You Bet, We Still Care About Sustainability
As they erase the distractions posed by the pandemic, companies brainstorm new ideas to make their supply chains more sustainable.
The pandemic put new strains on supply chains, but that didn’t stop companies from launching initiatives to shrink their carbon footprints and eliminate waste.
A few notable examples:
- Starbucks set a goal in March 2021 to improve the way its suppliers produce and process green coffee, achieving carbon neutrality and cutting water usage in half by 2030.
- Google announced a new routing model for Google Maps that will help users optimize trips to reduce fuel consumption.
- Apparel retailer J. Crew said that by 2025 it would sustainably source all the key fibers in its clothing and all the plastic and paper in its packaging, and its operations would be carbon neutral by 2030.
- DHL Express opened a 100% solar-powered pop-up retail store, the company’s first, in Chino Hills, California.
At the start of the pandemic, sustainability advocates held their collective breaths, wondering how the crisis would affect the world’s progress.
“It was a relief to see that the pandemic actually put sustainability at the core of everyone’s efforts,” says Bettina Grabmayr, head of institutional relations at EcoVadis, a Paris-based company that helps firms assess how they’re performing on environmental, social, and ethical issues.
The environment stayed a priority during COVID-19 in part because people realized that some of the same factors that fuel climate change, such as loss of biodiversity, also helped to spur the pandemic, Grabmayr says.
While it’s hard to directly connect the pandemic to recent supply chain sustainability initiatives, COVID has led many companies to examine how they operate, and spurred them to become more flexible.”There is some correlation between the pandemic and sustainability based on the fact that we’re changing in so many ways as it relates to the supply chain,” says Tim Gagnon, vice president of analytics and data science at third-party logistics company C.H. Robinson in Eden Prairie, Minnesota.
Although commitment varies by geography and industry, sustainability has become a core endeavor rather than an afterthought for more companies. They’re responding to pressure from regulators, consumers, and, more recently, investors.
“It’s hard now for companies to compete in the global market if they don’t have a sustainability strategy, because stakeholders have some expectation about this,” says Grabmayr.
Measuring the Results
To help companies rate themselves and their supply chain partners on sustainability, EcoVadis aggregates and analyzes data from a company’s own management systems, reports, and other internal sources; from stakeholders’ databases; and from public sources. Using insights gleaned from that data, EcoVadis works with companies to develop plans to improve sustainability and then measure the results.
Companies that already collaborated with suppliers on sustainability were generally better equipped to deal with supply shortages and other challenges posed by the pandemic, which also required collaboration.
“This is why some companies did better than others when it came to making sure the supply chain was resilient,” Grabmayr says.
One of the more popular improvement strategies is for companies to reduce their carbon footprint. Companies are starting to take a more systematic approach toward their emissions goals.
“These strategies are not just based on their operations or on what they think they can do and what will be comfortable for them,” Grabmayr says. “They’re based on the science and where we need to be.”
Testing Green IQ
C.H. Robinson’s latest contribution to the science is Emissions IQ, a free, self-service tool that calculates users’ carbon emissions across all forms of transportation.
For companies that partner with C.H. Robinson, Emissions IQ analyzes data on past shipments, drawn from the 3PL’s management systems, to calculate emissions. “Each mode of transportation has an emissions intensity score—basically a carbon score,” Gagnon says.
The tool currently covers North American truckload, less-than-truckload, and rail shipments. C.H. Robinson will add air and ocean shipments later in 2021.
Shippers that manage logistics internally can use data from their own transportation management systems, engaging C.H. Robinson as a consultant to help refine their strategies based on what they learn from the tool.
Emissions IQ provides a high-level summary of a company’s carbon emissions, allowing comparisons over time or among various modes. Users can also drill down on specific factors, such as the geographical makeup of the carbon footprint, or where opportunities for improvement lie.
For example, a user could run what-if scenarios to see the potential impact of switching some freight to a different mode, or consolidating some shipments.
