Ten per cent of UK greenhouse gases are produced by logistics.
The move by the European Commission to make sure that logistics operations “internalise external costs” – code for paying the full price for their environmental impacts – presents a challenge for our sector. Companies will increasingly pay for decarbonising the supply chain and that will call for particular skills sets relating to compliance and environmental audits.
There are many ways for companies to save money via resource management, the use of alternative fuel sources and conversion to more environmentally considerate fuel. To make efficient use of conventional fuel the industry needs to address sustainable fleet management by examining the basics of mileage management, eco-driving and vehicle technology. The opportunities for using new fuel sources, such as methane (CH4) and hydrogen (H2) need to be investigated, as do the benefits of converting vehicles to more efficient fuel sources, such as bio-methane and compressed natural gas.
Indeed, these are issues that Skills for Logistics in partnership with the University of Glamorgan have been exploring through the FUEL (Fuel Usage for Efficient Logistics) programme.
Many companies like the idea of making their way down the sustainability road, not only to help them meet environmental benchmarks, which may become enforced through legislation, but also because greater efficiency can deliver financial payback. The barrier is the large initial investment often required and finding finance in the post banking crisis world remains a trick in itself.
It costs about £10,000 to “dual-fuel” a tractor, which is a reasonably practical environmental step available for operators to take today. Using a combination of diesel and liquefied petroleum gas in your waggon can result in reducing fuel costs per mile by 15 per cent, which means payback could be achieved in about a year for waggons travelling between 50,000-100,000 km annually. The benefits are not just on the bottom line; you also gain a greener fleet, yet with so many costs to think about taking such a step remains a big financial commitment for operators.
The small number of large operators are more able to invest in green technology but the predominant part of our sector is made up of smaller companies, so anything that can help them become more efficient and make our industry more green will raise the standards for UK plc.
More readily available sources of finance for this kind of scheme would be a big help for small operators, who aim to make each pound they spend more productive. A credit union that will be a feature of the Logistics Guild, which is due to be launched this month, will have a role to play here. As the Logistics Credit Union develops momentum, it will be in a position to offer finance to employer members in the logistics sector for vehicle, plant and machinery leasing at preferential rates.
Fuel efficiency is very much a skills issue because with ten per cent of the UK’s greenhouse gases produced by the logistics industry, sustainability and fuel efficiency has become a critical skill in our sector.
This could lead to apprenticeships for sustainability and fuel efficiency in logistics. An apprentice could perhaps start with ensuring that the doors and windows in the warehouse are closed and the radiators are at the right level. They could then be given responsibility for checking fuel bills before stepping up to take a foundation degree on solar panel technology.
Returning to supply chain management skills, another skill set that will become increasingly important for furthering environment efficiency is the art of collaboration. Learning to collaborate with your customers and with your suppliers will create more efficient routing and scheduling; having replenished a store, a vehicle returning to the depot can pick up from a supplier on its way. Moving up a step, you have collaboration between supply chains. Organisations like Nestlé and Kimberly Clark have been very successful on a European scale with collaboration on routes, counterbalancing flows.
Then, the next level of sophistication is to start looking for collaborative opportunities with the competition, in other words: co- opetition. There are undoubted savings that can be made here but you need the right skills sets at the supply chain management level, and here we are talking specifically about communication skills – identifying opportunities and then initiating lines of communication – and these are skills that our industry is not doing enough to train people in at the moment.