Sustainability - challenges and opportunities for the freight industry

19.09.2019

 

There are no excuses. Use the data regarding your carbon footprint now!

Data quality on carbon footprints has improved dramatically in the last years and a lot of data is already available. With this data it important to not fall into the trap of looking for perfect data, but use the data you have to take pragmatic actions to reduce your carbon footprint now.

In the future, the focus on sustainability will only continue to increase. The better the visibility and  more awareness on all sides, customers, shippers and suppliers, the more focus on sustainability.

One of the challenges is that you can only book a certain service with a carrier and/ or supplier, but not yet see which vessel is actually used (potentially a very old one that consumes a lot of fuel), so visibility and having options is key to make the right decision.

 

Cost cutting and greening the supply chain

So does reducing your carbon footprint go hand in hand with cutting costs? This is the endless discussion between suppliers and shippers. 

According to a speaker from Nestlé, shippers are willing to pay, or at least consider, green options, but, want to see their options. At the moment carriers are only offering their standard solutions as a base. 

The speaker added that lowering the carbon footprint goes hand in hand with optimizing the supply chain and lowering costs. In their opinion, given the choice, shippers will do the right thing. However, suppliers feel differently and say going green will cost money, given the investment needed to provide these green options.

One of the challenges is that you can only book a certain service with a carrier and/ or supplier, but not yet see which vessel is actually used (for example, it could be one that consumes a lot of fuel), so visibility and having options is key to making the right decision.

 

How can the different parties improve their carbon footprint?

According to the speakers from Nestlé, Hapag Lloyd and Kuehne+Nagel at the JOC Container Trade Europe conference 2019, the following initiatives, broken down by party, are examples of best practice:

Shippers
 

  • Make the supply chain less intensive
  • Improve visibility of the supply chain, especially on the ocean
  • Ask for green options to be able to compare and see the impact
  • Increase container utilization
  • Improve forecasting
  • Share forecasting data with suppliers
  • Reduce booking changes and cancellations, as they cause inefficiencies on the carrier/supplier side
  • Carbon offsets

Suppliers/ carriers
 

  • Show visibility per service
  • Show the different green options
  • Improve reliability, so fewer changes will occur during the route and it becomes more interesting to choose green options. Better reliability means better forecasting, which in turn means a greener supply chain
  • Reduce the number of no shows. It’s currently 25-30%
  • Invest in greener warehouses, offices, travel policy now and look into the subcontractor base
  • Equate the costs related to becoming greener with safety measurements. It will be a cost that you cannot and will not skip.
  • The speaker at the supplier/carriers side stated that ocean is already one of the greenest solutions in transportation

 
The fourth pillar

At present, buyers in ocean transportation make their choices based on three main elements:

  • Cost
  • Speed
  • Free days (DET&DEM)


Soon, if not already, you can add sustainability to that list. That’s something you need to factor in now. Take into account sustainability in your procurement , look at the options available and track the impact of making the right decision. The sooner the better for everyone involved!

 

Written by
Joyce Willemsen

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