green logistics: global trends and issues - world...

Green Logistics: Global Trends and Issues

Professor Alan McKinnon

Kühne Logistics University Hamburg

Decoding Sustainable Logistics Trends World Bank

Washington DC

26th June 2012

Economic objectives

Environmental objectives

Social objectives

Sustainable Logistics

Close correlation between cutting cost and reducing environmental impact

Tightening Emission Standards

Par

ticul

ates

(g /

kWh)

NOx (g/kWh)

L O C A L H ealth & air quality

RE G IO NA L

Acidification

photochemical

G L O B A L

G reenhouse -indirect

G reenhouse - direct

E ffect PM H M NH3 SO2 NOx NM V O C C O C H4 C O2 N2O

EU India (cities)

India (nationwide)

Euro 1 1993 2000 2000

Euro 2 1996 2003 2005

Euro 3 2000 2005 2010

Euro 4 2005 2010

Emission standard time-lag

Emission of Greenhouse Gases from Freight Transport / Logistics

Logistics accounts for 2,800 mega-tonnes of CO2e = 5.5% of total GHG emissions

Source: World Economic Forum / Accenture

Life Cycle Assessment of the Environmental Impact of Unilever Products

One wash with laundry detergent

Source: http://www.sustainable-living.unilever.com/the-plan/

Raw materials

Manufacturing

Distribution & retail

Consumer use

Disposal

Greenhouse Gases per Consumer Use

Average Fuel Efficiency of New European Trucks (38 -40 tonnes gvw) litres / 100 km

tightening Euro - emission standard

- 2005, (all Brands) quoted in Mercedes presentation (2011)

Test reports of new truck fuel efficiency 1966 - 2010

Steep reductions in fuel consumption and emissions per tonne-km

Growth of total tonne-kms counteracting this trend

Economic Growth Increases Freight Transport Emissions per Capita

Source: Eom, Schipper and Thompson, 2012

US Canada Australia

Improvements to transport infrastructure mainly road

Centralisation

Increased length of haul

Increased freight transport intensity: ratio of tonne-km to output

Change in commodity mix

Industrialisation

Lower density / higher value products

Consolidate loads in larger / heavier vehicles

Stronger just-in-time pressures

Poorer utilisation of vehicle capacity

Decline in rail freight

New industrial / warehousing

development not rail-connected

Enhance inter-modal capabilities

Economic development

Wider sourcing

New patterns of consumption

Growth in output

Much more freight being moved By less green mode

Higher externalities per unit of freight moved Greater environmental

degradation

Improve fuel efficiency

Improvements to transport infrastructure

In less full vehicles

Projected Growth of Inland Freight Movement (billion tonne-km)

Source: EU Transvisions project (2009)

(McKinsey, 2010)

India

EU

+160%

+166% 13 years

43 years

Growth of Container Shipping Volumes

Source: Clarksons Container Intelligence Monthly, Jan 2010

Projected Growth of Airfreight

Total freight tonne-kms (FTK)

Source: Airbus (2011)

Sustainable Freight Transport Framework 1

Reduce or avoid need for freight

movement

Shift freight to greener transport modes

Improve energy the efficiency of freight

transport

AVOID SHIFT IMPROVE

Activity Shift Intensity Fuel (ASIF)

Sustainable Freight Transport Framework 2

Source: Schipper et al, 2006

Weight of goods produced / consumed

Total tonnes- lifted

Tonne-kilometres

Road tonne-kms

Total vehicle-kms

energy-related externalities

Energy consumption

other noxious gases greenhouse gases other non-energy-related externalities

average handling factor

average length of haul

average load on laden trips

average % empty running

energy efficiency

noise, vibration, accidents, visual intrusion

emissions per unit of energy

other externalities per vehicle km

environmental impact of freight transport

modal split Similar analyses for other modes

outputs key ratios outputs key ratios

output key parameter

modal split

supply chain structure

emission intensity

energy efficiency

vehicle utilisation

Sustainable Freight Transport Framework

Relative importance of these factors varies with the level of

economic development

Car

bon

emis

sion

s

2050

Adapted from Pacala and Socolow, 2004

reduced transport intensity

Diverging from Business-as-Usual Energy / Emissions Trend freight transport sector

Limited Evidence of Freight Traffic / GDP Decoupling Ratio of Tonne-kms to GDP

Inde

x (2

000

= 10

0)

0

20

40

60

80

100

120

140

EU27

UK

Spain

China

Sources: Eurostat and Chinese government

Objective is not to decouple freight volumes from GDP but rather to decouple freight-related externalities from GDP

Minimising distances freight is moved will not necessarily minimise environmental impacts on a full life cycle basis

0 1000 2000 3000 4000

Dairy produce

Lamb

Apples

Onions

kg of CO2 per tonne

New ZealandUK

Should we reverse the globalisation process?

