A Win-Win: Greener Transport and Logistics solutions to meet growing demand for better services

Asia’s mark on climate impact is arguably the most critical globally, reflecting the stark reality of the region being home to over half of the planet’s population. Asia’s demand for food, energy, and services outstrips any other comparable region, and results in many Asian countries driving global Greenhouse Gas (GHG) emissions. Transport and logistics play a major role across all aspects of public life in the region, with the sector exponentially growing in order to meet the demand for better services. This demand currently is, and will continue to be, a leading source of GHG emissions.

Most of these emissions come from East and Southeast Asia, accounting for around 50 per cent and 22 per cent of emissions respectively, with projections of an overall increase of CO2 emissions of 1.5% by 2030 based on current trends. The recovery from the COVID-19 pandemic can only be expected to exacerbate the demand for more and better logistics and transport, as demand surpasses pre-pandemic levels.

This makes it critical for governments, economies, businesses, and organizations to invest in improving logistics and transportation and find solutions that increase efficiency, promote the use of alternative transportation, and provide financing for a greener transition. ADB Ventures views the transport and logistics sectors as a huge opportunity to support climate impact goals.

Mainstreaming electric vehicle use

Asia’s burgeoning young population and growing use of retail e-commerce channels drive demand for transportation options, especially in urban centers where there is higher population density and disposable income. Market observers note that globally, e-commerce solutions have soared in highly populous countries with significant logistics challenges – indeed four out of the top five countries showing the greatest retail e-commerce sales growth are based in Asia .

Coinciding with the growth of e-commerce sectors, is the growth in transport and logistics solutions. Transport CO2 emissions have grown faster in Asia in the past two decades than anywhere else in the world and will not likely peak until beyond 2030 at least. Moreover, the transport landscape in Asia is rapidly evolving. The growing demand for passenger and freight transport is increasingly being met by road-based modalities including two-and-three wheelers, cars, and trucks. Nearly 60% of transport CO2 emissions in Asia come from passenger cars and medium-heavy duty trucks and is on track to increase as a proportion of overall GHG emissions.

Euler Motors Founder and CEO Saurav Kumar noted that in India alone, manufacturers produce around 600,000 commercial vehicles annually and that the electric vehicle industry is poised to become a USD 10 billion market. “This is something that has a global parallel, so you can take these products and you can find market for it in the Southeast Asia, parts of Africa, Europe, South America. It’s a product that we believe that once we solve it for India, we can scale it globally,” said Kumar

Two of ADB Ventures portfolio companies, Selex and Euler Motors , are providing cost-effective and reliable electric vehicle (EV) fleet solutions to businesses and communities in the region. Selex is an electric scooter manufacturer making electric two-wheelers and battery packs specifically for last-mile delivery and passenger transport. The second portfolio company, Euler Motors, makes light electric commercial vehicles (three-wheelers) for intra-city transportation and with a focus on producing key parts and components that also addresses concerns regarding vehicle and component availability and long-term maintenance, making them viable options for consumers and businesses alike.

Since ADB Ventures’ initial investment in these two companies, Euler has set up in India’s capital and is looking to expand to 12 regions across the country. The company is also looking to increase its production to 1,000 vehicles per month. Meanwhile, Selex is currently working with e-commerce giants Lazada and Grab, with aims to expand its production lines and set up battery-swapping systems in key cities in Vietnam.

Why are these investments high-impact and relevant?

The EV sector is gaining massive traction in Asia with an estimated valuation of over USD 777 billion in 2027, registering a CAGR of 19.1%, while the Vietnamese market alone for electric two wheelers is the biggest and fastest growing among ASEAN nations and is also the second largest globally. With petrol-powered two-wheelers being one of the largest sources of greenhouse gas emissions in major cities, electrification will greatly benefit high-usage applications such as last-mile transport to minimize carbon footprint. Selex and Euler are not only mainstreaming electric vehicles in densely populated areas, but they are also encouraging research, development and manufacturing for the electric vehicle industry within the region. This not only creates new sources of jobs and attracts investments in the countries where they operate, but this also empowers the region by creating the knowledge and products critical for Asia to transition from fossil fuel-powered vehicles.

“By displacing gasoline-based 2-wheelers with E2Ws in last-mile logistics fleets, Selex’s growth will naturally mitigate carbon emissions which our sources estimate up to 50,000 tons by 2025” –
Dr. Nguyen H.P. Nguyen, Selex Motors Chief Executive Officer

Improving logistics marketplace for businesses

Businesses are demanding greater efficiency when it comes to freight or truck deliveries and are often stuck with expensive, limited options. The cost of booking these services means that businesses risk perishable goods spoiling or that they risk increasing their footprint by scheduling frequent, smaller deliveries.  

 

ADB Ventures SEED Portfolio companies Loop Freight, Truck It In, and Rider provide various solutions to optimize freight management, delivery routes, and supply and demand aggregation. Loop Freight, based in Bangladesh, provides a freight management platform to better match supply and demand to address low trucking use, inefficient routing, and higher trucking costs. 

 

Meanwhile, in Pakistan, Rider and Truck It In are tackling problems on both ends. Rider has built a buyer app and a shipper portal to facilitate e-commerce deliveries, which brings customers a success rate of up to 93 per cent and optimizes delivery routes to reduce distances travelled by up to 20 per cent.

 

Truck It In has developed a proprietary algorithm to produce quotes based on market prices and quick supply-demand aggregation to match shipments with available trucks in the area. Since ADB Ventures’ SEED investment, Truck It In has grown its trips by 50 per cent month- on- month.

So, what have we learned?  

With Asia’s transportation and logistics industries becoming more complex, there is a demand for country tailor made and efficient solutions. ADB Ventures SEED investments in these three companies provide businesses in South Asia, particularly small and medium businesses, with the resources to conduct trade efficiently while reducing their carbon footprint.

Providing financing for electric vehicles

One of the challenges of fully transitioning to climate positive transportation alternatives is the cost of switching to new solutions or vehicles. Electric vehicles often have higher costs compared to their diesel or gasoline-powered counterparts, and in a region where consumers are reliant on cheaper two or three-wheeler vehicles, these alternatives are perceived as less viable. 

 

Three Wheels United aims to address this crucial barrier by offering financing for electric three-wheelers at low-interest rates and leveraging a data-driven lending ecosystem to keep downpayment low and thereby improve the borrowers’ income. This then puts the drivers in a better position to make a good income and repay their loans. Three Wheels United has financed over 3,000 vehicles to date and has recently formed partnerships to procure electric three-wheelers for auto rickshaw drivers to transition from conventional engines to electric vehicles. Partnerships have also been brokered with Eqaro Guarantees and Log9 Materials  to offer financing solutions for fast-charging batteries and electric vehicles, to support the distribution of over 500 three-wheeler electric vehicles across Delhi NCR, Mumbai, Chennai, and Bengaluru.