There are four driving forces in efforts to build sustainability into logistics operations today, says Jason Mathers, project direct for the Environmental Defense Fund. They are cost reduction, the expectations of investors, consumer demands, and acceding to what a company's employees want.
It's never been more important than to get costs out of the supply chin, and every bit of electricity or fuel that goes into making or moving or delivering a product is "wasted" money, Mathers says. And it leads to more emissions than we need. The importance of the institutional investors can no longer be ignored by companies. The 500 or so members of the Carbon Disclosure Project have a lot of clout, and they are demanding to know about the environmental practices of potential trading partners. After all, these companies need to respond to their own shareholders, so they must know if their partners are acceptably "green." Consumers themselves are much more interested in sustainable products, and as transparency increases more and more they will easily be able to ascertain whom they want to buy from. Similarly, employees of many companies "want to feel good" about the companies they work for, Mathers says.
OK, all of these factors mean environmental factors are increasingly on the minds of people, but why target logistics specifically? "Globally, the freight transportation industry accounts for three giga-tons of emissions a year, more than the combined emissions of Japan, Germany, Canada and Mexico. That's a lot of emissions. If, as a society, we're going to get to the point that we are able avert dangerous climate change, we need to reduce freight emissions.
"That said, every product has a freight component to it. So this is a universal aspect of the supply chain, and it's one that very well correlates with cost reductions. Lower-cost modes of transportation are typically more carbon-efficient modes of transportation. So there's a lot of efficiency that can be eked out in logistics operations that have cost benefits to them, such as better container utilization, improved network design, etc."
Shippers can begin to reduce the emissions in their operations by understanding their carbon footprint, Mathers says. That critical exercise will lead to knowing what areas need to be addressed first. Keep in mind that a lot of potential partners now demand to see analysis of such a footprint before they will enter into a partnership. The reality is that there are a number of things that shippers themselves control, he says.
The biggest role for carriers and providers is in solutions. "That's their business," says Mathers. "Carbon is no different. We want to see logistics service providers giving carbon footprint data to their customers. But that's not the end of it. That's just the start of the conversation. They can take that type of information and provide a suite of solutions to clients. The great thing about being framed around carbon is that it's comparable. The provider with the best solution to reduce carbon the most, not just with the lowest price, will be the one to win the day."
