Kirsty Adams (KA): How damaging are logistics operations to our planet?
Inigo Juantegui (IJ): It’s difficult to give precise figures given the diversity of the industry, but it’s estimated that logistics operations and freight account for about 7% of global carbon emissions. To reframe this, to meet the climate change goals of the Paris Agreement the carbon footprint of logistics activities needs to be lowered by 20% .
The underlying issue is that as global trade grows and production becomes more fragmented across the world, the supply chains and logistics networks supporting them also become more complex to sustain operations. Increasing consumer demand and booming e-commerce have also impacted freight patterns in recent years, resulting in more frequent and smaller shipments, and unfortunately, less full containers and journeys made with empty cargo. It’s estimated that commercial vehicles travel an average of 30% of their time with empty loads, in part due to a lack of route optimisation. The expectation for rapid deliveries and faster turnaround times likewise pushes the demand for energy-intensive modes of transport such as air freight, which further undermines the work being done to achieve climate goals. So until current inefficiencies are tackled, it would be fair to say that logistics operations still have a way to go in becoming kinder to the planet.
KA: We know that logistics operations are more committed than ever to create processes that are kinder to our planet. What challenges do they face?
IJ: As stakeholders across the logistics ecosystem become increasingly environmentally aware and committed to making the transition to greener solutions, the main challenges will be relative to benchmarking, transparency and tracking the development of dependable and usable indicators and references. You can’t improve what you can’t measure, and the absence of a uniform measurement system coupled with a lack of knowledge around how to evaluate carbon footprints can be testing for operators.
Delivering low carbon technologies and solutions is a long-term objective that requires continuous monitoring, external auditing and company-wide engagement to make a reality. For some companies, this can prove challenging given the time and resources necessary to implement green practices, however, the return on investment this has for the environment is invaluable. At Ontruck we partnered with Lean & Green Europe, an initiative established to reduce C02 emissions across European transport that is data-driven and evidence-based, with community-driven labels. This helps us to pursue our carbon emission goals by using rigorous reporting and timelines. Having regular audits and guidelines from partnerships such as these help us to sustain our efforts and best manage our resources by setting up tangible KPIs and goals while also sharing our best practices with other stakeholders in the ecosystem.
KA: How will COVID 19 change the way we do logistics from a sustainability point of view?
IJ: The impact and market volatility onset by COVID 19 has cast a light on the sustainability of current logistics processes and shows how the industry itself is changing. If we take into consideration the spikes in demand in some sectors, the halts to activity in others and the supply-side constraints from layoffs and furloughing, there has never been a bigger catalyst for rethinking the concept of “business as usual” for the industry.
As a result of the disruption created by the pandemic, logistics and supply chain stakeholders are now re-evaluating existing management models to understand how to create more resilient operations. One of the consequences of examining business processes under the microscope like this, is that it can reveal major inefficiencies, for example, around costs and fuel consumption. By addressing the need for optimisation and efficiency, we by proxy start to see sustainability climbing higher up the agenda, as wasteful output is often the result of a lack of efficiency and organisation.
From conversations with our shippers and carriers, a few trends that we are seeing emerge around more sustainable logistics in a post COVID industry include:
● Diverse & flexible supply chains- many manufacturers and retailers were unable to move goods to where they needed them during the outbreak. There is increased awareness now around the risk of having a singular concentrated supply base. At Ontruck, our asset-light model allowed us to be able to respond quickly to urgent and sporadic needs by our shippers, such as supermarkets in need of urgent restocking.
● Transparent supply chains- knowing where your goods are during the crisis proved to be paramount. With consumers driving up e-commerce sales and demanding to have full visibility on packages, businesses faced increased pressure to provide visibility across their end-to-end supply chain. Real-time GPS tracking and incident management are no longer a nice-to-have add-on, but a fundamental feature.
● Going paper-free - social distancing measures made it impossible to exchange the Proof of Delivery documents in person. Ontruck’s carrier application allows a digital copy to be taken, stored and shared to shippers, ensuring the safety of truck drivers and warehouse managers alike.
● Increased environmental consciousness- shocks in oil prices, alongside the noticeable drop in pollution and greenhouse gas (GHG) emissions due to lockdowns, is raising a new level of consciousness around the environmental impact of our activities. GHG emissions from trucks alone account for 5-10% of the EU’s total C02 output, so companies will be looking at this more closely to reach their corporate sustainability goals. In fact, Ontruck is already working with several clients on reducing GHG emissions in their supply chain.
KA: Why did Ontruck recently receive funding from OGCI Climate Investments?
IJ: Even as the financial markets slowed down during the COVID 19 outbreak, we continued to reach out to existing and potential investors who we believed could help us take our vision into its next chapter. With the OGCI, the synergies between their vision for a low carbon future and Ontruck’s for a cleaner, more sustainable solution across transportation made for a very natural partnership. They are equally as dedicated to lowering carbon emissions and fostering a future driven by sustainable energy as we are.
KA: The government recently signalled to a transport revolution. What’s the reality of this?
IJ With both the roll out of Brexit and the aftermath of the COVID-19 outbreak it’s difficult to know what the global reality will be in the coming months as new measures and policies roll out across UK transport and the necessary adjustments are made, however, it is likely that climate change initiatives will remain high on the agenda. Shocks in oil prices, alongside the noticeable drop in pollution and greenhouse gas (GHG) emissions due to lockdowns, have showcased a new level of consciousness around the environmental impact created by transport.
The UK has already become the first major global economy to pass a law that requires the country to achieve net-zero greenhouse gas emissions by 2050 and is using this year (2020) to outline the exact plans and policies necessary to tackle transport emissions and revolutionise not just how we travel, but how our goods and services reach us and the deployment of clean technology. While the Decarbonising Transport plan outlines these ambitions in great detail, the challenges going forward will remain in taking this proposed revolution beyond research and plans to transform it into actionable steps and tangible commitments.