Its Not Easy Being Green: Servicing Green Supply Chains

Increasingly, shippers are asking carriers to document the  environmental impact of their operations. In fact of the several hundred RFQ's my company has received this year, so far about 30 percent have included questions on environmental programs.  That number is expected to grow.

The pressure is on for transportation and logistics firms to illustrate what they are doing to "Go Green". Both government agencies and the general public are putting pressure on transportation companies to reduce emissions and increase fuel efficiency.

Carriers do get it and are listening. Ultimately efficient use of resources reduces the cost to serve. Getting there however isn't easy. Industrial engineering teams at transportation companies have spent considerable energy and money investing in aerodynamic vehicles, increased fuel mileage, reduced emissions,  longer trailer lengths and other ways to make transport more cost effective.

Some of the ways carriers are reducing environmental impact include:

Parcel Carriers using lighter, more fuel efficient vehicles. UPS is investing in hybrid package cars. Meanwhile, FedEx plans to replace all its medium sized delivery vehicles with hybrids by 2014. DHL has been testing Solectria Citivan electric vehicles since 2004.

Trucking companies and parcel carriers are using computer software to route vehicles not only to improve service, but also to reduce fuel consumption.   Parcel carriers are also using fewer aircraft and more trucks in overnight services.  When aircraft are used,  capacities are managed tightly by using using the right sized airplane in the right lane.

Trucking companies as well as shipping lines have spent several years investing in aerodynamic shaping of vehicles and vessels to reduce wind drag. Slippery ships and sloping noses reduce fuel consumption and improve revenue-per-mile.   Longer trailers and containers promise to increase the amount of freight that can be pulled by a single truck.

Air carriers now taxi to the runway on one engine.  This reduces fuel use as well. New aircraft such as the Boeing 787, are designed to take more people and freight farther than ever before.  Using thinner wings, a more aerodynamic shape and high tech engines that sip fuel, the 787 will impact both profitability and an airlines environmental footprint in tangible ways .

Like the parcel carriers, airlines are also matching smaller aircraft with bigger routes in order to maximize passenger yields.  The downside of this is that it has virtually killed the domestic air freight business.  When Delta flew an L-1011 between Atlanta and Dallas in the 1980's there was belly freight capacity to spare.  When that airplane today is an EMB-170 or MD-88, there just isn't any room for freight.

3PL's now more than ever, are being asked to use their expertise and engineering resources to help customers site distribution centers in locations that not only take advantage of labor costs, but also select modes of transportation that get goods to market as efficiently as possible.   Food producers are now looking at warehouses that are not located near plant locations but are instead deployed forward toward consumption.   New and clever ways to combine distribution for greater efficiency are also occurring.

Efforts by local governments in Southern California to force use of fuel efficient vehicles entering the ports of LA and Long Beach are well chronicled. By 2010, most of the trucks entering the port complexes will be newer vehicles meeting tighter pollution controls.

The cost of deploying new or upgraded tractors will show up in drayage rates. Shippers will pass that cost along, one way or another to consumers while at the same time looking at alternative ports where the cost is less. That, in and of itself will reduce pollution by moderating current container flows even as traffic increases over coming years. 

The Port of Los Angeles is also now providing shoreside power to containerships in order to reduce exhaust emissions from vessels in port.The port is taking it so far as to brand on cleanliness and environmental impact.

The market and political forces will make some strange bedfellows.

Unions and Industry are going to have to work together. Politicians in both political parties are going to have to do a better job of understanding the strategic value of transportation.  Shippers are also going to have to realize that supply chain efficiency is less about dictating target rates and more about collaboration with their partner carriers.

We are living in a time where creative use of technology and business acumen are going to change how we in the logistics industry do business. I personally think these challenges are exciting and will make our industry a dynamic one for years to come.   Ultimately, communication between all parties will be the key to creating green supply chains.  In this day of iPods, iPhones, email and txt messages, that's a challenge in and of itself. 

Eric

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Comments

[Eric]

Thanks Brad. What specifically was relevant to you?

[Brad]

Great article and very useful information about the industry.

-Brad