Reducing the carbon footprint of a global logistics operation presents some serious challenges, so how can companies ensure they reach their goals without getting soot on their faces?
The pressure to reduce carbon footprints is intensifying and most companies have now picked all the low hanging fruit – there is a limit to what you can achieve by encouraging staff to turn out the lights when they leave the room.
But deciding where to go next is not always obvious. There are lots of ways of saving energy but how do you know what is the real deal and what is mere greenwashing?
A study by Ernst & Young found that the five greatest climate change and sustainability risks to supply chain operations are:
Strategic: the supply chain, for many companies, increasingly provides an opportunity to improve competitive advantage and reduce cost and waste.
Compliance: organisations that are required to comply with green supplier programmes now need to track data on energy use and make the information available for audits.
Financial: opportunities to cut costs, potential cash management and liquidity implications as a price for carbon is set in different jurisdictions.
Reputational: ensuring companies do business with suppliers that share their values, which helps them manage brand and reputational risk.
Operational: spare parts inventory management, manufacturing equipment utilisation, and planned maintenance are just a few areas where the level of efficiency could be improved.
The first issue is deciding where to start. Mark Brannan, general manager at AEB International, points out that if emissions are saved in one area, what effect does it have on other areas?
“Isolated arrangements can be counterproductive. For example, if a company reduces the number of its warehouses to save energy costs, it may well mean that stock is instead shifted onto trucks, which increases fuel costs and CO2 emissions. In any case, companies should look at the full picture.”
In addition, he says: “Before investing in new, energy saving equipment for a warehouse, one should ask whether the warehouse couldn’t be disposed with altogether, eg by using other warehouses more efficiently and optimising their inbound and outbound traffic. Of course it’s easier to make savings in the warehouse or generally in fixed facilities and operations rather than in the area of transports, which is subject to much more dynamics and prone to many changes, where one has to rely on information provided by the service provider to estimate emissions levels.”
Ewan French, chief operating officer at Barloworld Supply Chain Software, says: “Aggressive carbon targets are being set at board level and logistics managers need to ensure that their supply chains are able to achieve them. Unfortunately for most companies, simple operational changes alone will not be enough and before supply chains, it is critical that they plan and understand
these changes properly. The bottom line is that over 80 per cent of this target is only achievable at the supply chain design stage.”
Brannan believes the most effective approach is a combination of supply chain management software and software that calculates CO2 emissions. Supply chain management software enables companies to collate information about mileage, transport routes, stock levels, and distances. This data can be conciliated with the relevant emissions benchmarks and help estimate the carbon footprint.
DHL Supply Chain has developed its own environmental strategy, GoGreen, which sets out targets for efficiency improvements of ten per cent by 2012 and 30 per cent by 2020. Jim York, head of GoGreen UK, Ireland, France & EEMEA, says: “Our goal is to understand and minimise our environmental impact – especially our contribution to climate change.
“We focus on key areas of our business, including transport and real estate programmes, network design, and employee and other stakeholder engagement. Our long-term vision is to measure our business on customer service, profitability, and also on environmental impact.
This is a complex journey, requiring a solid foundation built over time, raising awareness and setting clear goals.” Initially DHL’s approach has been to make changes that have an immediate impact, including vehicle design and driver training.
“Network optimisation – In partnership with Fujitsu, DHL Supply Chain in Japan worked to review the transport networks and processes of its operations. Through improved loading, modal shift and packing optimisation, we have helped Fujitsu to reduce its carbon by more than 45 per cent,” says York.
Fuel management and driver training programmes have achieved up to seven per cent savings in fuel consumption, he adds, while the teardrop trailers first introduced with Mark & Spencer are saving an average of eight per cent in fuel and CO2.
The group has also reduced the speed of its fleet by 3.1 mph (5kph) for 5,500 vehicles in the UK and 900 in the US, which, says York, has improved fuel efficiency by two to three per cent. “The UK has seen savings of £3m from its net fuel spend from this abatement lever and more than 11,000 tonnes of carbon.”
DHL is trialling a range of electric and hybrid vehicles. In partnership with manufacturer Volvo Trucks, DHL Supply Chain is trialling the world’s first 18-tonne hybrid distribution truck that could achieve up to 15 per cent in fuel consumption.
