Fuel costs overtake climate goals as the driver of fleet transition
According to new research from GXO Logistics, Inc. (NYSE: GXO). the world’s largest pure-play contract logistics provider, rising operating costs, rather than net zero commitments, are now the primary driver of fleet fuel transition decisions for UK businesses.
The survey of over 1,000 UK supply chain, transport and logistics decision makers found that 63% say rising fuel costs are accelerating their interest in alternative fuel vehicles. However, progress remains slow, with only 38% currently operating alternative fuel vehicles, despite 87% identifying emissions reduction as a key priority.
While reducing emissions remains a priority, businesses are increasingly focused on securing commercial return. More than three-quarters (76%) say demonstrating cost savings or operational efficiencies is essential to unlocking investment in low-emission transport.
High upfront vehicle costs, uncertainty over future technology choices and concerns around infrastructure continue to delay investment decisions, leaving many operators focused on efficiency improvements they can implement today. The research found that 43% are reducing part-loads, while 41% are cutting empty running, 41% are exploring fleet sharing and 39% are optimising routes – figures all up from the last survey in 2024.
“Decarbonisation and commercial performance cannot be treated as competing priorities,” said Carl Hanson, managing director, transport, GXO UK & Ireland. “The findings show that businesses need practical solutions that deliver efficiencies now while preparing their fleets for a range of future fuels. Better data, stronger visibility and more connected transport networks can reduce waste, cost and emissions today, while partners with the right expertise and scale can help organisations navigate complexity and move from ambition to action.”
The latest Future of Transport research highlights the importance of starting the transition journey now. Through bespoke transport transformation programmes, GXO helps customers identify the right place to begin, using network analysis, phased implementation plans and funding options to create a practical path to net zero. Taking action early enables businesses to manage costs, control the pace of change and reduce the operational risk associated with fleet transformation.
Furthermore, the findings underline the industry’s belief that no single technology will deliver the transition away from diesel. Seven in ten (70%) logistics leaders expect gas-powered fleets (LNG/CNG) to be a viable, affordable and operationally realistic option by 2028, followed closely by electric HGVs (68%), biofuels (64%) and hydrogen (62%).
Although the transition is underway, the research also finds that there are still sizeable hurdles for businesses to cross. Only a quarter of businesses (25%) have already started investment planning for charging or refuelling infrastructure and less than a third (30%) have begun procurement planning around anticipated energy supply.
GXO is supporting the industry’s move towards net zero through its participation in the UK’s Zero Emission HGV and Infrastructure Demonstrator (ZEHID) programme, deploying electric HGV technology alongside the charging infrastructure and operational systems required to enable real-world fleet operations.
Technology-enabled optimisation still remains a critical enabler of the transition to lower-emission transport. Solutions such as GXO’s EyeQ digital transport platform help organisations improve efficiency, reduce empty running and lower emissions through enhanced visibility, real-time data and access to collaborative transport networks, enabling immediate operational gains while preparing for longer-term fleet decarbonisation.
The findings build on previously released GXO research which found that 89% of UK businesses expect the overall cost of running their transport operations to increase over the next 12 months, while only 35% say they have a clear strategy and timeline for alternative fuel vehicle adoption.
The Future of Transport: The Net Zero Transition is the second in a three-part series from GXO that explores operational efficiency, sustainability and technology-led optimisation in UK transport. The full report and methodology can be found here.