Towards a sustainable transport ecosystem

9 November 2022

Driven by sustainability and digitalisation, disrupted by the current period of uncertainty – the transport industry is embarking on its most significant period of change. On this journey, SCC patron Scania is taking a leading position, with the customer in the front seat and backed up by collaborating partners. “We want to be not just on the front edge of providing the solutions, but actually pushing our industry along the road towards a more sustainable future,” says James Armstrong, Executive Regional Director for Northern Europe at Scania.

With a 130-year heritage and 54,000 employees in more than 100 countries, Scania is today one of the world’s leading providers of transport solutions. According to James Armstrong, Executive Regional Director for Northern Europe at Scania, this position has been made possible through the company’s focus on the heavy-duty end of the market. “Concentrating on vehicles at 17 tonnes and above allows us to develop expertise in terms of the product but also how we support our customers.” A heritage in engineering, focus on product quality and being a manufacturer that owns a large proportion of its service network are also important parts of the success story. “This is really what has driven our success in the past, and probably is also what we will base our future success on.”

Joining the Scania family
James joined the Scania family in 1995, working for a private dealer in the East Midlands in the UK. “That was a ten year journey from working as a Commercial Manager to becoming the Managing Director of that business, as well as a shareholder in the company,” James recalls. In 2005, he joined Scania Great Britain, the wholly owned Scania distributor in the UK, as Service Director and member of the executive team. Since then, he has been Managing Director in Southeast Asia, based in Kuala Lumpur, and after relocating to Prague, he took on the responsibility of the Central European market. In 2021, James returned to the UK, this time as Managing Director of Scania Great Britain.

“I had only been here a couple of months when Scania made some fairly significant organisational changes as part of its transformation programme. Part of that was to reshuffle the regional structure and I was given the opportunity to take up the role of Executive Regional Director for Northern Europe, which includes the UK as a market and business unit.” Now, Scania is about to finalise the recruitment of a new Managing Director for the UK. “This will allow me to concentrate on my European responsibility in the coming months.”

Creating solutions across markets
For James, working and living abroad has been an enriching experience and he has learned a lot about himself from relocating outside what he calls his ‘domestic comfort zone’. “There are plentiful cultural differences meaning that your style and approach has to be adapted for whatever the local context is, but I can also see that the basic customer demands are largely the same. It allows us to really create solutions that are valid across a number of markets.”

Supporting customers through difficult times
The core of Scania’s business is looking after its customers and fulfilling their demands, even through periods of uncertainty. “Everything we do is ‘customer first’. Our number one priority is to support our customers in a period which is pretty difficult,” James says and continues: “You could ask any company in any industry what is really affecting them today, and they will talk about coming out of COVID. The pressure that this has created, with regards to our working practices and availability of staff, and then with Brexit on top of this, and the pressures that have been created by the war in Ukraine – not wanting to undermine the humanitarian disaster that is going on in that country – but the economic consequences and fallout is really dramatic for our customers, and for our business as well.”

As a consequence, changing cost structures coming from increasing fuel costs and a strong wage inflation due to shortage of drivers, inevitably creates cost pressure for Scania’s customers. “How we help our customers is really front and centre of what we do today, but also helping them in developing the view going forward as we shape up to a more sustainable electrified future – helping our customers to find their way through this maze of transformation.”

Saving cost through fuel efficiency There are several ways Scania helps its customers through cost savings, greener solutions and attracting drivers to the industry. James mentions the recent launch of ‘Scania Super’ which is more fuel efficient than its predecessor. “We believe that this will generate a fuel saving for customers of up to 8%. Fuel is about a third of the transport operator’s cost in the long haul operation. That is a pretty significant cost saving that we are able to deliver.”

Also, by focusing on the driver, James hopes that Scania can help make the driving occupation more attractive. “I think Brexit resulted in many European drivers employed in the UK returning back to their home countries. Our responsibility to make the work of a driver more comfortable, safer, and less arduous is really important in helping our customers to attract people into the industry and to retain them within the driving occupation.”

