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Today’s Transportation problems stem from the accumulation of years of environmental burdens and the ever increasing number of vehicles. As a result, the transportation industry is confronted with challenges as never before. The emergence of the circular economy, however, provides a catalyst for change. Re-manufacturing, Re-cycling and Re-generating will help to conserve resources; new technology is leading vehicles to high efficiency and low energy consumption; and new services are making transportation more efficient than ever.

The design and development stage for smart and energy-efficient vehicles takes into account the environmental impact of the materials selected, manufacturing processes, product usage and disposal. The purpose is to minimize resource consumption and environmental impact throughout the lifecycle of the vehicles. This is consistent with the concept of material recycling and product remanufacturing in the circular economy.

Corbion Purac, a Netherland company, has developed a heat-resistant polylactic acid (PLA), a bioplastic that is capable of replacing pollution-causing polymers in many applications. PLA is also used in the manufacturing of automotive air filter casings and interiors. Ford has launched a soy-based foam for seat backs and cushions. This material is light in weight and 100% recyclable and reusable.    

Automobile lightweight designs are assisting in reducing material consumption, while easy-to-disassemble designs help to retain the value of components. The advent of electric vehicles promises a future of zero pollution and zero emissions, spurring auto makers to improve their vehicles’ endurance ability. The development of autonomous driving and the combination with artificial intelligence and IoT (Internet-of-Things) are set to enhance the utilization and controllability of vehicles. 

Car sharing services can boost utilization efficiency and lower energy consumption. This is the best example of the new services in the circular economy which replaces vehicle ownership with usership. Car sharing has been a vibrant business in Europe and the US for a number of years. Service providers are mainly car rental companies, automobile manufacturers and government-invested operators. Zipcar offers car sharing services in more than 500 cities and campuses around the world. Daimler, BMW, Toyota and Ford are all involved in the car sharing market. The Paris city government has been working with Bolloré to introduce Autolib, an electric car sharing service, in order to resolve the problems associated with carbon emissions, traffic congestion and parking space shortage.

Car sharing services as part of the circular economy reduces car ownership and boosts vehicle utilization thereby minimizing resource wastage associated with vehicle idle time. Car sharing and public transportation help to alleviate the problems of air pollution, congestion, insufficient parking spaces and retired vehicle disposal in metropolitan areas. The large amount of data and information gathered through sharing services can be analyzed and used for further business model innovation.

The booming development of e-commerce has been increasing the demand and the market size of logistics services. Statistics from Armstrong & Associates, a research & consulting firm in the US indicate that the logistics industry accounted for 11% of the global GDP in 2015. The aggregate revenue of third-party logistics (3PL) totaled $788.4 billion. The industry is known for the high variability, complexity, distribution and cross-border characteristics. The waste and emissions that result from the packaging, storage and shipping of goods cannot be ignored.

The application of circular economy anchored on the creation of a new environment for green logistics, considering the environmental impact from packaging design, the selection of recyclable and decomposable materials, to warehousing layouts, equipment and transportation arrangement. Distribution centers will need to come up with appropriate routing and scheduling plans to reduce cargo flows, unoccupancy rates and error rates, strive for zero inventory, and improve logistics efficiency and service levels in order to lower carbon emissions and environmental pollution. The vision is to combine new technologies such as automation, IoT and Big Data to optimize management efficiency, logistics service and environmental sustainability.

The transformation of transportation industry is also part of the circular economy. Automotive manufacturing, transportation services and logistic demands are all set to change, driving the evolution and revolution of supply chains and the emergence of new industries such as materials recycling and reusing, artificial intelligence and machine learning, all of which could provide an entry point for new services and business models catering to user-based needs in the circular economy.