freight logistics: strategic focus for sustainable development pablo guerrero transforming...

Freight Logistics: Strategic Focus for Sustainable Development

Pablo GuerreroTransforming TransportationWashington DC, January 2011

TT IDB Freight Logistics 2Washington DC 2011 | Transforming Transportation

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GHG emissions, motorization and freight distribution

– What are the implications for policy makers?

Logistics Decisions and Sustainable Freight Transportation

IDB Freight Logistics and Trade Facilitation Strategy

Conclusions

How bad is the situation in LAC on GHG emissions from the transport sector

2000 GHG Emissions by Sector as Percentage of Total Emissions—LAC vs World.

Source. Taking Action on Climate Change in LAC. IDB 2009Climate Analysis Indicators Tool (CAIT) Version 6.0. (Washington, DC: World Resources Institute, 2009)

Looking at relatively low LAC GHG emissions levels, the region may not play a major role in reducing GHG emissions worldwide

However, CO2 emissions from transport have increased more rapidly than from any other energy consuming sector: – as a consequence of rapid urbanization– increased vehicle ownership– aging vehicle fleet– fuel combustion patterns


Albeit a small share of total GHG emissions in LAC, the transport sector should play an important role in the region’s climate change agenda

12%-20% annual increase in private vehicle ownership (cars and motorcycles)… before 2008

1995 2005

LAC (6) 91 128

U.S.A. 756 837

OECD (14) 455 563

High income (4) 303 423

Motorization rates

LAC: Chile, Colombia, Ecuador, Mexico, Dominican Republic and UruguayOECD: Germany, Austria, Denmark, Finland, France, Greece, Island, Italy, Korea, New Zeeland, Norway, Sweden, Switzerland and UK

LAC motorization rate: two decades and counting of continue vehicle growth

Source: Objetivos de Desarrollo del Milenio. 2010 CEPALBase de estadísticas de indicadores sociales, económicos y medioambientales de América Latina y el Caribe (CEPALSTAT) http://websie.eclac.cl/sisgen/ConsultaIntegrada.asp. Argentina, Belice, Brasil, Chile, Colombia, Costa Rica, El Salvador, Estado Plurinacional de Bolivia, Guatemala, Honduras, México, Panamá, Paraguay, Perú, República Bolivariana de Venezuela y República Dominicana.

Number of vehicles per person


- 25,000,000 50,000,000 75,000,000 100,000,000 125,000,000 150,000,000 175,000,000 200,000,000 -

5,000,000

10,000,000

15,000,000

20,000,000

25,000,000

30,000,000

35,000,000

40,000,000

45,000,000

50,000,000

Population

Flee

t

BR

MX

AR

CO

PECL

Source: 2007 Population WB. Fleet and motorization rates ECLAC

LAC motorization rateStrong correlation between population and vehicle ownership


As motorization grows, the region fails to achieve national and international air quality standards

Source: Comisión Económica para América Latina y el Caribe (CEPAL), sobre la base de Organización Panamericana de la Salud (OPS) Evaluación de los efectos de la contaminación del aire en la salud de América Latina y el Caribe,Washington, D.C., 2005.

Average annual concentration of MP10 in micrograms per cubic meter (μg/m³)


Motorization rate does not only affect the environment, it also poses a huge constraint to the countries logistics system

Logistics costs in LAC = double those of OECD countries Modal split critical for efficiency= LAC intra-country freight transport total

80%-90% on trucks Freight and private vehicles share scarce infrastructure in last mile

operations Increase logistics cost affect city competitiveness

Source: Kogan & Guasch, 2006

Logistics costs (% of GDP)


Last decade of strong economic output and international supply chains operation in LAC generated a strong pressure on national logistics systems

0.0

1.0

2.0

3.0

4.0

5.0

6.0

7.0

8.0

2000 2001 2002 2003 2004 2005 2006 2007 2008

Mill

ion

TEU

Tráfico marítimo de contenedores*en algunos países de América Latina y el Caribe (miembros del BID)

entre 2000-2008(TEU: unidades equivalentes a 20 pies)