Source: Saunders, Barber and Taylor, 2006

Includes transport by deep-sea container

18000 kms

New Zealand agriculture emits less greenhouse gas per tonne of product

Local sourcing food from UK or importing it from New Zealand?

Potential CO2 Benefits from Inventory Centralisation: Lower inventory levels: less energy use in storage less wastage of product Less warehouse space required: less CO2 in construction, operation and maintenance Larger warehouses can be more energy efficient: emit less CO2 per unit of throughput

CO2 Trade-offs

warehousing CO2

transport CO2

total logistics CO2

CO2

Emissions

no.of warehousesMinimum

CO2 footprint

Inventory-related CO2

To Cut Carbon Emissions Should We Return to Decentralised Warehousing?

ultra-low / zero carbon

warehousing and materials handling equipment by 2030?

Car

bon

emis

sion

s

2050


freight modal shift



Variations in CO2 Intensity by Freight Transport Mode

0

200

400

600

800

1000

1200

1400

1600

1800

Airfreigh

tVans

HGVs

Inland waterways

Coastal sh

ipping Rail

Pipeline

CO2 g

m pe

r ton

ne-km

Source: McKinnon / Commission for Integrated Transport

Over-reliance of average modal intensity values

Sensitivity to assumptions about vehicle loading

Future trends in modal intensity values

Need to extend the calculation boundary to

include infrastructure and vehicle construction

and maintenance

g C

O2

/ ton

ne-k

m

Extending the System Boundary in Measuring Transport CO2

SB1

SB2

SB3

SB4

SB5

vehicle operations

energy supply chain

vehicle / infrastructure maintenance

vehicle / infrastructure construction

administration / personnel / IT

Source: NTM

Carbon Savings from Switching from Road to Intermodal Road-Rail Service

www.freightbestpractice.org.uk

60% saving

Car

bon

emis

sion

s

2050



increased vehicle utilisation

freight modal shift


Utilisation of Truck Capacity

% of truck-kms run empty in the EU: national and international transport 2010

China 50%

Source: Eurostat report 63/2011 India

empty running

vehicle loading Higher rates of over-loading in developing countries e.g. UK 8-9% Philippines 17% Combined with under-powering more fuel use More damage to road pavement + under-maintenance

Constraints on Truck Utilisation

Regulatory

Market-related

Inter-functional

Demand fluctuations

Unreliable delivery schedules

Vehicle size and weight restrictions

Nature of packaging / handling equipment

Incompatibility of vehicles and products for backloading

Uncertainty about transport requirements

Infrastructural

Poor coordination of purchasing, sales and logistics

Limited storage capacity at destination

Health and safety regulations

Equipment-related

Just-in-Time delivery

The Maximum Truck Size and Weight Issue

Comparison of Indian and European Long-haul Trucks

84% are 2-3 axle rigids 30 40 cubic metres capacity

Max GVW: 9 t (2 axle) 25 t (3 axle)

5-6 axle articulated vehicle 82 cubic metres capacity

Max GVW: 40 - 44 t

Need to Adapt Green Logistics Strategies to Local Circumstances

Need to allow for differences in: Road infrastructure Materials handling system Commodity mix Order replenishment process Structure of the haulage industry etc

Transport Collaboration even between Competitors Nestle and United Biscuits

Reduced empty running 280,000 truck-kms saved per annum

New EU-funded project

Collaboration Concepts for Comodality

Car

bon

emis

sion

s

2050


electrification of transport low / zero carbon electricity

80%

improved fuel efficiency


freight modal shift



Future Advances in Truck Technology

Accelerate the diffusion of new truck technology into developing countries within infrastructural, financial and market constraints. Displacement of 2nd hand truck purchases from developed countries with indigenous production of freight vehicles Long vehicle life and lack of finance favours retrofitting of vehicles Imposition of fuel economy standards for new trucks - a worthwhile policy?

Ways of Improving the Fuel Efficiency of Existing Trucks

0 2 4 6 8

Maximum speed reduction (65-60 mph)

Idling reduction (automatic engine idle)

Driver training and monitoring

Improved Tractor Aerodynamics

Improved Trailer Aerodynamics

Wide-base tyres

Tare weight reduction

Low friction engine lubricants

Low friction drive train lubricants

Automatic tyre inflation systems

% fuel saving

Source: Ang-Olsen and Schroeer

Telematics

Improved fleet management

increased confidence in schedule for backloading

easing the impact of traffic congestion

Teardrop Cheetah

DolphinBoat-tails Trailer under-tray

Over cab spoiler

Improving the Aerodynamic Profiling of Trucks: 360o perspective

Limited benefit in developing countries where average truck speed is low

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

1 4 7 10 13 16 19 22 25 28 31 34 37 40 43 46 49 52 55 58 61 64 67 70 73 76 79 82 85 88 91 94 97 100

Speed (km/h)

Vehi

cle

resi

stiv

e fo

rces

(%)

Internal vehicle friction (gear box, drive shaft, bearings, ...)

