GCC transport, logistics can cut carbon emissions by 20pc: Strategy&
GCC countries have a critical opportunity to advance their ambitious net-zero commitments by transforming their transport and logistics (T&L) sector, according to new research from Strategy& Middle East, part of the PwC network.
Representing a quarter of global greenhouse gas emissions, the sector offers a critical opportunity to drive impactful change.
According to the analysis, targeted measures could reduce regional carbon emissions across T&L activities, by 20% to 40%.
With all GCC nations committed to achieving net-zero emissions by 2050 or 2060, the logistics sector's environmental impact cannot be overstated; its influence extends beyond its own footprint.
As an enabler of nearly all economic sectors, from manufacturing to retail, logistics decarbonization offers an unparalleled multiplier effect. The fact that T&L is embedded within so much of the region's economy gives it a potential that exceeds its already large direct footprint.
"Globally and across the GCC, transport and logistics stands out as a high emission sector that plays a pivotal role in enabling and influencing various parts of economies," said Maha Raad, Partner at Strategy& Middle East.
"Clearly, decarbonization of the sector is of critical importance, and there is opportunity to initiate this at domestic level, with the aim of creating strong impact on decarbonization agendas," she added.
For the GCC's fast-growing, dynamic markets, there is broad awareness that without effective near-term action, carbon emissions are projected to increase instead of decline, threatening regional sustainability efforts.
The new research from Strategy& Middle East underscores the need for a paradigm shift in logistics operations, which moves beyond incremental improvements, toward innovative practices that prioritize sustainability without comprising efficiency or economic growth.
A framework for change
Achieving meaningful decarbonization in the GCC's T&L sector hinges on a collaborative effort among governments, industry leaders, and other stakeholders.
A tailored change framework is needed, with distinct measures for both 'cross-border' and 'domestic logistics.'
For cross-border logistics - specifically air and sea transport - emission targets are being set by supranational bodies such as the IMO and IATA.
This requires GCC countries to adapt their regulations, such as vessel emission limits, and adjust or update infrastructure (e.g. alternative fuel bunkering in ports), to align with international standards, and potentially play a leading role in the global scene to accelerate the future of fuels agenda.
In domestic logistics, examples of shifts in practices include moving from the traditional just-in-time (JIT) model to a balanced supply chain management approach; transitioning from delivery schedules that prioritize speed to capacity optimization; and adopting multimodal delivery systems to integrate greener transportation modes.
The transition from JIT, which prioritizes efficiency and speed but often results in higher emissions, to a balanced approach allows for a recalibration of operations to achieve both economic and environmental goals.
Similarly, optimizing capacity through strategies such as dynamic routing and load consolidation addresses inefficiencies while reducing underutilized vehicle trips.
Integrating multimodal systems, including expanded use of rail and maritime transport in countries like Saudi Arabia and the UAE, offers significant potential to reduce long-haul emissions while driving operational savings. These shifts are vital to achieving sustainable logistics.
"For the GCC, composed of fast-growing, dynamic markets, meeting sustainability targets will be even more of an uphill battle than in other regions," said Hamza El Mounhi, Principal at Strategy& Middle East.
"However, with the right focus on technology, innovation, and collaboration, the region can set a global standard for decarbonized logistics," he added.
The role of stakeholders
At a policy level, governments can be critical to the success of this transformation. Policymakers can enforce international sustainability standards, incentivize green practices and green fleet deployments, and define acceptable emissions standards, according to the report.
On the infrastructure front, investments in green fuels and technologies, such as hydrogen and biodiesel, further present an opportunity to position the GCC as a global leader in sustainable logistics innovation.
Private sector stakeholders, including carriers, logistics service providers, and cargo owners, are equally pivotal. Carriers and logistics providers must adopt international standards, reconfigure logistics networks for greater efficiency, and deploy green technologies such as electric vehicles, it stated.
Cargo owners can embrace predictive analytics to optimize inventory management and operations while rethinking rapid delivery expectations to balance sustainability with performance.
Consumers also play a significant role in the broader shift toward greener logistics. By choosing products and services from companies that prioritize sustainable practices, their decisions amplify industry-wide efforts to reduce carbon emissions.
The GCC's logistics sector has the potential to become a global leader in sustainability, contributing not only to the region's net-zero goals but also to broader economic resilience and competitiveness. With decisive action and collaboration, the sector can deliver transformative outcomes for the environment and the economy.
'As we look to the future, the path to net zero is not just about incremental change. It requires a rethinking of traditional approaches, driven by innovation and underpinned by collective commitment," said Raad.
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