Sustainable Logistics: Find the right mode of Transport, which Emits the Lowest Carbon Emissions

by Chaminda Gunasekera on 2012-08-22 08:03:36

Sustainable logistics is demanding topic . Many brands are resorting to many means of developing sustainability in their production and energy usage. Their Carbon foot print is calculated in all parts of their product life cycle and retailing.

The cargo foot print starts from raw material to finished goods in products related brands . Most brands focuses on production , energy consumption and raw materials . However they do not realize the impact they have on their carbon foot print when a supplier delivers raw materials  or when finished goods reach the end customer by air freight or by courier . World's highest carbon emitting modes are energy and transportation.

When a supplier/OEM or a finished goods supply chain activities have to select the mode of air transport , that increases many folds of cargo emitting . With the recently passed legislation and UK in Europe leading the EU to take measures to quantify the cargo foot print for corporates , the need to have sustainable supply chain options will be in demand . No corporate will like to be tagged as a bad corporate citizen . Therefore all corporates and brands will start to focus on how could they deploy measures to emit less carbon and have less emissions than a allocated foot print . These savings will also have a financial advantage die to the commercial value of carbon credits . As of today , the carbon credits are sold around 7-8 USD per ton , which is sub par value . but the Eu legislation will tax corporates around Euro 23-25 per ton . The ETS which is the trading system will also do trading around the same prices based on demand and supply. Sustainability is not only a social responsibility but a financial tool as well , which needs to be managed with proper planing . A frequently discussed scenario is how to manage carbon foot print when multiple departments of a product is emitting carbon at any given time .

To make matters more difficult , the airline industry has not come out with fuel efficient air crafts which reduced double digit fuel consumption . The earliest aircraft that NASA is testing will reduce 50% of fuel consumption but its available only in 2030 for commercial use. With internet usage and popularity of e-commerce developing , speed of transport will be key for any brand which has a physical product to reach end customer. Air freight and courier cannot be avoided. To give a direct comparison , 3 x foot ball fields of solar panels which produced 7000 KWs of energy will save 88 tons of Carbon Emissions compared to using traditional energy sources . A 4ton air freight shipment from Hong Kong to London will emit 38 tons of carbon. 2 shipments  of air freight will be equal to a year's worth of carbon emission savings via solar power .

How do we handle this situation in supply chain . Its an answer that no one has spent time to understand? should all products go via Ocean freight , when vessel operators reduced their speed on vessels on long haul routes ? reducing speed means longer transit times for product to reach the end customers? When a whole sale digital camera prices come down for USD98/per uint to USD58/per unit with a commitment to replenish stocks in 21 days , can all these products on on Ocean freight with longer lead times ? the answer is "its a challenge" .

The best way to manage the supply chain related carbon impact is by managing cycle times . Its a decision of Cost, lead times and with the latest addition of carbon impact . Logistics managers need tools to manage and analyse the carbon impact or the foot print . not only they need analytics but they they need modes of transportation to manage less air freight too. This is where the multimodal transport options we have introduced , comes in to play . The possibilities of saving over 40% of carbon emissions as per  DEFRA standards will be introduced with a reduced cycle time to manage the supply chain of world brands from key production sites in the world like China, Bangladesh , Vietnam , Korea , Japan , Taiwan and many other places destined to US. Latin America , Europe , Russia and even short sectors like China-India for raw materials . We need to anticipate the supply chain needs of products reaching markets, traveling over continents . We need to manage the lead times by creating multiple options than the traditional weekend consolidations . The logistics managers or the end users of the supply chain modes will also need to think out of the box and be flexible to benefit from these improved modes of transport.

Chaminda Gunasekera