The 125 companies that used Emissions IQ during a pilot implementation discovered strategies that helped them collectively reduce their carbon emissions by 350,000 metric tons, says Angie Freeman, chief human resources officer and environmental, social and corporate governance officer at C.H. Robinson.
Onfleet, a San Francisco-based global provider of last-mile delivery management software, also recently started measuring carbon emissions for its customers. While Onfleet’s software can help shippers shrink their carbon footprints by generating more efficient routes, the new Onfleet Offset program uses a different strategy for greening the supply chain, offering a chance to invest in projects that mitigate the effects of CO2 emissions.
“More than 1,000 businesses are on our platform, and if it was easier for them to track and offset their emissions, we know they would do it,” says Khaled Naim, co-founder and CEO at Onfleet.
After a company opts in to Onfleet Offset, at the end of each month Onfleet calculates the number of miles that company’s delivery drivers have covered, distinguishing among vehicle types.
“If they are using scooters, bicycles, or motorcycles, the emissions will be lower than for trucks,” Naim says.
Using the greenhouse gas coefficient established by the Environmental Protection Agency for each transportation mode, the system calculates the fleet’s carbon impact and tabulates a dollar value, at $4 per metric ton of carbon. That total appears as a line on the customer’s invoice for the month.
“We then match that with our own $4 per ton and send the funds to our partner, Pachama, which uses the money to buy carbon credits,” Naim says.
Based in San Francisco, Pachama invests in projects to preserve forests around the world—for example, by paying landowners to keep trees intact rather than clear land for agriculture.
“Out of the gate, we built a portfolio of three forestry projects in Peru, Alaska, and Mexico,” Naim says. Pachama uses satellite imagery and other technologies to verify that the forests are actually preserved, he adds.
For Canadian transportation company Purolator, one key to working toward zero emissions by 2050, in line with Canada’s national goal, is electrification. Purolator has used hybrid-electric trucks, plus some low-speed electric vehicles and electric bikes, for pickup and delivery in Montreal and Toronto for some time. In the spring of 2021, it added five all-electric, 18-foot delivery trucks to its fleet in Vancouver, along with four new e-bikes.
When Purolator put its first 30 hybrids on the road in 2005, all-electric vehicles were expensive and complex.”Today, we’re finally getting to the point where electric batteries are becoming more affordable,” says Serge Viola, director of the national fleet at Purolator, in Mississauga, Ontario.
With a single drive train, an all-electric vehicle is a bit lighter and more efficient than a hybrid. “And you can reach zero greenhouse gas emissions when driving on the road,” Viola adds.
Purolator procured the trucks from Motiv Power Systems of Foster City, California, which electrifies standard Ford truck chassis—usually the F-53, F-59, or E-450—to produce electric vehicles. Purolator’s trucks are based on the F-59, with bodies built on top of the chassis to match the rest of its fleet.
“We typically use three lithium-ion battery packs, which give a range on a single charge of up to 169 kilometers, or 105 miles,” says Prasad Ramakrishnan, COO of Motiv. “That requires eight hours to recharge.”
Purolator is assigning the electric trucks to routes that keep them within that range, so there will be no need to recharge during the day.
The rollout of all-electric vehicles in Vancouver is a test, meant to help Purolator build a business case for bringing the technology to other locations, and also to determine how well the vehicle’s power requirements match the electrical infrastructure at different locations.
Beyond its pickup and delivery operations, Purolator is also exploring all-electric vehicle technology for possible use on the “shunters” that move trailers in its hub facilities, and electric or hydrogen fuel cell technology for long-haul transportation.
The five trucks in Vancouver are the first that Motiv has supplied in Canada. In the United States, the company has supplied step vans to AmeriPride Services, Aramark Corporation, bakery company Bimbo, and the U.S. Postal Service. It has also provided electric buses to customers ranging from the Sacramento Area Schools to Google’s campus in Mountain View, California.
Sourcing for sustainability
Another tool companies can use to improve sustainability is the request for proposal (RFP). Whether they’re sourcing components and materials, finished products, or transportation services, buyers can set criteria that favor more environmentally friendly solutions, says Alan Holland, founder and CEO of Keelvar Systems, a software provider based in Cork, Ireland.