However, some of the emerging technologies have their critics. Bill Goodwin, sales director of Jungheinrich UK, says: “While many industry commentators believe the use of hydrogen fuel cells within forklifts is getting closer, the reality is that hydrogen-powered forklifts will not be seen in any significant numbers in Europe for at least ten years.
“It is widely accepted that hydrogen will only become truly attractive as a fuel once it can be produced in such a way that causes zero, or minimal, greenhouse gas emissions and, of course, at a cheaper price than traditional fuels. That remains some years in the future.”
“So, the lead acid battery currently remains the industry standard forklift power source. Going forward, in the short term, lithium-ion batteries will be available with the benefits of rapid charging, long running times and compact dimensions. In the medium term – say, over the next two to three years – Methanol fuel cells will be widely available as a forklift power source.
“Hydrogen could well prove viable as a forklift power source, but because of the issues that still surround it, hydrogen-powered forklifts will not be seen in any significant numbers in Europe for many years.”
At the end of last year, the government produced its “Guidance on measuring and reporting greenhouse gas emissions from freight transport operations” which has been produced in association with a number of industry associations.
This guidance provides instructions on calculating the greenhouse gas emissions from freight transport operations. It is designed to supplement the DEFRA/DECC document “Guidance on how to measure and report your greenhouse gas emissions”, by providing more specific information and examples relating directly to freight transport operations.
The document can be downloaded from:
Shed some light on the problem
Energy efficient lighting is one of the most effective ways of reducing energy consumption in the warehouse.
For example, March Foods replaced the HPS lighting in its warehouses with LED units and reckons it is making energy savings of some 72 per cent as a result – a cut in carbon emissions of 100 tonnes a year.
Managing director Paul Cope says: “We had two 3,250 square metre (35,000 sq ft) warehouses with a total of 84 x 450W HPS lamps operating 24/5 and Saturdays. Even though we are not constantly in and out of all bays in the warehouse all the time, the old lamps couldn’t be switched off as they took 10-15 minutes to restrike, so I wanted a more energy efficient solution.”
It brought in Interior Control to replace the 84 x 450W HPS lamps on a one-to-one basis with Dialight’s DuroSite Series LED High Bay. This 150W fitting features eight arrays in a compact oval pattern resulting in less wasted light on racking and more directed at floor level in the aisles where 110 lux was measured under the HPS, which had dimmed over time, increasing to 221 lux after the installation of the LED High Bays.
As a British SME, March Foods was able to have its LED installation funded by a four-year interest-free loan of £38,000 from the Carbon Trust which offers a £1,000 loan for every 2.5 tonnes of CO2 saved, so the capital expenditure is effectively funded by the energy savings. Cope estimates that payback will take less than three years.
DHL has implemented energy efficient lighting in more than 120 warehouses with a return on investment typically around 18-24 months – this has resulted in lowered energy consumption and resulting emissions. In the US and Canada initial results show an 18-30 per cent reduction in electricity consumption.
There are various carbon calculators available on the internet. These allow the user to enter a number (ie distance and route) and click to see the CO2 emissions.
However, says Mark Brannan of AEB International, the factors involved in such calculations remain a mystery. “Such calculators should be regarded more as a gimmick for people who want to quickly assess the impact of their flight, for example.” The number of suppliers offering specialised software for logistics is still relatively modest. Brannan says there are a number of factors to keep in mind when looking at such solutions:
Which database or table of emission factors is used?
Are greenhouse gas emissions calculated according to the Greenhouse Gas Protocol of the World Resources Institute and the World Business Council for Sustainable Development? Calculating CO2 (equivalent) emissions requires conversion factors that reflect the various means of transport as accurately as possible.
How comprehensive is such a transport database among the various means of transport? Other factors to bear in mind are:
Does the system contain distances, route information and the weight or volume of a consignment and if so, to what degree of detail?
How easy is it to obtain an analysis of the annual volume of consignments and the corresponding CO2 emissions in tonnes per kilometre?
Is it possible to calculate the CO2 emissions for a consignment?
Can I run an advance simulation of the CO2 emissions for various routes or means of transport?