Demand for Transportationin Circular Businesses : A System Dynamic approach

Abstract: One of the largest challenges’ mankind is currently facing has been recognized to be climate change. Moving towards climate neutrality, decoupling economic growth from resource use, and at the same time ensuring long-term competitiveness becomes highly important. A possible path to decrease our impact on the environment is to switch from linear to circular material flows, which is today referred to as a circular economy. In a circular economy, assets that are being reused will induce a demand for transportation. Understanding how the transportation demand could be affected is important, since the sector is widely known through its environmental impact causing impaired life expectancy in many parts of the world. This study examines therefore variables in circular businesses that could affect transportation demand both directly and indirectly. These variables have been identified by interviewing eight businesses that employ repair & reuse configurations in a circular context. The study concludes that transportation could be affected in numerous ways, depending on the system's future development. If the current linear paradigm still governs the original equipment manufacturers (OEMs), it will be hard to increase the amount of viable products circulating in the system. The current paradigm has been recognized to be a large barrier due to the high uncertainty of OEMs continuance in a transition to a circular economy. If OEM collaboration could be increased extensively, the system could increase its growth. Further, customer behaviour has also been identified to be a driver for both increasing and decreasing transportation in the system. Increasing the amount of viable products circulating in a circular system comes naturally, as the trade-off in Co2-emissions between increased transportation and newly produced products is prominent. Having such a holistic view argues for the implementation, but the system still has implications regarding sustainability. As the trade-off is continuously made, demand for transportation will be increasing as the system grows. Looking at this from the perspective of the transportation industry, such implementation could make it harder to decrease its Co2-emissions with 70% by 2030, which is the goal set by the Swedish government.