The sustainability dilemma in the logistics sector

Sustainable logistics is a hot topic in the supply chain industry, but clearly not an adopted way of performing logistics operations. According to World Bank figures, global CO2 emissions from the transport sector have been increasing rather than decreasing over the last few years, indicating that logistics providers’ ‘green’ efforts have not yet translated into an improved environmental footprint. These statistics also suggest that the increasing number of alternative mobility solutions, discussed at length in Ti’s Contract Logistics Report 2017, cannot yet offset the negative impact of economic growth on the environment. As long as more and more goods are transported around the world, it will be difficult to achieve emission reductions on the back of a few, isolated examples of sustainable transport solutions.

Indeed, the efforts in the industry to meet sustainability criteria need to be recognised. Shipping carriers have reduced their speed to reduce carbon emissions, road freight companies have been investing in electric vehicles and exploring the opportunities of the ‘sharing economy’, warehouse developers have been installing solar panels on their facilities. However, the logistics sector requires a much more comprehensive approach and harmonized logistics emissions accounting if it is to achieve environmentally sustainable logistics. Such wide-ranging sustainability initiatives can be a response to legislative pressures, and/or an outcome of management’s commitment to recognise environmental sustainability as a strategic priority.

DPDHL’s strategic initiatives signal such a shift towards a more comprehensive and sustainable approach to logistics. In its Go Green initiative, DPDHL has set a new climate protection goal of zero logistics emissions by 2050, applied to both its own activities and those of its transport subcontractors. The company’s commitment to the environment is so strong that in 2014 it purchased Street Scooter, an electric car maker. DPDHL is understood to be considering building its own power-generating infrastructure to reach that goal if the government does not assist. Initiatives of this range and scope clearly suggest that sustainable logistics processes are recognised as a strategic priority, rather than being driven merely by regulation.

In addition to legislative pressures, shippers themselves can act as drivers of sustainability initiatives among logistics providers. An increasing number of shipping companies are demanding sustainability certificates, urging logistics providers to reconsider their attitude towards environmental concerns. Moving forward, it will be difficult for logistics companies to remain involved in the supply chain without certified environmental management systems.

One of the most prominent examples echoing this trend is BMW Group’s extension of its sustainability practices to its suppliers and business partners. In addition to the self-imposed sustainability obligations, the German auto manufacturer demands ecologically responsible behaviour from external parties as well. Moreover, BMW recently introduced a questionnaire for potential suppliers and business partners on their social and environmental standards, the results of which form a key part of BMW’s selection criteria.

Overall, it is likely that the push towards sustainability in logistics will continue and that environmental issues will be taken into account more strongly by logistics operators. The key barrier to an industry-wide sustainable practice will, however, remain the insufficient immediate return on investments in green solutions, making this approach less appealing to logistics companies.

Source: Transport Intelligence, May 25, 2017

Author: Violeta Keckarovska

If the future of sustainable logistics is of interest to you, both from a global supply chain and  logistics provider-specific perspective, you may like to know more about Ti’s Global Contract Logistics 2017 report.