Elaborado: BID (INE/TSP) Fuente: Banco Mundial

BR 15%

PN 14%

GU 13%

MX 12%

Source: WDI, selected countries

Port container traffic: flow of containers from land to sea transport modes and vice versa, show consistent average growth for all countries

Which in turns increased demand for both last-mile and long haul freight operations affecting countries’ mobility

1995 2000 2005 20070

100,000

200,000

300,000

400,000

500,000

600,000

700,000

83,103

141,172

228,778

273,697

83,642

141,334

190,234

213,236

13,310

23,152

39,377

45,014

Car (private) Motorcycle Minibus Taxis LDV Freight <2 Ton Heavy Truck > 2 Ton

< Freight

< Public transport

< Private

<< Urban distribution

Growth 2000-2007: 93,9% 50,9% 94,9%

<< Intra-country and medium distance

Source. El Salvador. Energy Efficiency Program. Study and Categorization of Energy Consumption in the Transport Sector. IDB 2010


Current projections on emissions and energy consumption have important implications but we might have a different reality…

Source. Road transport emissions in Latin America by vehicle type. Source: (Schipper et al., 2009) Original source: 2004 WBCSD Sustainable Mobility Project and IEA.

Note: 1 EJ (exajoule=10^18 joules) = 24 MTOE (million tonnes of oil). Data adjusted to include Mexico. Emissions for rail were included in the original Sustainable Mobility Project spreadsheets but are omitted here.

Vehicle type

Vehicles (100,000)

Km / year

Energy, EJ

Emissions Mtonnes

CO2

Share of total CO2

emissions

LDV Pass. 40,127 13,000 2.11 155.4 41.7% Motorcycles 6,948 7,500 0.05 3.0 0.8% Minibuses 930 40,000 0.21 14.1 3.8% Busses 511 40,000 0.20 14.5 3.9% LDV freight 4,459 13,000 0.23 16.2 4.4%

Med Truck 5,385 22,000 1.15 77.6 20.8% Heavy Truck 2,314 50,000 1.38 92.2 24.7% Total 5.33 372.9

49.9%51.7%

Road Transport Emissions in LAC 2000 by Vehicle Type


Type of transport

Average daily travel

Daily occupancy

Average yearly travel

(1)km/day

(2) year

(3)km/year

(4) = (2)*(3)

Car (private) 25 208 5,200

Taxi 100 312 31,200

LCV freight 50 260 13,000

Minibus 50 312 15,600

Heavy truck 100 260 26,000

Busses 100 312 31,200

Motorcycle 40 260 10,400

When relevant data and consistent report mechanisms are implemented, findings will increase the pressure for better more efficient logistics and freight transport systems

Source: El Salvador. Energy Efficiency Program. Study and Categorization of Energy Consumption in the Transport Sector. IDB 2010


Energy consumption in road transportation: the case of El Salvador

Type Area Modality MeansEnergy (Tcal)

Gasoline Diesel GLP Total

Passenger

Urban Road

Private 1,330 59 0 1,389

Taxi 175 2 0 177

Minibus 180 274 0 454

Motorcycle 296 0 0 296

Inter-urbanUrban Subtotal 1,981 334 0 2,316Road Busses 2 644 0 646Rail Rail 0 6 0 6

Inter-urban Subtotal 2 650 0 653Total Passanger 1,984 985 0 2,968

Freight

UrbanRoad

LDV freight< 2 Ton 2,609 1,107 0 3,716

Inter-urban Heavy truck> 2 Ton 33 2,812 0 2,845

Total Freight 2,641 3,919 0 6,560Total Transport 4,625 4,903 0 9,529

68.9%



Evidence of freight participation by type of service (in Tcal) could imply more emissions than previously estimated from the freight sector and urban distribution

Gasoline

Diesel

0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%

1,981

334

2

650

2,609

1,107

33

2,812

Urban pax. Inter-city pax. Urban freight Intra-country freight

Energy consumption in road transportation: the case of El Salvador



GHG emissions and motorization



Conclusions


Logistics Decisions and Sustainable Freight Transportation: why emissions and motorization matter for freight logistics

Global, regional and local patterns of movement of goods are a consequence of the interaction of three key stakeholders: Customers: are the driving force behind freight transportation movements.

