Most large corporations know that their supply chains are now visible. When a factory explosion in China impacts parts shipments to Apple in the United States, for example, it makes the news. Also, as consumers become more informed, potential for brand loyalty increases for those organizations reducing their harmful emissions and their carbon footprints through more efficient, money-saving supply chain management.
Bottom line? Staying clean is not only healthier, it’s smarter for business. Earlier this week at a Council of Supply Chain Management Professionals conference, I explained more about this concept and suggested steps toward improving goods movement operations.
Why It Matters
Freight emissions are growing rapidly.
Freight transport is the single largest source of corporate carbon emissions, accounting for 15 percent of all emissions. In the U.S. alone, emissions from freight have been projected to increase 74 percent from 2005 to 2035. China is expected to increase its use of freight transportation fuels by 4.5 percent per year from 2008 to 2035. Over the coming decades, freight transport will be among the fastest-growing source of emissions, projected to increase 40 percent globally.
Retailers and other manufacturers exercise significant control over the environmental footprint of supply chain logistics operations. Their decisions on where products are made and stored, how they are designed and packaged, and how much time is allotted for transit have a tremendous impact on carbon and other air pollutants and cost efficiency.
These shippers have the most to gain from an increasingly cleaner and cost-efficient freight system and they can reap the greatest financial rewards from increasing efficiency. On top of that, public perception improves from an organizational “good environmental steward” image, increasing the brand loyalty odds in your favor.
Five Principles For Improving Supply Chain Efficiency And Sustainability
EDF created five principles shippers can follow to enable a less polluting, more carbon-efficient freight supply chain. These are based on documented case studies in our Smart Moves report, which shows how new technology and thinking are unlocking a raft of previously unattainable economic and environmental efficiencies in the vast commercial shipping industry.
- Support “Hot Spot” Clean Up. Older diesel equipment without the most modern emission controls release emissions that are hazardous to human health. In fact, the World Health Organization recently declared that diesel emissions can cause cancer in humans. People who live or work near logistics hubs, such as ports and rail yards are exposed to higher levels of these emissions, and are thus at higher risk for harmful health outcomes. As these emissions are generated by the demand for freight, shippers are increasingly being held responsible for cleaning-up “hot spots” of diesel pollution. One way for shippers to make a difference is to support the adoption of cleaner equipment in these hot spots.
- Choose the most carbon-efficient mode possible. Different modes of transportation emit different amounts of carbon per ton-mile. Planes, for instance, emit 47 times more than container ships, and trucks emit six times more than trains. Clearly differentiating cargo that needs to be expedited from that which doesn’t is step one in a carbon-efficient supply chain.
- Collaborate with other shippers. Are there opportunities to merge your warehouses and distribution assets with other companies? Ship products directly to the client and avoid warehousing altogether? Match “back-haul” lanes with other shippers to improve efficiency? All of these strategies are being used successfully in today’s retail industry.
- Redesign your own network for efficiency. New logistics tools can help to optimize warehouse locations, shipping routes, and modal connections.
- Get the most out of each move. Set goals for trailer utilization, look for new ways to combine loads, and use the best new software to optimize orders. Redesigning and consolidating packaging can also increase utilization while decreasing damage.
Increasing Sustainability While Cutting Costs
In the near term, the principles outlined above have significant cost and emissions reduction potential. Collaboration alone has been projected to be able to cut emissions 30 percent while reducing costs by 25 percent. Mode shifting and improved container utilization combined can cut tens of millions of metric tons of emissions from the U.S. freight system each year.
EDF believes that it is vital for shippers to lead the way to freight sustainability. A key way to participate is by adopting freight-specific goals as part of an organization’s sustainability objectives. Here’s a suggestion: Sit down with your logistics team and explore the possibilities:
- Can you improve carbon-efficiency by ton-mile by 25 percent over the next five years?
- Can you double or triple the percentage of your goods that use intermodal transit?
- Are you able to work with your partners in ports to support that rapid turnover of heavy-polluting trucks and other equipment?
The dramatic growth in goods movement clearly presents major challenges in efforts to minimize the effects of global climate change and lessen widespread harm to public health. However, it is possible to significantly reduce freight emissions from today’s levels, while continuing to grow our economy while improving the cost-efficiency of freight transport.