How supply chains can reduce Transport Emissions by 30% in the next 10 years

The freight challenge

The exponential increase in transport volumes over the last 50 years has been accompanied by an increase in air pollution, traffic jams, accidents, noise pollution, as well as significantly contributing towards climate change. In Europe alone, this is estimated to have cost to the European Union an estimated €1,000bn/year! 

Transport emissions account for 24% of all global emissions of greenhouse gases (10% of which is from freight alone), making it the second-highest emitting sector after energy production.

In this context, reducing emissions from freight is a somewhat unprecedented challenge; to reduce emissions by 30% by 2030 (meeting the objectives of the Paris agreement) despite the International Trade Forum predicting trade to triple by 2050.

So how can we achieve this goal?

This article suggests actions companies can take to reduce their carbon emissions, with a focus on transport, setting aside industrial relocation challenges.

1 – Start by reducing your transport costs

The first step is to optimise capacity, which allows you to reduce costs while favouring modes of transport that generate fewer emissions.

Maximise the fill rates of freight

The options for increasing the filling of freight are numerous and these are just some of the ways you can increase cargo capacity; optimise the weight/volume of packaging, use palletisation plans, pallet risers, and/or favour the use of homogenous pallet transportation rather than using heterogeneous pallets which take up more space. 

Re-design your network to reduce freight requirements

What’s good for the environment is nicely aligned to what is good for the bottom line.  Reducing overall freight requirements through network redesign will naturally do both.  With the exponential growth of e-commerce demand and rapid fulfillment options, leveraging all stocking points, particularly those closest to your customers is essential to low-cost fulfillment.  At the same time fulfilling the objective of reducing the overall freight task.  

Optimisation of resources:

For transport by road, this can be done by favouring the use of large volume rigid-axle vehicles and/or articulated vehicles or through the use of a lightweight aluminium trailer which gives the option of increasing the payload (as opposed to a heavier trailer). 

Developing synergies with partners (or competitors), in a shared services model can lead to a 30% decrease in the number of vehicles in circulation. For example, companies that are located in the same warehouse with the same (or similar) delivery objectives can share freight/delivery. 

Optimise useful distances 

In France, nearly 25% of trucks on the road are empty. This is a valuable statistic and something that could to be improved drastically in all countries. Below are two options of how this could be achieved;

• Logistically: such as utilising “backhauling” (hauling cargo from point B, back to point A), using couple flows, and minimising the distances of relocating of trucks systematically.
• Digitally: the use of support tools can aid decision-making under specific constraints to significantly optimise the distances traveled. For example, setting up a ‘route optimiser’ results in gains of between 5-10% when compared to opting for the ‘modal shift’ (switching modes of transport). However, the ‘modal shift’ itself has the potential to act as a powerful driver in reducing the carbon footprint of companies. For example, intercontinental transport flows show that using air passage in the maritime sector cut emissions by 50% and costs by 20%. 

2. Make responsible choices

Economic drivers can also contribute to a significant reduction in the CO2 footprint, but remain insufficient in achieving the objectives set out in the Paris agreement. To be successful they must be supplemented by the implementation of a responsible transport policy.

A policy could integrate CSR accountability criteria during contract tenders for fleet renewal or the purchase of transport services to reduce emissions per kilometer tonne.

These criteria could be accomplished through one or more of the following suggestions:

• Clean vehicle fleets: use a vehicle fleet that has a minimum emission standard rating. This can be done through the use of vehicles running on biogas or the use of electric vehicles. Today, the leading manufacturers of freight vehicles are beginning to develop such sustainable options, and these are likely to increase within the vehicle manufacturing industry.
• Eco-Driver Training: driving economically can achieve reductions in fuel consumption of around 5% and telematic control systems offer ways of monitoring the way the vehicle is driven.
• Commitments: choose a contractor that has committed to reducing greenhouse gas emissions as part of the Freight 21 (Fret21) initiative and/or commit to reducing CO2 within your companies distribution policy. 

The carbon footprint of the transport industry is vastly disproportionate when compared to that of the warehousing industry by a ratio of at least 95:1, whereas the financial costs of transport and storage are fairly similar in comparison. Logistics managers must analyse costs, stock levels, and CO2 impacts of various transportation and warehousing options because while they may appear to be economically similar there is the potential that one may be significantly better in regards to CO2 emission reductions. For example, when reducing financial costs, a company may choose to reduce the number of warehouses, however, this may lead to an increase in transportation distances thus increasing CO2 emissions.

The more we reduce the mass production of luxury items (massification), and the more times deliveries are made on time; the more significant the impact on emissions. 

Reducing the frequency of deliveries (by storing more), or increasing the delivery times for the end customer are opportunities for emissions reductions that can be studied further. For example, many retailers are starting to raise the awareness to their customers of how their delivery methods are environmentally friendly, albeit slower. 

3. Join a forward-looking vision

Responsible transport policy actions implemented by companies can achieve significant reductions, but these policies must be supported by politicians and the public on two main axes;

• Using financial incentives/stimuli to develop transport sectors with low CO2 footprints such as river or rail networks while ensuring the same quality of service that air or road transport currently provides. Some countries have already succeeded at this, such as Switzerland where 42% of trade within the country takes place via rail networks.
• Supporting technological innovations by upgrading necessary infrastructure. This goes beyond the electrification of vehicles as other technological innovations are also being developed. For example, the addition of sails on container ships within the maritime sector and the development of hydrogen as a fuel within the air and road sectors. In countries such as France, where diesel fuel equates to 97% of the fuel used in freight, there is still a long way to go before these innovations are realised. 

4. Businesses: it’s time to set goals, measure, and act!

At a company level, the reduction of transport emissions in response to the climate challenge sees the need for a combination of transport training, making responsible choices, and having a prospective vision. Engaging in these dynamic factors and successfully implementing them will be based on five main factors; 

• The adoption of various reduction targets across business decision-making processes; 

• Being able to measure the carbon footprint of the business, identify the main causes of emissions and identify ways to make improvements in emission reductions (stage 1). This is followed by steering the business to action the necessary improvements; 

• Being analytical; the drivers of CO2 emissions are numerous and often complex, and it is, therefore, important to analyse them in a way that numerically conceptualises the issues and their accessibility (economic impacts, services, stock levels, market maturity, etc.); 

• Collaborate with stakeholders and suppliers when trying to reduce emissions, and communicate with your customers, all of whom are becoming more and more sensitive to the environmental performance of businesses;

• Enthusiasm! This approach to reducing CO2 emissions gives a unique opportunity to mobilise and unite employees by establishing a sense that their work is important. 

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