– demand for product and services – generates good movement in the freight transportation system

Supply Chain: corporations of different sizes and geographies exchange goods, information and money to maximize the value between the willingness to pay and the total cost of providing the good or service to the customers.

Government. Setups the “playing field” for the supply chain to operate – This playing field is a combination of regulations, infrastructure and economic

incentives.

Empty-load trucks entering Belo Horizonte’s metropolitan region on a daily basis, MG Brazil


Customers demands for products and services affect the supply processes (and collections to a lesser extent) in cities:

Zero inventory– Fresh products and ready available 24-7– Collection points (retailers, restaurants) avoid having inventory and

request only goods to sell or consume in short periods of time Numerous small orders

– Strong competition demands large UPC in stores ready accessible– Consumption in short periods of time– Require systematic and more frequent deliveries

Lack the proper equipments for reception– Storage, handling and delivery to their points of sale

Complex and conflicting supply logistics– Pharmaceutical industry, hospitality industry (inverse logistics), high

value density industry products


Key logistical variables and their impact on freight transportation drivers

Developing Sustainable Freight Transportation in Latin America: Best Practices and Policy Alternatives. Adapted by Edgar Blanco for IDB from Mckinnon and Woodburn (1996) and Piecyk and McKinnon (2009)

Companies implement environmental parameters (e.g. GHG) to evaluate alternative network designs

CENTRO DE FORMACIÓN DE LA COOPERACIÓN ESPAÑOLA. Seminario Internacional sobre Soluciones de Transporte en Ciudades Emergentes. Cartagena, Colombia mayo 2010

What is the knowledge of LAC public agencies and expectations regarding Urban Freight Distribution and freight transport?

<< Do you have knowledge of any current diagnosis regarding Urban Freight Transportation Systems in emerging cities of your country or any other city? >>

What are the expe-riences undertaken by your institution

0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%

72 14 11 3

None Access improvements Local regulations Unloading at night

Do you have knowledge of a diagnosis on freight

transportation

0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%

76 24

Does not exist/not aware Yes

<<What are the experiences undertaken by your institution regarding Systems that improve urban freight transportation capacity?>>

What improvement models will be imple-

mented in your country

0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%

78 12

Not aware Assumptions

<<What models for Systems that improve urban freight transportation capacity will be implemented in your country in the future?>>


Stakeholder Analysis is a cornerstone for developing an Agenda that is in line with the needs of the countries: more efficient and sustainable logistics systems

Type of Stakeholders analyzed

0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%

Public Public & Private Private International NGO

IDB’s stakeholders database includes 437 entries currently covering nine countries

Logistics dimension

0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%


However, there is still a long way until common agreements and perception regarding the importance of a National Logistics Agenda is achieved

Public

Public & Private

Private

International

NGO

0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%

Opponent Moderate opponent Neutral Moderate supporter Supporter

Stakeholders position with regards to advancing a logistics agenda


Advancing the agenda implies a long effort on strengthening institutional capacity for critical policy making

Stakeholders position and capacity assessment

High

Low

Supporter Moderate Supporter

Moderate opponent

Neutral Opponent0

20

40

60

80

100

120

-

0.5

1.0

1.5

2.0

2.5

3.0

3.5

4.0

4.5

5.0

Number of actors Average Capacity





Conclusions and next steps

BelizeTrade and Transport Facilitation Assessment

BahamasCustoms Modernization project, including ESW

HondurasModernization of Puerto Cortes

Modernization of Customs in Puerto Cortes

T&T

Preparation of an Action Plan for implementing the SAFE Framework

Implementing the Regional Single Administrative Document for CustomsCaribbean Maritime Freight Performance Analysis

