Global Logistics: A study on Greener and more sustainable supply chain delivery of Amazon, UPS & DHL

#Amazon #UPS #DHL

Logistics emissions data

Logistics are regarded as a key determinant of a company’s performance, through the efficiency of supply chain systems and the calculation of the profitability of product sales. The calculation of profitability in the majority of logistics history has included only economic performance (McKinnon, et al., 2015), however, in recent years due to globalization and digitalization, wider environmental and social impacts are of large importance for green marketing and future strategy of supply chain providers.

Green logistics are now regarded as good business practice as it provides a lot of opportunities for having a positive impact on financial and operational metrics without the need to trade off economic costs against environmental benefits. As stated in the SFC Annual report (SFC, 2020), freight transportation generates 8% of global CO2e emission and as much as 11% if logistics sites are also considered. Sustainable reforms of the sector are required as between now and 2050 the world will see a doubling in freight emissions, according to the International Transport Forum.

Different modes of transport of freights are used based on the distance and time of the delivery requirement. Figure 1 and Figure 2 show the data of CO2e emissions of UK and the logistics provider DHL which both suggest that air transportation accounts for the majority of the emissions also justified due to usage of jet fuel and damping of greenhouse gases (GHG) emission at high altitudes which increases the quantity of the global warming potential (GWP) impact in the atmosphere (Sathaye, 2006).

Figure 1 Estimated average CO2 intensity values for freight transport modes (United Kingdom) (McKinnon, et al., 2015)

Figure 2 DHL Total carbon emissions by source in 2019 (DHL, 2019)

Mitigation of logistics systems environmental impact

A four-step roadmap developed by the SFC as outlined in Figure 3 identifies the importance of calculating emissions across the multi-modal supply chain as well as setting targets on emissions reduction and the requirement of implementing new technological solutions as well as the need for collaboration across the industry.

Collaboration of businesses, governments, research, and civil society should be achieved for a sector transformation to be realized. As defined by (Sathaye, 2006) and shown in Table 1 teaching, four solution types were identified of impact reduction, emissions reduction, changing operations, and economic and societal development considerations for making supply chains greener.

Figure 3 Sustainable Logistics Roadmap (SFC, 2020)

Table 1 Overview of options for reducing environmental externalities (Sathaye, 2006)

Impact reduction

To achieve greener supply chains and a substantial reduction of environmental impact, the focus should be given to the reduction of the environmental externalities impact associated with freight operations rather than the cause of the exhaust emissions level. An example of focusing on the effect rather than the cause could be illustrated by the introduction of the Low Emission Zone (LEZ) and Ultra Low Emission Zone (ULEZ) in areas of central London, which reduces the car movements on roads including high emission freight vehicles (London, 2019).

A reduction of 31% (200 tCO2e) harmful NOx emissions from road transport in the central zone have been recorded, improving the welfare of its citizens and subsequently challenging supply chains to adapt to these government regulations.

To achieve emissions reductions of logistics systems valid quantification measures of impacts are required such as the intake fraction (Marshall, et al., 2005), which calculates the ratio of the quantity of pollutant intake by people over the total emissions.

Aligned with the sustainable logistics roadmap of SFC (see Figure 3), reporting emissions will help supply chain providers such as UPS, DHL, Amazon, etc. to modify the mode of transport for the last and first mile delivery by implementing the use of electric cargo bicycles, drones or delivery by foot, hence reducing urban emissions. DHL has proved the concept by replacing conventional vans with using 27,000 bicycles of electric and cargo type in their Germany division, which saved up to 8 tCO2e per year (DHL, 2019).

Also, Amazon has expanded to cargo bikes connected to trailers that can carry up to 45 packages as well as introduced electric three-wheelers and compressed natural gas vehicles in their delivery operations in Europe and India as well as the use of Prime air drones which will make deliveries faster, more automated and efficient and reduce the requirement of van delivery subsequently reducing traffic and pollution (Amazon, 2019).

Emissions reduction

Reducing emissions through technology innovations and achieving a high standard of equipment performance can substantially reduce emissions of supply chain logistic operations. An initial and effective step of supply providers to reduce emissions is through training and educating employees of the impacts the company’s logistics carbon footprint has on a global scale as well as teach methods for reducing fuel consumption. Drivers can reduce fuel consumption through acceleration and shifting techniques, and by limiting average speeds, idling time, accessory usage, and the number of stops made (Sathaye, 2006).

DHL goes a step further and implementing companywide guidance where they define targets and measures their sub-contractors, which employees have to follow to achieve their environmental targets (DHL, 2019). Furthermore, DHL is aiming at certifying 80% of their employees as GoGreen specialists, where training is provided for all employees to achieve fundamental environmental awareness (DHL, 2019).

Furthermore, technology options on logistics freight such as roof deflectors, wide-base tires, etc. as seen in Table 2 that reduce the drive train friction, aerodynamic drag, rolling resistance, operation of vehicle accessories, and inertial forces for acceleration can be of logical use as they reduce emissions and cost.

Examples of Amazon using skirts (panels attached to the lower side edges of a truck to make it aerodynamic) and automatic tire inflation systems to maximize fuel efficiency as well as mud flaps which are designed to allow water and airflow through them have been seen to minimize drag and save 454L of diesel fuel per vehicle annually (Amazon, 2019). On the other hand, DHL has implemented photovoltaic mats fitted on trailers which can save up to 4.5tCO2e per vehicle annually and reduce fuel consumption by up to 5% (DHL, 2019).

