Persistent scale effects: the case of freight transport in the automobile sector

Abstract

The environmental effects of freight transportation are closely linked to growth in industrial scale. Focusing on firm or industrial sector activity allows for a clearer understanding of the dynamics underlying this phenomenon. Using a supply chain as the analytical unit, emissions associated with freight are estimated for one corporate supply chain in the North American automobile industry. Examining freight emissions in the context of growth in industrial scale shows that, notwithstanding improvements in regulation, scale effects easily outweigh efficiency gains, arising from technology and regulation. Efforts to address climate change and air pollution through measures focusing on efficiency gains targeting emissions per unit transported will not be successful in reducing overall emissions and the industrial footprint. This reinforces the need to address the three distinct economic problems of efficiency, allocation and scale when moving towards a more ecological economy.