Will the logistics industry meaningfully reduce its roughly 7% contribution to global greenhouse gas emissions? Sustainability has gained traction over the last several decades. Ideas about sustainability and the human impact on the environment that may have been dismissed by the general public decades ago are now commonplace. Technology and innovation will help the logistics industry and its stakeholders keep driving toward a brighter future.
Sustainability has gained traction over the last several decades. Ideas about sustainability and the human impact on the environment that may have been dismissed by the general public decades ago are now commonplace. Today it’s not out of the ordinary to see a hybrid car parked in the parking lot next to you or a neighbor’s house with a bank of solar panels on the roof. While much of the general population now considers the environment and sustainability to be important societal issues, many in the supply chain have been slow to take action – including shippers and carriers.
In fact, a recent survey of logistics industry professionals conducted by Blume Global indicates that individuals are more concerned with sustainability than the companies they work for, while those companies tend to be more concerned than the logistics industry at large. While a focus on sustainability is stronger at the individual level than at the company or industry levels, that trend is beginning to shift. Moreover, 76% of respondents believe that the logistics industry as a whole is interested in sustainability, and 91% believe their companies are interested in exploring sustainability programs at the organizational level.
The Impact of Logistics on Greenhouse Gas Emissions
The logistics industry currently contributes roughly 7% of global greenhouse gas (GHG) emissions. According to the EPA, the transportation industry accounts for 29% of GHG emissions. Over half these global greenhouse gas emissions come from passenger cars and light-duty trucks including pickup trucks, SUVs, and minivans. The rest are attributed to commercial aviation, rail, and ships. Because logistics and transportation are responsible for such significant amounts of fossil fuel consumption and GHG emissions, increasing sustainability across these industries has the potential to significantly improve the global environmental outlook.
Getting Started with Sustainability
But where to start? How does a shipper or carrier pursue a sustainability strategy, and why should we want to?
The Blume Global survey revealed that the leading motivators for adopting a sustainability program are:
- Corporate responsibility
- Concern about climate change
- Demand from supply chain partners
- Consumer demand
Interestingly, few survey respondents believed that regulatory pressures were a significant factor driving sustainability. This indicates that social pressures and legitimate environmental concerns are much stronger motivators than governmental pressures. Consumers, in general, are becoming more conscious about the environmental impact of their purchasing habits, and they are actively seeking out sustainable products and buying options. This, of course, means that sustainability can ultimately affect a company’s bottom line by appealing to consumers’ personal social responsibility preferences.
Technology and Optimized Route Planning
Once a company decides to “go green”, how does it actually develop and implement an environmental sustainability program? Nearly 80% of Blume Global survey respondents said they believed technology was the most important factor for achieving sustainability goals, followed by renewable energy, green buildings, recycling, and alternative fuels. Technology, such as software used in optimized route planning, can help reduce GHG emissions by increasing operational efficiencies. The EPA also suggests training drivers in techniques that reduce fuel consumption, including driving habits and vehicle maintenance.
Technology is a key (and potentially underutilized) component in the transportation industry when pursuing a reduction in greenhouse gas emissions. In the survey conducted by Blume Global, participants reviewed topics such as technologies that optimize route planning, renewable energy vehicles, technologies that recommend carriers and routes minimizing carbon footprint (vs cost and on-time performance), and technologies that provide carbon footprint transparency when selecting carriers and routes. Technology that optimizes route planning was the most important to participants while renewable energy vehicles came in as a close second. Customers are making conscious decisions when deciding what companies to affiliate with.
With the use of technological advances in the industry, optimized route planning may have the greatest impact on reducing GHG emissions. Shipping empty containers is the leading culprit that produces negative miles, reducing profit, customer satisfaction, and the ability to drive carrier utilization. CEO of Blume Global, Pervinder Johar, states, “Empty miles are a significant driver of increased supply chain costs and carbon emissions. Reducing empty miles can be done through street turn matching, which matches outbound moves with inbound moves to rail ramps, rather than repositioning empty containers for pickup.” Optimized route planning has the potential to significantly reduce the carbon footprint of the transportation industry.
Respondents also consider renewable energy vehicles to be a valuable investment for the future of sustainability in logistics. However, renewable energy vehicles such as electric trucks can present a significant cost barrier. In fact, half of the survey respondents indicated that funding was the largest obstacle to implementing a sustainability program at their company. Industry experts point out that while the upfront costs of many sustainability initiatives are high, the payoff can be worth it in the long run. Glenn Jones, Global Vice President of Product at Blume Global, explains that “going green helps attract socially conscious consumers who are considering sustainability practices as they make day to day purchases.”
While renewable energy is without a doubt a factor of consideration for proponents of a carbon-neutral logistics industry, even an electric vehicle leaves a footprint if coal is used to produce the electricity that powers it. Electric vehicles also depend upon the accessibility of charging stations and the time necessary to complete a charge. Along those same lines, solar energy continues to be a distant dream for many communities due to steep upfront costs and variable levels of practicality depending upon where one lives. That said, alternative fuels may present shippers and carriers with a first step forward.
Alternative fuels like natural gas still produce GHG emissions, but not nearly as much as traditional fossil fuels. In fact, renewable natural gas derived from methane can reduce GHG vehicle emissions by 382%. So, while alternative fuels may not be a permanent solution, they can help shippers and carriers begin achieving their sustainability goals until the industry is able to fully shift to renewable energy.
Regardless of the steps it takes to get there, we are clearly moving toward the widespread adoption of sustainable operations as more individuals, companies, and consumers become deeply connected to environmental impact. Not only can sustainable practices increase profitability through operational efficiencies, they can also attract environmentally conscious consumers, shippers, and supply chain partners. There are many paths forward, and more to be discovered, through the collective ingenuity of humankind. Technology and innovation will help the logistics industry and its stakeholders keep driving toward a brighter future.