023, with 520+ EVs in its fleet, offering lessons for India.
Policy Progress:
The Forum for Decarbonizing Transport (2021) fosters stakeholder collaboration and policy action.
Indian Railways aims for net-zero emissions by 2030 through renewable energy and increased freight share.
The National Railway Plan targets a 45% freight share by 2030, with potential to reach 55% to cut logistics costs to 8% of GDP.
Global Rankings: India jumped to 38th out of 139 countries in the 2023 Logistics Performance Index, up from 54th in 2014, reflecting improved infrastructure and digitalization.
Challenges
High Logistics Costs: At 14% of GDP, India's logistics costs are higher than developed nations (8-9%), driven by reliance on road transport and inefficiencies.
Fragmented Sector: The logistics sector is largely unorganized, complicating the adoption of sustainable practices.
Infrastructure Gaps: Limited EV charging stations, low draft depth at ports, and uneven modal mix hinder decarbonization.
Technology Adoption: While IoT and automation are growing, scaling drones, blockchain, and cloud computing requires further investment.
Fuel Availability: Low-carbon fuels like green hydrogen and biofuels face production and cost barriers.
Hard-to-Abate Segments: Domestic aviation and heavy-duty trucking are challenging due to high carbon intensity and limited sustainable alternatives.
Opportunities
Economic Growth: The logistics market is projected to grow from $107.16 billion in 2023 to $159.54 billion by 2028, driven by e-commerce and government reforms.
Job Creation: The sector employs 22 million people and is expected to add 10 million jobs by 2027, with green logistics creating new roles.
Global Competitiveness: Reducing logistics costs to 8-9% of GDP aligns India with global standards, boosting trade.
Sustainable Finance: India's sustainable finance sector, needing $10 trillion for net-zero by 2070, supports green logistics investments.
International Collaboration: Learning from China and the US, which shifted freight to rail, can accelerate India's transition.
Decarbonizing India's logistics sector requires a multifaceted approach, combining modal shifts to rail, electrification, sustainable fuels, digital optimization, and robust policies. Recent developments, such as DFCs, EV adoption, and private investments like GreenLine's, signal progress. However, overcoming high costs, infrastructure gaps, and technological barriers is essential. With concerted efforts from government, industry, and global partners, India can build a greener, more efficient logistics ecosystem, supporting its economic and environmental goals by 2070.