Sustainable Logistics: Why it’s Essential
Carbon dioxide (CO2) in our atmosphere has reached an alarming level, and, while there are many documented reasons for this, it’s likely that ecommerce growth has contributed to environmental decline. Sustainable logistics aims to reduce the environmental threat arising from industrial and commercial activity, by transforming the way supply chains serve customers around the world.
What is Sustainable Logistics?
McKinsey’s Sustainability & Resources Productivity report estimates that the world’s population will grow by 1.5 billion by 2035. That’s likely to cause a sharp increase in demand for ecommerce services across the world.
The challenge faced by the global logistics industry lies in finding ways to reduce the environmental impact of transporting goods to billions of customers. That means increasing the efficiency of ecommerce supply chains to enable the delivery of services in the most eco-friendly way—sustainable logistics.
Why is Sustainable Logistics So Important?
Ecommerce was booming even before the pandemic prompted a spike in the number of products ordered online and delivered around the world. More than ever, logistics and supply chain operations are coming under scrutiny. Ecommerce businesses are looking at ways of reducing the impact of their operations on the environment because they are being challenged by:
- Governments with sustainability targets
- Customers who are aware of the need for businesses to reduce their carbon emissions
- Pressure within organizations to develop sustainable logistics and supply chain management strategies
The Drawbacks of Sustainable Logistics
Cost is a primary barrier to companies wishing to shift to green logistics. Many green initiatives require a substantial investment, often beyond the budgets of smaller ecommerce businesses. It’s why many are asking ‘can we afford to go green?’ The simple answer is that no business can afford not to go green if they want to maintain their customer base long-term.
There are affordable ways businesses can adopt green logistics processes and procedures. Later in this article, we’ll reveal some of the solutions that businesses are introducing to reduce their environmental impact and make their supply chains greener.
The Environmental Cost Of Faster Supply Chains and Logistics
Consumers are demanding and expecting speed, ease, and convenience when it comes to ecommerce. But there’s a price to pay for making it so easy for customers to search for what they want online and arrange for it to be delivered.
165 billion packages are shipped in the USA alone each year according to eConsultancy. But all over the world, items are often wrapped and shipped separately, using more packaging than is required. This wasteful approach is fast becoming an eco-issue that’s as important to solve as the problem of plastic in the ocean.
E-shoppers are more aware than ever of the impact their shopping habits are having on the environment. A Nielsen survey showed that 73% of consumers are changing their consumption habits to reduce their impact on the environment.
A Doddle Pulse survey revealed that 56% of consumers between the ages of 18 and 24 are prepared to buy products from competitors that offer more sustainable fulfillment options. That’s a stark warning to brands refusing to change: improve your sustainability credentials or face losing customers.
Sustainability As A Strategy
The statistics mentioned above help to explain why sustainability is becoming a crucial element of ecommerce business strategies. Customers want to preserve and protect the world for future generations, and are prepared to alter their buying habits to do so.
Governments are leading the charge for change, introducing environmental regulations designed to increase logistics sustainability. Businesses that fail to meet targets face fines, penalties, perhaps even civil or criminal legal action.
Such regulations are deliberately punitive because of the seriousness of the environmental catastrophe the world faces if there is no change.
Actions Being Taken To Reduce Environmental Impact
Many ecommerce businesses are becoming increasingly conscious of how their products are transported to their customer’s homes or workplaces.
Affordable green logistics options exist for all kinds of ecommerce businesses. These include:
- Use of more sustainable types of packaging
- Efficient freighting solutions
- Greener types of transportation
Let’s look at each in turn:
Sustainable Packaging Solutions
A Nosto survey revealed that 75% of consumers want all brands to reduce their use of packaging. But green packaging solutions aren’t just a reduction measure. They are also about changing the type of materials used in packaging. It’s not uncommon to see packaging made from 100% recycled materials. Furthermore, old, unrecyclable materials such as Styrofoam are being phased out in favor of (for example) corrugated cardboard to protect goods during transit.
More Efficient Freighting
Many aspects of the supply chain cause unwanted carbon emissions. But it’s the last-mile delivery phase of the logistics process that’s seen as the prime contributor to environmental problems. This is an area of focus for many of the developments in sustainable logistics.
