As we have seen in recent months, the increase in demand for consumer goods has put a strain on the global supply chain. It has also brought into sharp focus some of the inefficiencies that are inherent in the supply chain logistics, especially in its freight component.
Any organization that is tabulating its Scope 3 emissions has to contend with the contribution from its supply chain. Managing this portion is perhaps the most challenging aspect of emissions accounting. Even more challenging is how to induce your supply chain and logistics partners to align with your sustainability and emissions reduction goals.
While the global supply chain has a long way to go towards becoming sustainable, the encouraging news within logistics is that most freight operators are cognizant of environmental considerations. Transportation as a whole is already the largest source of emissions in the U.S. and commercial freight, in particular, is projected to surpass other transportation emissions by 2040. So, it’s no surprise that the freight sector is getting a lot of push to curb its emissions and become more energy efficient. And there is definitely plenty of room for such improvements.
Fuel Efficiency Measures
The ICCT, a transportation policy thinktank, recently conducted a study with the home improvement retailer Home Depot and showed that by adopting efficiency measures in their freight, its operational emissions were reduced by 30%. Using EPA’s SmartWay guidelines on freight emissions accounting and reduction strategies, they put in place measures such as better utilization of freight space and switching to more efficient modes of transportation in various delivery segments. Of course, this kind of approach requires a rethinking of business-as-usual on the part of organizations but such flexibility is vital in today’s vulnerable business environment.
Digitization is a very valuable resource that has already provided critical insights to adoptees, for instance, by combining IoT and data analytics. Vehicle telematics have revealed tie-ups between fuel consumption and driving patterns changes to which have created positive shifts.
There are other pathways to digitization as well. For example, the package delivery company UPS uses a route optimization tool in its delivery trucks that provides real-time optimal driving instructions. The postal service USPS utilizes energy management software to guide its energy reduction efforts.
The shipping industry has also adopted energy reduction measures within its operations, such as slow steaming on the seas, route optimization guided by weather and maritime conditions, and using technology for efficient loading / unloading of containers.
Alternatives to Fossil Fuels
While efficiency measures are absolutely necessary in order to reduce fuel consumption in transportation, the use of fossil fuel itself continues to be the 800-pound gorilla. However, there is some good news on that front as well. Ground transportation fleets like those used by USPS have been using a mix of several alternative fuels like CNG, electric and biodiesel.
Shipping and aviation industries are starting to actively source more sustainable fuels like biofuels. Electrification in those two sectors is still a pipe dream but rail transport may have gained an edge with the recent unveiling of world’s first electric freight locomotive.
Major shipping companies such as Maersk are starting to launch container ships that will run on lower carbon fuels. As a result, the development & procurement of sustainable and alternative fuels such as methanol and hydrogen has taken on a new urgency.
The Problem with Trucking
Notwithstanding all the positive environmental news coming from the transportation sector, there are still many metaphorical potholes that need fixing. The trucking industry is particularly intractable, in large measure due to its fragmented nature. Its operators range from many small private owners to a few big organizations. Smaller outfits, in general, cannot afford major overhauls or sophisticated solutions needed to reduce fuel consumption.
One of the biggest inefficiencies in trucking is that of “empty miles” when a truck is driven without a load, which frequently happens on the return trip following a delivery. Drivers are typically under tremendous pressure to meet deadlines for pickups and delivery. This leaves no incentive to prolong a trip or take a detour in order to accommodate a return shipment.
Some digital platforms are trying to solve the problem of empty miles with steps like flexible time appointments. Regardless of how successful such solutions turn out to be, it is clear that most trucking businesses could do with some financial incentives to adopt broader measures that will ensure lesser, cleaner emissions.
Sustainability frameworks have proven instrumental in the positive changes seen so far in the commercial transportation sector. For example, the GLEC framework is widely used by the global shipping industry to calculate and set strategies for reducing freight emissions. It derives from the GHG Protocol, CDP and UN supported Global Green Freight Action Plan. The latter has been influenced by EPA’s SmartWay program referenced earlier.
Similar trajectories can be seen across other industries where sector specific guidelines are evolving from globally recognized sustainability frameworks. This evolution is happening as part of a natural progression towards codification into standards and regulations. It will serve organizations well to, in the least, become aware of this process and, better yet, become active participants in it.
Your Carbon Steps can help you make sense of sustainability trends within your industry as well as provide you with a comprehensive understanding of relevant frameworks.