Driving the shift towards sustainable solutions
Scania’s current mission and vision is all about driving the shift towards sustainable transport solutions. For example, the company was the first manufacturer committing to science based targets and, in 2021, Scania signed the Climate Pledge, committing to reach net zero carbon emissions by 2040. “We want to be not just on the front edge of providing the solutions, but actually pushing our industry along the road to a more sustainable future, which is about developing products that can run on the widest range of fuels available today, including sustainable fuel alternatives and our journey towards an electrified future.”

Making good strides
Taking a closer look at the science based targets, and specifically the scope three ambition to reduce the emissions of vehicles delivered into the rolling population, Scania is already making good strides. “We have already launched our battery electric vehicles and plug-in hybrid electric vehicles, but it is not only about electrification. Our current vehicles give us significant savings through fuel-efficiency. We have an engine platform that runs on the widest range of available fuels - an operator can refuel their truck or bus with hydrogenated vegetable oil without any modifications to the engine or the service regime. And we have a range of engines that can run on renewable fuels including gas and biodiesel.”

“We want to be not just on the front edge of providing the solutions, but actually pushing our industry along the road to a more sustainable future.”

Product innovations aside, Scania is also making significant investments to future-proof its internal operations and standard of its premises. “When we are building new workshops, or replacing heating systems, we are looking at sustainable solutions. Recently, we invested £10 million in a new workshop in Eurocentral just east of Glasgow, and that includes a completely sustainable heating system for the workshop.”

While there is more work to be done, Scania is well on its way to meet its emission targets. “Compared to our base year 2015 and heading towards our intermediate targets of a 50% reduction in our scope one and two emissions by 2025 – we are absolutely on track for this. From a scope three perspective and a vehicle emissions point of view, a lot of it is going to come down to the infrastructure development.”

Envisioning the future transport ecosystem
Scania envisions the future transport ecosystem as a net zero system, and in reaching this state, the company plays a key role. “We contribute most heavily with our sustainability drive in terms of using the available, sustainable fuels and working with smart, sustainable solutions. But we really believe it is also underpinned substantially by electric vehicles. Our part is to shift the whole transport ecosystem into that net zero state.”

But to reach this net zero state requires a great deal of collaboration. James says that while zero emission vehicles are available today, the limiting factor is infrastructure. Apart from more incentives from the government, he argues that the government and local authorities, together with manufacturers and infrastructure providers need to collaborate for all the pieces to come together.

Manufacturers taking responsibility
To get the ball rolling, Scania is working actively with infrastructure partners and fuel companies to develop an infrastructure supporting electric vehicles. James mentions the electric roads initiative in the Northeast of England, where Scania has been involved in establishing the feasibility of electrifying a section of a motorway with overhead catenaries. “This year, on a wider European level, Traton (including Scania and MAN), Daimler, and Volvo Trucks, pledged half a billion Euro to develop a charging infrastructure with some 1,700 charging points. The manufacturers are really taking responsibility to help that shift towards a sustainable transport ecosystem. We need to come together to mobilise the change that can’t be done by one player on its own.

Embarking on the most significant period of change
According to James, the transport sector is now embarking on its most significant period of change, driven not only by a strong sustainability push and move towards net zero vehicles, but also by digitalisation acting as a strong disruptor in the industry. “When you are in this very strong period of change, you are never really sure how clear the roadmap is. We know where we want to get to, but we are not fully sure what the final solutions are.”

And on this journey, it is important to understand the customer’s perspective, and how these new solutions should be implemented. “The first thing I think we will see are new business models, because to purchase an electric vehicle is extremely expensive compared to a traditional internal combustion engine vehicle. We will need to be extremely agile in the way that we develop these solutions and then implement them in the organisation. And it is the competencies that we will need to develop in our organisation to be able to work with these changes. I think these are the main success factors that we have to work on.”