Rising operating costs are becoming the main driver of alternative fuel investment decisions among UK transport and logistics businesses, according to new research from GXO Logistics, which highlights several commercial barriers slowing the transition to lower-emission fleets.
The contract logistics provider’s latest Future of Transport report, based on a survey of more than 1,000 UK supply chain, transport and logistics decision-makers, found 63% said rising fuel costs were accelerating their interest in alternative fuel vehicles.
However, just 38% currently operate such vehicles, despite 87% identifying emissions reduction as a key priority.
The findings suggest businesses increasingly need to demonstrate a financial return before committing to fleet decarbonisation. Some 76% of respondents said evidence of cost savings or operational efficiencies was essential to unlocking investment in lower-emission transport.
High upfront vehicle costs, uncertainty over which technologies will prevail and concerns about refuelling and charging infrastructure continue to hold back progress.
In response, businesses are focusing on measures that can deliver immediate efficiency gains. The proportion reducing part-loads has reached 43%, while 41% are cutting empty running, 41% are exploring fleet sharing and 39% are optimising routes. All four figures have increased since GXO’s previous survey in 2024.
Shared transport network: The Perfume Shop avoiding ‘empty space’ in store deliveries
Carl Hanson, managing director of transport at GXO UK & Ireland, remarked: “Decarbonisation and commercial performance cannot be treated as competing priorities.”
He added that better data, greater visibility and more connected transport networks could help businesses reduce waste, costs and emissions now, while preparing fleets for a range of future fuels.
The research also highlights uncertainty over the technologies likely to replace diesel. Seven in ten logistics leaders expect gas-powered fleets using liquefied natural gas (LNG) or compressed natural gas (CNG) to be viable, affordable and operationally realistic by 2028. Electric HGVs follow at 68%, with biofuels at 64% and hydrogen at 62%.
Infrastructure planning remains limited, however. Only 25% of businesses have started investment planning for charging or refuelling infrastructure, while 30% have begun procurement planning around anticipated energy supply.
GXO said its work through the UK’s Zero Emission HGV and Infrastructure Demonstrator (ZEHID for short) programme is supporting the deployment of electric HGVs alongside the charging infrastructure and operational systems needed for real-world use.
Its EyeQ digital transport platform also supports route optimisation, reduced empty running and collaboration between transport networks, helping businesses improve efficiency while developing longer-term decarbonisation plans.
The report, Future of Transport: The Net Zero Transition, is the second instalment in GXO’s three-part research series examining operational efficiency, sustainability and technology-led optimisation in UK transport.
[image credit: Green Retail World]