Tire rolling resistance

Aerodynamic forces

Source: Michelin

Aerodynamics have limited influence on fuel consumption at lower speeds

speed

Vehi

cle

resi

stiv

e fo

rce

(%)

EU average speed

India average truck speed

Car

bon

emis

sion

s

2050


electrification of transport low / zero carbon electricity

80%

improved fuel efficiency


freight modal shift



cut carbon content of fuel

Predicted Decarbonisation of Electricity Generation around the World

Source: International Energy Agency, 2009

Electrifying the Road Network?

Direct transmission to freight transport services:

Indirect transmission via batteries or hydrogen

Electrifying Freight Transport

Electrifying the road network: Swedish, French and Germany studies

Net GHG savings and environmental sustainability of biodiesel uncertain

biogas / biomethane

on life-cycle basis yields significant net GHG reductions

Use of Biofuels in the Road Freight Transport Sector

Million tonnes of oil equivalent

Source: DG Tren

Projected use of different fuel types in the EU transport sector by 2030

0

1000

2000

3000

4000

5000

6000

2005 2050baseline

2050 highbaseline

2050scenario

GHG

em

issi

ons

(m to

nne

CO2e

)

modal shift

alternative energy

improved efficiency-40%

-60%

International Energy Agency Projections 2005-2050

-6%

-29%

-24%

Trucking

Source: IEA, 2009

Supply Chain Decarbonisation Measures

Source: World Economic Forum / Accenture

Reduction in congestion13

Increased home delivery12

Near-shoring / relocalisation11

Reverse logistics / recycling10

Freight modal shift9

Training and communications8

Enable low carbon production7

Improved packaging design6

Increased energy efficiency of buildings5

Optimisation of logistics networks4

Localised sourcing of agricultural produce3

Slowing down product flow2

Clean vehicle technology1

Reduction in congestion13

Increased home delivery12

Near-shoring / relocalisation11

Reverse logistics / recycling10

Freight modal shift9

Training and communications8

Enable low carbon production7

Improved packaging design6

Increased energy efficiency of buildings5

Optimisation of logistics networks4

Localised sourcing of agricultural produce3

Slowing down product flow2

Clean vehicle technology1

Potential for reducing emissions

feas

ibili

ty

Levels of Environmental Intervention

Logistics System Design

Vehicle Maintenance

Driving

Vehicle Loading

Vehicle Routing and Scheduling

Vehicle Design

Supply Chain Structure

Vehicle + equipment manufacturers

Logistic service providers

Individual shippers

Supply chain partners

National Government European Commission

Levels of Logistical Decision-making

STRATEGIC: numbers, locations and capacity of factories and warehouses Restructuring of logistical systems COMMERCIAL: trading links to suppliers, customers and sub-contractors Reconfiguring supply chains OPERATIONAL: scheduling of production and distribution operations Rescheduling of freight flows FUNCTIONAL: day-to-day management of the logistics function Changes in the management of freight transport

Interaction between decisions at different level determines volume of freight traffic and related externalities

Green measures implemented at lower levels offset by effects of higher level strategic decisions

Public Cost per tonne of CO2 saved: £8

Advice and Encouragement on Sustainable Logistics

UK Government: Freight Best Practice Programme

Other Schemes to Promote Environmental Best Practice in Freight Transport

UK Logistics Carbon Reduction Scheme

8% reduction in carbon intensity of freight transport between 2010 and 2015

Endorsed by the UK Government

Euro / tonne of CO2 emitted0 50 100 150 200 250

Driver training in fuel efficient driving

Aerodynamic profiling of trucks

Application of computerised vehiclerouting

Hybridisation of delivery vans

Rail infrastructure investment

Major switch to localised sourcing

Decentralisation / relocation ofwarehousing

Economic Appraisal of Green Freight / Logistics Measures

$ / tonne of pollutant emissions saved

Need more research on cost-effectiveness of Green Logistics measures in both developed countries and emerging markets.

Conclusions

Freight sector has already achieved large reduction in externalities per tonne-km

Rate of tonne-km growth is exceeding rate of externality reduction per tonne-km

Little prospect of significant tonne-km : GDP decoupling in emerging markets

Broad array of mutually re-inforcing technological and behavioural options

Need to adapt green logistics policies to the circumstances of developing countries

Most eco-efficiency measures are self-financing often with short payback times

Need more data for the analysis of potential benefits and monitoring trends

Contact details

Kühne Logistics University The KLU Wissenschaftliche Hochschule für Logistik und

Unternehmensführung Brooktorkai 20

20457 Hamburg

Tel.: +49 40 328707-271 Fax: +49 40 328707-109

E-Mail: [email protected]

Website: www.the-klu.org

mailto:[email protected]



http://www.the-klu.org/



green logistics: global trends and issues - world...

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