Why the Logistics Industry Needs To Ensure Lesser Carbon Footprint
Global supply chains are growing and becoming more complex as consumer demand increases. Today, anything can be delivered to your doorstep. E-commerce is booming, and the consumer’s propensity to spend is steadily increasing. Manufacturing has to keep up the pace, increasing the need for more raw materials, more trucks to deliver goods and other factors of production. Over the years, these developments have put a significant strain on the environment.
This, in turn, puts the spotlight on the need for sustainability in logistics, or “green logistics”, adopted by the industry to balance the ecological and environmental effects of their functioning.
This is especially compelling considering logistics is the third-largest contributor to carbon emissions, only after power and industry. Some of the significant contributors to carbon emissions in transport are empty miles, reverse logistics, and the idle time of trucks.
Statistics to consider
With CO2 levels on the rise, being able to track the global emissions hotspots is becoming necessary.
- According to the IEA 2020 review report, the road freight sector is the third most CO2 emitting sector in India.
- A report released by Niti Aayog in June 2021 stated that CO2 emissions from freight transport are projected to increase by 451 percent – from 220 million tonnes in 2020 to 1,214 million tonnes in 2050.
- Road freight is the most significant contributor to these emissions, responsible for 95 percent of the freight CO2 emissions in 2020.
All of this would translate into transport-related emissions increasing faster than emissions from other carbon-intensive sectors without timely interventions.
Why it makes business sense for sustainable freight
Transporting goods requires large amounts of energy for fuel and machinery. It also causes pollution through gridlocked traffic in cities or heavy carbon emissions from planes zooming above the clouds. As more countries become industrialised, freight volumes will continue to increase, but this growth in supply chains is damaging the environment. How does this impact businesses?
Now more than ever, consumers care about where their products are and how they get from point A to point B. A recent study found that consumers are willing to pay 5% more for items delivered sustainably, and about 76% said they would wait an extra day for delivery. By proving to customers that you are focused on making the supply chain as sustainable as possible, customers will likely view you as a brand they can trust.
At the same time, one of the biggest sustainability challenges is improving efficiency and reducing the amount of complexity in the long run. Sustainable freight also leads to a reduction in costs, as it means lesser fuel consumption, lesser number of vehicles required and lesser wastage. Also, more revenue because of better product availability and better brand presence.
As environmental factors become more of a consideration and more standards for compliance are released, companies want to be on the winning side of history.
The road ahead for green freight and benefits
A key aspect of ensuring that freight transport remains economically and environmentally sustainable is the continued adoption of “green” technologies and practices such as;
- Driver training and vehicle maintenance
- Reverse logistics
- Route optimisation to reduce consumption and costs
Thorough driver training & vehicle maintenance:
Companies need to provide qualified on-field instructors who can constantly monitor and diligently train drivers to be aware of their responsibility. Globally, organisations such as FIATA and the International Road Union recognise the importance of driver training and take the necessary steps to deploy training.
If a truck is not regularly serviced, it could strain the components, increasing running costs. A poorly maintained vehicle also releases more pollutants into the air than otherwise. Scheduled services can save companies enormous repair costs and increase fuel efficiency. There is also the added benefit of reducing road accidents due to vehicle malfunctions.
In India, Freight Tiger adopts several initiatives under its Driver Welfare & Empowerment program to educate drivers and teach them great techniques on vehicle management, including fuel economy, safe driving skills to avoid accidents and reducing environmental impact. They also upskill drivers to be financially and digitally savvy. To this effect, the team has conducted several workshops and training sessions in partnership with its customers, Saint Gobain Gyproc and Transport Mitra – a platform dedicated to driver welfare, to help drivers understand how they can drive better, bring them up to speed on new technology and also teach them de-stressing techniques which come in handy during their long trips.
Higher asset utilisation through reverse logistics
The goal of reverse logistics is to make it possible for companies to sell products again. For example, consider a truck travelling from Rajasthan to Bangalore to make a delivery. On the return journey, if not utilised properly, there are empty miles. The best way to use this asset is to ensure that the truck carries a load or resource back to Rajasthan on its return trip.
Reverse logistics helps companies bring back products from retailers. The returned products are then inspected and sorted before they are distributed to the suppliers or manufacturers. The solution can help companies reduce costs and improve service levels by efficiently leveraging their supply chains to distribute returned goods.
Reverse Logistics can significantly contribute to reducing CO2 emissions in two ways:
1) Increasing product reuse within the network reduces the need for new products that need longer production times, resulting in lesser emissions. This also translates into less raw materials being consumed during production time;
2) Reverse Logistics can significantly impact transportation emissions because it helps reduce mileage travelled when goods are taken back from retailers or consumers.
Generally, the main benefits of Reverse Logistics include:
- Environmental benefits stemming from recycling and reuse;
- Infrastructure savings such as storage and distribution warehouse space;
- Economic benefits derived from gaining extended value for products by adding new revenue streams (such as refurbishing);
- Energy savings resulting from reduced transportation requirements; and finally,
- Social benefits such as the reduction of waste going to landfills.
In its report titled ‘Waste not, want not: Capturing the value of the circular economy through reverse logistics‘, DHL showcases how it set up reverse logistics processes based on 3 product types – low-value extended producer responsibility; service parts logistics; and advanced industrial products. This model also delivered an increase in recycling rates, reduced carbon emissions and saved costs.
