“In chaos lies opportunity.”
It’s my regular drumbeat. Amid the pandemic, it was the constant reminder to my team that our ability to deliver when others couldn’t would be a boon. It was. By looking beyond the data, getting ahead of the trends, and building sustainable partnerships, we grew our logistics business by 820%.
And from where I’m sitting, California’s Advanced Clean Fleets regulation will catalyze the next massive wave of transportation industry disruption.
If you ask me, tapping heavy-duty EV truck capacity now is a business imperative. Regulatory compliance is only part of the calculus, of course. Fortune 500s recognize that consumer, investor, and employee behavior is moving faster than the mandates—that there’s an opportunity to bolster brand preference by leveraging supply chain resources with a lower carbon footprint. In fact, we’re already getting quote requests from customers motivated to move drayage loads on EV trucks and inch closer to meeting their carbon-neutral (or even minus) targets.
Like all tech innovations that have come before, those that move early will realize the greatest opportunity.
The Golden State: The education that promises your golden ticket
California is once again setting the standard by which the rest of the nation will undoubtedly follow. Already, the state has implemented priority lanes for zero-emission vehicles (ZEVs) at its port terminals and announced 94.3M in ZEV grant funding for drayage fleet and small fleet operators.
While California has certainly faced setbacks in developing charging infrastructure, growing capacity, and restricting drayage truck registration to ZEVS, I see no signs that the state will take its proverbial foot off the gas.
If anything, it’s hitting the accelerator.
Alan Adler writes for FreightWaves, “Despite the ongoing challenge of matching electric trucks with convenient and reliable charging, 2024 looks like it could shake off some of the growing pains of 2023.”
What do the early-movers see?
HP, General Mills, and VF Corporation, which owns brands like The North Face and Vans, have already set aggressive, voluntary, net-zero commitments; they recognize that achieving carbon-neutral goals positions them as good corporate citizens—enabling them to burnish their brand reputations, create market preference, and charge higher prices.
Underscoring the market opportunity, the 2022 First Insight and University of Pennsylvania Baker Retailing Center survey, The Sustainability Disconnect Between Consumers and Retail Executives, finds that more than two-thirds of consumers are willing to pay a premium for sustainable products. “Consumers clearly want more than performative measures from retailers and brands when it comes to ESG priorities, which will only increase in importance as Gen Z grows in influence. Furthermore, it shows that aligning with consumers on sustainability topics is better for business,” the report says.
To meet these carbon-neutral commitments, the process of rolling heavy-duty EV trucks into supply chains must begin now. In fact, a global athletic apparel brand is already sourcing capacity to move the majority of its California inbound drayage with electric vehicles.
Now is the time to add EV trucks to your capacity mix
Not yet feeling the ESG and C-suite pressures? It’s coming, so now is the time to line up experienced partners and iron out the kinks.
Even if it’s on a small scale, moving 5-10% of your containers on EV trucks will be an immensely valuable education. You’ll familiarize yourself with available solutions, work through resource constraints, and establish relationships with trusted partners.
And when the dominoes do begin to fall—slow at first and then seemingly all at once—everyone else will be scrambling for capacity and adapting existing processes as EV trucks throw a spanner in the works. But not you. You’ll have worked through your implementation challenges, leaving you positioned to successfully move forward with zero-emission vehicle requirements as mandates inevitably pop up across the US.
Opportunities to play in the EV trucks space are limited—for now
Certainly, implementing EV trucks into your transportation plan today isn’t without its challenges and limitations.
Today, there are approximately 200 EV trucks moving freight in and out of Los Angeles ports—just a tiny fraction of the 33.500 drayage trucks pulling containers at California ports and rail yards on a day-to-day basis.
What’s more, EV infrastructure simply doesn’t exist to support long haul yet. Assuming trucks get 200-to-250 miles on a charge, only shippers with warehouses located within 100 miles of a port can play in the EV truck space right now. That means folks moving containers from Los Angeles to the Inland Empire or from Oakland to the Stockton and Tracy area.
Still, carriers will be adding EV trucks to their fleets in Q3 and Q4, and truck capacity is expected to quadruple by the end of the year. This will open up opportunity for more shippers, like you, to experiment with drayage loads. Of course, the pool of EV trucks will still remain comparatively small for some time. It’s why I urge you to secure capacity now as demand is certain to rise faster than resources.
The best predictor of the future is the past
Don’t have freight flowing through California ports? You’d be wise to build up capacity regardless. Change is coming, and probably far sooner than you realize.
Just look to California’s 1966 emissions standards as an example. Even though the federal requirement was still 12 years out, market forces came to bear on automakers. They recognized they had to implement emissions-reduction technologies across all of their vehicles as manufacturing compliant vehicles for California alone was simply too expensive.
For a similar track, one needs to look no further than the rapid evolution toward zero-carbon warehousing. What started in California is now spreading across the country. Soon, carbon-neutral warehouse design, zero-emission forklifts, and decarbonized sources of power for heating and cooling will be the norm.
EV trucks are sure to follow.
So, while the clock is already ticking for shippers moving freight in California, it’s only a matter of time before the Washington and Oregon dominoes fall. When they do, Massachusetts, New York, and New Jersey won’t be far behind.
Ultimately, we’ll see EV trucks transform the way we move freight across the country—and there will be sizable advantages for those who are first at the table.
Forward-thinking shippers: Get in line now.