The issue of sustainability has risen up the agenda in many industries in recent years due to the ever-increasing threat posed by climate change and the growing consumer demand for more eco-friendly solutions. Industries are also facing pressure from governments around the world to reduce their impact on the environment in an attempt to meet national and global sustainability goals. The logistics industry is no exception.
But how does an industry that’s founded on the international movement of goods take on the monumental challenge of creating a more sustainable global supply chain? Where does sustainability sit in relation to the industry’s traditional aims: efficiency, productivity and customer satisfaction? And what are the risks of not taking action? In this blog, we cover all this and more.
Why is sustainability important?
Before we explore the steps that logistics companies can take to create a greener supply chain, we need to be clear about why this issue matters.
Of course, there are multiple reasons why logistics businesses need to place sustainability at the heart of their ethos and their day-to-day operations, with everything from ethics to profitability playing a part.
Firstly, it’s important to understand that the scientific consensus is that the world is facing a climate emergency and human activities are at the root of the problem. According to the Intergovernmental Panel on Climate Change (IPCC), the concentration of greenhouse gases has been increasing since the Industrial Revolution, causing global temperatures to rise with it.
In 2015, the Paris Agreement saw countries around the world commit to limiting global temperature rises to no more than 2°C above pre-industrial levels and making pledges to reduce greenhouse gas emissions by 2030. However, these commitments have been deemed insufficient to meet targets, and governments are expected to review and adjust their pledges at COP 26, a climate change conference due to be held in Glasgow in November 2021.
In short, too little is being done to reduce global warming so every sector must now do its bit to tackle this problem head-on, and the logistics industry has a big role to play. After all, according to the International Transport Forum (ITF), global trade-related freight transport makes up approximately one third of all transport-related carbon emissions from fuel combustion, and over 7% of global emissions.
The business case
But beyond the ecological and moral motivations, there’s also an excellent business case to be made for greater sustainability in logistics. More and more, a good sustainability strategy is becoming a necessity in order to stay competitive and survive in the long term. According to a report commissioned by HSBC in 2019, almost half of all UK companies planned to increase their environmental expenditure in the next two years. Why? Well, in the transport and logistics industry, higher sustainability scores have been linked with greater TSR (total shareholder return), according to Boston Consulting Group. While traditionally, the industry might have viewed sustainability as a compliance chore and unnecessary expense, more logistics and transport businesses are waking up to the fact that sustainability offers the opportunity to increase market share, attract new customers and create new revenue streams. It can also support some of their major business goals: making cost savings, creating efficiencies, increasing employee productivity and raising customer satisfaction levels.
Dealing with the direct effects of climate change
Furthermore, the logistics and transport industry lies at the sharp end of the climate crisis. The industry is directly impacted by the effects of climate change, including heatwaves, flooding, storms, wildfires and rising sea levels so it’s in logistics and transportation companies best interests to act before it’s too late.
What sustainability means to your business
So what about your business? Can you afford to do nothing? The reality is, companies that do not keep pace with industry changes in relation to sustainability risk falling behind the competition as more businesses make environmental credentials a key consideration when choosing companies to partner with.
In order to preserve the future of your company, developing and implementing a rigorous sustainability strategy should be at the top of your priority list. Each stakeholder in the global supply chain must decide what sustainability means to their business and they must set ambitious, strategic and achievable goals if they are to fulfil their ethical obligations, meet consumer demand and reap the benefits of being a greener business.
Key focus areas
There are several areas that logistics companies can focus on in order to offer sustainable logistics. Here are some of the most important:
Calculating carbon footprint
In order to reduce your carbon footprint, it’s important to know how much energy you’re using in the first place. Calculating emissions can be challenging as it requires lots of different information, such as load types, equipment types, distance travelled and more. Companies may only have some of this data and, in many cases, it may be spread across multiple systems.
To get the most accurate picture of your carbon footprint, it’s important to invest in systems that can centralise data collection. Real-time visibility platforms, for example, can be used to collect pivotal information that can be leveraged to calculate your emissions.
Once you know your current carbon emissions levels, it’s easier to set ambitious, strategic and achievable goals in order to reduce them.
Space utilisation solutions
Logistics companies need to focus efforts on developing solutions that reduce the use of space. The use of stackable and collapsible pallet boxes, for example, can help to increase the fill rate of a freight vehicle. This can decrease the number of journeys or vehicles it takes to transport a consignment, thereby reducing carbon emissions and transportation costs.
In warehousing, businesses need to make the most of every square inch of space in order to optimise storage and picking processes. If space is not used efficiently, labour costs can go up, productivity can be reduced, and companies can find themselves consuming more energy than necessary – which is bad for business and the planet.
Load optimisation should be an everyday practice for logistics and transport companies. By combining shipments into larger loads to reduce the number of vehicles required to move goods, firms not only stand to save energy and have a positive environmental impact, they can also save money and increase efficiency.
Utilising load optimisation software can help to enhance your load management by ensuring that you are not carrying empty space and that goods are packed in the right order for your route. Such software can help to reduce the number of vehicles required and ensure that your drivers can stick to the most energy-efficient routes possible.
When planning the routes of their journeys, haulage companies need to keep the number of vehicles, the fuel consumed and the distances travelled to a minimum. Businesses must also consider how fast vehicles will be travelling, the nature of the roads that will be used and load size in order to construct the best possible route plan. Nowadays, more companies are turning to algorithms and specialist logistics firms to aid with route planning in order to save time, money and reduce emissions.
With consumer demand for greener solutions increasing and governments setting ambitious goals in regard to carbon neutrality, making the move to renewable energy is likely to be a move that will pay off in the long term. Investing in renewable energy now, such as wind and solar power to heat and light warehouses and electric vehicles to transport goods, could help your business to stay competitive and could future-proof it against new eco regulations. Not only that, but renewable energy is associated with reduced costs over the long-term so this is an all-round good business decision.
When it comes to the climate emergency, logistics and transportation companies cannot afford to sit back and do nothing. If companies in this industry want to remain attractive to clients and minimise future costs and challenges, it’s imperative that they act now.