Robust route optimisation leads the way today when it comes to making logistics more environmentally friendly.
Trucks are often used for carrying material or products to various destinations. They are also used to carry products back after the products have been delivered. Some companies may use this strategy in order to avoid using multiple vehicles. The problem with this type of transportation process is that the truck is not always working. There are many idle hours, leading to higher emissions, less fuel efficiency, and increased costs overall. With route optimisation idle time of trucks can be better managed to ensure the best fuel efficiency possible.
Route optimisation can reduce carbon emissions because it helps to find the most efficient transportation system possible. The goal is to reduce fuel consumption and efficiency.
It is a collaborative process between multiple parties using interoperable technologies. Companies are always on the lookout for ways to reduce CO2 emissions by understanding that climate change is a pressing issue that requires immediate action.
The road towards energy-efficient freight transport in India
In the fiscal year 2019-2020, CO2 emissions in India fell by an estimated 30 million tonnes of CO2 (MtCO2). The impact of the pandemic, like the lockdowns, restriction of movement, etc., had a significant impact in early 2020.
A recent report released by Niti Aayog in June 2021 showcases a roadmap on India’s path towards a cost-effective, clean and optimized freight transport system. The report estimates that by 2050, the cumulative energy consumption from freight transport will be around 5.8 billion tonnes and can be reduced by 50% under an efficient scenario.
The report also states that India can reduce its logistics cost by 4% of its gross domestic product and achieve 10 gigatonnes of carbon dioxide emission savings by 2030 through clean measures.
To promote clean, fuel-efficient vehicle technologies such as EVs, India plans to prioritise the following solutions:
- Improve fuel economy and reduce ICE vehicle’s emissions
- Use EVs and cleaner fuels
Furthermore, India has been improving its score on the LPI (Logistics Performance Index) from 3.07 to 3.42 between 2007 and 2016, which was achieved as a result of improving infrastructure, introducing policies like Make in India and incorporating technological and digital improvements in the logistics supply chain.
While Indian industries are already starting to take bold action on renewable energy and electric mobility, three emerging solutions include 1.) Electrifying energy use and switching as much as possible of the remaining fuel use to hydrogen. 2.) Increasing the energy efficiency of industrial equipment. 3.)Increasing material efficiency, product longevity and re-use.
Minimizing the environmental impact of transport and logistics is not just good for business. It’s also necessary to ensure supply chains can continue in their current form. With stricter regulations on emissions in the pipeline, every company will be forced to take action to save itself from being at a competitive disadvantage.
How technology can help
The growing demand for sustainability has given rise to new technologies that can achieve the eco-efficiency of products, companies, or an entire industry. The aim is to reduce carbon dioxide emissions by using technologies that minimize negative impacts on the environment. One of these emerging technologies in the logistics sector is the use of electric cars and E-bikes.
The use cases of Artificial Intelligence (AI) and Machine Learning in logistics are also considerable. The AI would look at the type of product and its destination, and provide an optimal route. That would allow for the materials to be delivered in a way that sustains cost efficiency and sustainability.
Despite what some people think or say, green logistics is not about forcing companies to make too expensive investments. It’s about finding more innovative ways of doing business, better for both our planet and your company.
With the help of technology companies can meet their carbon emissions goals and gain better ESG reporting by using the latest technology and products which many have already started to see the benefits from. Two such products that are helping customers reduce their carbon emissions by bettering vehicle utilization and reducing empty miles are FT Fulfil and FT Trace. FT Fulfil – Freight Tiger’s vehicle procurement product has helped businesses achieve higher asset utilization by converting empty miles to full truck loads. FT Trace – Freight Tiger’s trip visibility product has been designed to give companies end-to-end visibility on market and owned trucks. The product is helping customers reduce diversions due to disruptions and better fuel efficiency. Overall, Freight Tiger’s full suite of products can empower all the stakeholders in the logistics industry to build sustainable businesses and make a positive social impact.
Watch the video below to know more about FT Fulfil.
The Bottom Line
Keeping these factors in mind, sustainability in logistics supply chains is key to a healthier future for all stakeholders. A recent case study by McKinsey on ‘The Business of Sustainability’ points out that many companies prioritise sustainability goals in their businesses over reputation management. They are doing this by reducing energy usage and waste in operations, developing green products, and retaining and motivating employees. It is also heartening to note, as per the report, that globally, respondents in specific industries —energy, the extractive industries, and transportation —report that their companies are taking a more active approach than those in other sectors.
It’s time for trucks and other vehicles in the logistics industry to go electric or find other alternatives. Fortunately, recent technological advancements have paved the way for workable alternatives. It’s heartening to see government figures and business organisations adopting electric vehicles.
Finding a way to reduce your carbon footprint can be tricky. Luckily, there are several ways you can do it without sacrificing profits or efficiency. One such strategy is investing in new technology that helps companies meet their goals and improve their business. It’s just a more efficient and profitable way of doing business! You should consider implementing some form of logistics management software that would allow for better inventory control, reduced operational costs, and time-saving features like tracking orders via GPS on delivery vehicles, etc… In the end, this will help you save money while reducing emissions from your company’s operations!