Table 2 Overview of technological options for reducing fuel consumption by trucks (Ang-Olson, et al., 2002)

EV technology being extremely advanced in the past years, with primary targeted short distance deliveries, with Tesla currently developing an electric truck with a promised range of 300 miles will heavily influence the logistics market (Tesla, 2021). Amazon, having ordered 100,000 electric vehicles has also implemented a ‘’shipment zero-order’’ where zero-emissions 100% battery-electric or hydrogen-fuelled vehicles deliver the products.

They also heavily invest in EV charging station infrastructure for their partners to use, hence accelerating the global use of EV’s in the logistics industry (Amazon, 2019). On the other side, DHL is focusing on upgrading fleets of cargo aircraft to new more fuel-efficient aircraft, which saw a reduction of emissions of 18% (DHL, 2019).

Additionally, studies conducted by Ang-Olson and Ostria (2005), as indicated in Table 3, found that alternative fuels such as emulsified diesel, biodiesel, propane, and more, have lower emissions of toxic GHG such as PM and NOx. Post-combustion solutions such as NOx catalyst can also reduce the toxic gases exiting the exhaust of vehicle hence could be perceived as another viable solution.

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Table 3 Alternative fuels to diesel (Ang-Olson, et al., 2005)

In addition to changes made to fuel type, innovations are done in combustion processes such as cooled exhaust gas recirculation, combustion optimization, improved fuel injection, variable geometry turbocharges, and onboard diagnostics that can reduce emissions. Not directly associated to supply chain providers, however, if these features and alternatives are enquired, automotive manufactures will follow the trend and comply (Sathaye, 2006).

Furthermore, supply chain providers also own warehouses where the products are stored hence a further carbon footprint is present in their businesses. To minimize their environmental impact warehouses of companies such as Amazon, DHL and Prologis use solar panels, with Amazon having up to 80% of the energy used is renewable in a facility center (Amazon, 2019) (Prologis, 2019) (DHL, 2019). Furthermore, Amazon as a business invested heavily into the wind and solar projects, in this way offsetting their operational carbon.

Changing operations

Technologies based on reducing vehicle miles traveled can be both of economic and environmental benefit to companies. As found by Sathaye (2006) and displayed in Table 4, which includes vehicle routing tracking, real-time traffic updates, and facilitation of business-to-business communication and collaboration. Tesco supermarket delivery service estimated to reduce emissions by 23,000tCO2e over five years by applying techniques of logistics systems analysis and optimization (Sathaye, 2006).

Moreover, DHL through increased recording of data via sensors, intelligent network, and route planning, and the use of alternative modes of transport achieved to optimize processes and connect logistics chains across continents. Also, by the implementation of artificial intelligence (AI), big data, predictive analytics, and algorithms, potential incidents in the supply chain are identified and managed in real-time, further improving efficiency and reducing delays which ultimately account for emissions (DHL, 2019).

Amazon, due to the evidently large number of products shipped daily had to use data and algorithms to consolidate as many shipments as possible onto one vehicle or plane. This ensured the efficient transportation and use of space on freights hence maximizing the capacity and reducing unused space to be wasted (Amazon, 2019).

Table 4 Intelligent freight technologies ( U.S. Federal Highway Administration, 2005)

Reverse logistics

And finally, a more radical measure for environmental protection that may have economic and societal consequences extends further from the logistics of supply chains. A broader framework of life-cycle assessment (LCA) associated with reverse logistics and circular economy principles could be used by companies to improve their environmental burden.

Reverse logistics, which focus on waste management and return flow of products back along the chain could be an important study for the supply chain and its partners to minimize their waste (McKinnon, et al., 2015). As Amazon's free packaging program suggests, the packaging of products has been certified to be shipped with their original packaging without the need of the amazon extra protective box.

This policy and design initiative will increase the volume of goods transported and massively reduce the waste of cardboard boxes. Also, by encouraging the use of 100% recyclable packages, Amazon has eliminated 33% of packaging material (Amazon, 2019).

REFERENCES

References

U.S. Federal Highway Administration, 2005. The Freight Technology Story: Intelligent Freight Technologies and Their Benefits. Office of Freight Management and Operations.

Amazon, 2019. Goals and Strategies & Climate pledge, s.l.: https://sustainability.aboutamazon.com/?energyType=true&workerCount=true&engagementProgram=true&productCategory=true.

Ang-Olson, Jeffrey & Ostria, S., 2005. Assessing the Effects of Freight Movement on Air Quality at the National and Regional Level: Final Report.

Ang-Olson, Schroeer, J. & Schroeer, W., 2002. 'Energy Efficiency Strategies for Freight Trucking: Potential Impacts of Fuel Use and Greenhouse Gas Emissions, s.l.: Transportation Research Record 1815.

DHL, 2019. DHL Sustainability Report, s.l.: s.n.

Tesla, 2021. Semi. [Online] Available at: https://www.tesla.com/semi

London, M. o., 2019. CENTRAL LONDON ULTRA LOW EMISSION ZONE – SIX MONTH REPORT, London: Greater London Authority.

Sathaye, N. L. Y. H. A., 2006. The Environmental Impacts of Logistics Systems and Options for Mitigation. UC Berkeley Recent Work.

SFC, 2020. Leading the way to efficient and zero emission freight and logistics, s.l.: Smart Freight Centre Annual Report .

Prologis, 2019. 2019 Prologis ESG Impact Report.

McKinnon, A., Browne, M., Whiteing, A. & Piecyk, M., 2015. Green Logistics : Improving the Environmental Sustainability of Logistics. s.l.:Kogan Page.

Marshall, D., J., Teoh, S.-K. & Nazaroff, W., 2005. Intake fraction of nonreactive vehicle emissions in U.S. urban areas, s.l.: Atmospheric Environment 39 (7).