Keelvar provides solutions that optimize and automate sourcing events, letting buyers and sellers reach agreements that accommodate a complex array of needs and constraints.
When a company sources transportation, for example, and adds sustainability to its criteria, that creates a new set of data points to consider along with traditional factors, such as on-time performance and cost.
A supply chain manager trying to evaluate many tradeoffs for numerous shipments might skip the environmental factors just to keep things simple, Holland says. But an automated solution can quickly analyze data to compare, for example, the carbon cost of using each of three ships leaving the Port of Manila for the Port of Long Beach in a certain period.
“If the pricing is similar—and it often is—then a company can bias in favor of the most environmentally friendly option,” Holland says.
If the greener solution does cost more, Keelvar’s customers can configure the sourcing optimizer to balance value and expense. “What is the rate of equivalence? Is it $10 per kilogram of CO2, or $50, or $100?” Holland asks. “It’s our customers’ choice. We facilitate that biasing at scale.”
About five years ago, many of Keelvar’s customers cared more about cutting costs than cutting emissions, Holland says. But today, between regulatory imperatives and pressure from consumers, many customers now consider sustainability a crucial value.
So do many other shippers and supply chain professionals, all of them seeking innovative ways to produce and deliver as much as ever while doing minimal harm to the environment.
Grow Your Own
While some companies strive to burn less fuel, others in the logistics sector are trying to slow global warming by burning different fuels. One of those alternatives is Sustainable Aviation Fuel (SAF), made by recycling used vegetable oils and other biomass waste.
In April 2021, logistics company DB Schenker and airline Lufthansa Cargo started what they say is the world’s first regular carbon-neutral flight, using SAF to power an aircraft once a week between Frankfurt am Main and Shanghai Pudong. The partners say that the CO2 released in flight equals the amount removed from the atmosphere during the growth of the plants that produce the fuel, resulting in net zero carbon emissions.
Greenhouse gases emitted when manufacturing and transporting the fuel are offset by investments in sustainability projects.
United Airlines is also using SAF to help green its operations, forming the Eco-Skies Alliance to encourage investments in its biofuels programs. United customers that join the alliance contribute part of the cost of purchasing SAF, helping to reduce emissions and demonstrate a demand for low-emissions fuel. CEVA Logistics announced in April 2021 that it had joined the Eco-Skies Alliance.
French shipping line CMA CGM Group recently supported the production of 12,000 tons of biomethane made from organic and plant waste sourced in Europe. That is enough to fuel the equivalent of two 1,400-TEU ships powered by liquid natural gas between Saint Petersburg and Rotterdam for one year, the company says.
CMA CGM plans to invest in biomethane production facilities and study the viability of liquefaction processes, with the goal of employing biomethane as a shipping fuel.
Aeroshark Tests the Waters
Innovative surface technology from Lufthansa Technik and BASF improves fuel efficiency, thus helping airlines reach their sustainability targets.
The lower the frictional resistance of an aircraft in the air, the lower the fuel consumption. Using nature as a role model, the aviation industry has been intensively researching ways to reduce aerodynamic drag for many years. Now Lufthansa Technik and BASF have made a breakthrough as part of a joint project.
Lufthansa will roll out AeroSHARK, a surface film that mimics the fine structure of a shark’s skin, on its entire freighter fleet starting in 2022, making the aircraft more economical and reducing emissions.
The surface structure—consisting of riblets measuring around 50 micrometers (.002 inches)—imitates the properties of sharkskin, optimizing the aerodynamics on flow-related parts of the aircraft. This means that less fuel is needed overall.
For Lufthansa Cargo’s Boeing 777F freighters, Lufthansa Technik estimates a drag reduction of more than 1%. For the entire fleet of 10 aircraft, this translates to annual savings of around 3,700 tons of kerosene and just under 11,700 tons of CO2 emissions, which is the equivalent of 48 individual freight flights from Frankfurt to Shanghai.