Caribbean

Customs Performance Indicators

LAC Regional

Support to city logistics and urban freight distribution in Curitiba

Brazil

Support the application of ICTs to improve the Freight Logistics

Uruguay

Support to implement the National Logistics Plan

Paraguay

Support Logistics and Port Expansion

Colombia

Support for the implementation of the National Logistics Plan

Support the application of ICTs to improve the Freight Logistics

Support to design Specialized Logistics Infrastructure

PBL Policy Based Loan for Logistics Improvement

Regional Freight Logistics Observatory

C. America

Analysis of Freight Logistics and Trade Facilitation in MesoamericaImplementation of a system to facilitate the movement of goods in international transit

IDB Freight Logistics and Trade Facilitation Operational Activities

MexicoSupport for the Development of a National Logistics Park System

IIRSA Regional Initiative for Infrastructure Integration in South America- Border crossing – Productive integration methodologies

Mesoamerica Plan- Road corridors – Border crossings – Customs modernization

Regional Targets

PrimaryStake-holders Short term Long term

HighConsistently measure GHG transportation emissions

Public sector, NGO, Academia

Develop country specific emission factors

Establish measurement standards (e.g. GHG protocol)

Refine current GHG transportation measurements

Freight and logistics observatory: GHG

HighActively engage logistics partners in GHG reduction

Public and private sector

Establish local private-public GHG partnerships (e.g. SmartWay)

Education on GHG reporting Multimodal feasibility studies

GHG Certification programs

Consumer labeling GHG reduction targets Multimodal

infrastructure expansion

High

Reduce freight related emissions in urban environments


R&D urban logistics programs Evaluate economic impact of urban

distribution platforms Set urban reduction targets

Invest in urban distribution platforms

Urban freight regulations

Monitor urban reduction targets

An Agenda for Achieving Sustainable Freight Transportation in LAC

Regional Targets PrimaryStake-holders Short term Long term

High

Consistently measure and monitor transport pollution in major urban areas

Public sector, Academia

Pollution studies across LAC cities

Set pollution reduction targets and incentives for urban areas

High Phase out high emitting vehicles Public sector

Inventory of freight fleet age Measure environmental benefits

vs. economic replacement strategies

Establish taxes and incentives for vehicle replacement programs

Med.

Evaluate distribution of biofuels and natural gas alternatives

Public sector

Document and disseminate existing success stories on biofuels/CNV

Evaluate economic feasibility of biofuel strategies in LAC

Evaluate economic feasibility CNV strategies in LAC

Track progress of biofuel and CNV

Med.Invest in alternative fuel sources infrastructures


Determine economic feasibility

of electric infrastructure Invest in regional

alternative fuel distribution networks


Regional Targets PrimaryStake-holders Short term Long term

Med.Educate private sector in urban driving environments


Develop safety educational programs by country

Establish professional safety accreditations

Establish safety standards for private and public operators

Med.- Low

Monitor urban noise trends Public sector Document urban noise in major

cities Empower urban

citizen enforcement

Low Develop tire recycle markets


Country studies on tire life cycle analysis

Invest in tire recycling supply chains

LowEncourage enforcement of pollution guidelines

None Empower urban citizen enforcement






Conclusions and next steps


Why is it important to manage logistics and freight distribution in LAC?

Cities are key to country's logistics performance Long Distance Traffic

– Cities are O/D of the main freight transportation flows High Demand for Mobility

– Increased population to be served– Excessive motorization

Sprawl– Comprehensive land planning shortcomings have resulted in

cities with low density– Greater, longer and crowded routes for delivery

More expensive and inefficient distribution networks

Urban patterns contribute to supply chain inefficiencies


Typical work flow for a city logistics study

Data intensive exercise Fleet information Flows + O/D Infra diagnosis GHG diagnosis and inventory Identify business logistics and logistics nodes Market analysis Logistics platforms traffic simulations GHG simulations Define business model for logistics nodes identified KPI and institutional setting for logistics-driven city planning

freight logistics: strategic focus for sustainable development pablo guerrero transforming...

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