Optimizing Routes: Technology exists to map out the most fuel-efficient route a vehicle needs to take to deliver goods. This tech even takes into account undulations in the landscape. After all, delivery vans and trucks require more power to drive up hills than along flat roads, so routes over flatter terrain will help reduce emissions.
Digital Freight Matching: According to the American Transportation Research Institute, around 20% of distances driven by US truckers generate no revenue. These wasted trips, or ‘empty miles’ as they’re known, can be reduced by digital freight matching. This solution aims to match a vehicle’s capacity to carry cargo with the nearest shipments awaiting transportation. The benefits of this approach include:
- Fewer empty trucks
- More efficient use of space
- Less waiting time
- More efficient fleets
- Less traffic clogging up roads
Greener Modes Of Transportation
Reliance on road for last-mile delivery is likely to remain for the foreseeable future. But have we already glimpsed what lies ahead? Automated delivery robots have proved popular in delivering food. Can their use be safely and sensibly extended to include product deliveries on a large scale? We shall see.
Right now, sustainable logistics seeks to pinpoint the vehicles having the biggest impact on CO2 emissions, replacing the polluters with more eco-friendly options.
Truck and engine manufacturers are trialing new trailer designs and engines. Some are seeking a move away from combustion engine fleets to fully electric vehicles to reduce the number of noxious gases released into the atmosphere.
Agility has invested in an easy-to-install intelligent drive axle for trailers. It uses regenerative braking to capture and store power while the truck is slowing down. The energy is re-used to power the truck when driving up hills. The Hyliion system (as it’s known) can reduce fuel use by up to 30 percent and cost by $1,300 a month.
The Impact of Digitization
Digital is playing a key role in increasing the environmental friendliness of logistics. We’ve already mentioned route optimization software and digital freight matching. Digital is also replacing many of the traditional paper-based procedures involved in logistics.
Agility is working on an app that will allow it to collaborate with customers to instantly design optimized supply chains with a low impact on the environment. Commenting on the venture, Frank Clary, Agility’s director of Corporate Social Responsibility said “We can help our customers ‘scale-up’ cost savings and efficiencies across their supply chains.”
Changing Consumer Behaviors and Expectations
While those in ecommerce understand that much of the responsibility for sustainable solutions starts and stops with them, consumers also have a role to play. Customers need to understand that their demand for same-day deliveries harms the environment.
Meeting short deadlines often requires ecommerce businesses to pack and deliver goods separately. With more time, several orders could be consolidated into the same package and delivered together.
If consumers are willing to extend their delivery lead-time expectations from one or two, to four or five days, ecommerce companies can provide services in a more eco-friendly way. The question is, in the Amazon era, will shoppers accustomed to express priority deliveries accept the inevitable longer delivery times required for an eco-friendly approach?
Other Sustainable Logistics Initiatives
Like its customers, Agility is taking bold steps to get greener. It is working with carriers to:
- Drastically cut CO2 emissions
- Rethink warehouse construction and management
- Use solar energy to cool as well as heat buildings
The Doodle Pulse survey referenced earlier, revealed that just 3% of consumers strongly agree that e-tailors are doing a good job of offering sustainable delivery options. So the perception is that more needs to be done—and retailers are responding:
Amazon has launched a Retail Zero initiative to make half of its shipments net zero carbon by 2030.
eBay has set up two green campuses as part of a drive to use 100% renewable electricity sources by 2025.
Agility has put its money where its mouth is regarding its commitment to sustainability. The leading provider of global logistics has invested $35 million in Queen’s Gambit Growth Capital, a company offering sustainable solutions in areas such as healthcare, fintech, and mobility.
Agility has also recently been added to the FTSE4Good Index Series, which investors use to identify companies demonstrating strong environmental practices.
So there are signs of change within large organizations, but what about smaller companies? A greener supply chain can be achieved by making the smaller, more affordable changes mentioned earlier in this article. Meanwhile, many online retailers—large and small—are choosing logistics partners with a proven track record of supporting sustainability goals, to help meet their eco-friendly ecommerce targets.
Sustainable Logistics: Likely to Become the Norm
Sustainable logistics is no longer an option—It’s a necessity. Businesses face a backlash from customers if they do not adopt sustainable practices to ‘green’ their supply chains. As this article has shown, there are steps all merchants can take to introduce sustainable logistics into their operations. Making changes sooner rather than later is the right approach to benefit everyone on the planet for generations to come.