Though the environmental externalities of the supply chain industry have long been recognised by the stakeholders but it is only now that organisations are proactively swinging in action to figure out various ways and means to mitigate the factors impacting the environment, while balancing the economic feasibility at the same time. It is about time when more and more supply chain experts take concern of the current state of logistics sustainability which eventually their genuine concerns will drive their conduct towards the betterment of ecosystem.
In recent times the term ‘Green’ has drawn a wide attention across logistics operations globally owing to the current state of environment which is alarming as ever. As logistics is the back bone of almost any sort of business and it includes various operations starting from packaging, transport, distribution, to consumption, it will be in the thick of all the strategies that can be put in place in order to bring down the cost and overall feasibility. Hence transportation and logistics represent abound opportunities to further embolden the efforts towards sustainability.
Current State of Sustainability
Logistics industry has given the buoyancy to the economy owing to the steady adaptation of ‘smart’, technologically empowered operational practices, coupled with accelerated growth opportunities. India’s fast track rise to become a global economy has also led to adverse impact on its environment and ecology. Although the country’s logistics and supply chain has a long way to go before becoming a fully fledged Green Supply Chain, the process has begun to take shape.
“Staggering rise in E-commerce doesn’t just have an outsized economic impact though — it has dramatic implications for how we need to think about our supply chains, transportation networks and how we plan our cities. At the intersection of this are smart policies that become critical to driving sustainable solutions,” says Rachid Fergati, MD- Indian subcontinent, UPS.
All this progress also has one caveat to it; logistics systems are under increasing pressure due to the impact of the natural environment which has long been overlooked. In India, the CO2 emission from fossil fuels has also grown at CAGR of 4.5 per cent, as compared to the 1.16 per cent growth in developed countries. Apart from CO2 emissions, transportation contributes to 30 percent of particulate matter in the air in metro cities, leading to air pollution. However, any discussion on green logistics should not only remain confined to transportation as it includes facilities like warehousing, transport terminals, packaging, distribution, material handling and even disposal of waste, all these operations are attributed to the carbon emissions in various degrees.
Notwithstanding the evident environmental implications, conventionally, the main objective of logistics has been to integrate all the supply chain activities in the most effective way to meet customer demands and minimise monetary costs, and in recent time companies have slowly but surely coming to terms with environmental implications of supply chain operations.
Concerning the dire need to swing in action to maintain sustainable ecosystem in logistics, Ketan Kulkarni, CMO & Head – Business Development, Blue Dart says, “Companies have become conscious regarding their environmental and societal impact. Organisations are taking responsibility and adapting their methods to meet emission norms to have a positive impact on changing weather patterns, their workforce, local communities and the environment. As stakeholders become more aware and conscious, sustainable supply chain operations will, in fact, become an integral part of strategy.”
Undoubtedly, for any company to pursue sustainability, it is critical to link environmental, social, and financial goals within a broader strategy.
Obstacles to Sustainability
Economic viability is one of the most common place obstacles to sustainability. Although sustainability measures require an initial investment, the long-term savings could easily outweigh the costs. Apart from that, lack of recognition which has been another major hurdle for companies to overcome the integration of sustainable transportation and logistics is the basic recognition of what this actually encompasses.
Mismatch in coordination – The lack of consistency from one jurisdiction to the next makes coordinating multi-stop deliveries and back-loading more challenging, making the effort to collaborate and find sustainable solutions seem more troublesome than it’s worth.
Unequal benefits – Collaboration takes a lot of work from all parties involved, but if one party does not perceive the same benefits as others, projects can quickly fold before they have a chance to come to fruition. Identifying these gaps and working through them to share benefits is key to moving past such roadblocks.
True commitment to sustainability – If a given company, retailer or manufacturer is not committed to finding sustainable solutions across its business, more complex projects, such as sustainable opportunities for logistics and transportation, will be much more difficult to gain approval and funding.
Category differences – The CPG industry is varied, so each opportunity may not be possible with every category. For instance, while generally moving away from truck transport to rail transport has environmental benefits, it is not appropriate with every category of product because routes are not as direct, therefore typically take longer.
Striking the Balance
In many cases, reducing costs also results in reducing different aspects of environmental impact. More recently, ‘cost’ has started to evolve its meaning to incorporate other factors – social and environmental. However, the consideration of achieving multiple objectives is more difficult because often these objectives are in conflict and determining a single performance metric that adequately evaluates them is challenging.
Adarsh Hegde, Joint Managing Director, Allcargo Logistics believes that corporate responsibility towards the whole ecosystem without compromising on the returns as both profitability and well being of the society are the two important pillars of doing business.
“One doesn’t have to invest too much money in implementing environmental sustainable business practices. The Paris Agreement on Climate Change 2016, to which India is a signatory, is aimed at raising global response and awareness to the rapidly increasing threat of climate change. India, especially the Indian supply chain industry is integrating environment sustainability efforts and climate compliance initiatives with their strategies and operations to mitigate the impact of rising temperature levels. It is a welcome change,” says Hegde.
Ramesh Venkat, Head- Industry Partnerships, Logistics Sector Skill Council (LSC) is of the opinion that positive disposition of the stakeholders towards sustainability will certainly yield better solutions and monetary feasibility. Amalgamating or uniting the current processes and strategies to be greener and environmentally friendly will help enhancing the efficiency and possibly reduce the cost.
“Adopting good practices, contributing a positive impact on the society and protecting the resources by consuming less, wasting less, and recycling more will be good enough and not to sacrifice the profitability. A plan of action, with eco-friendly systems will always drive a company to remain focussed on bringing in profit while helping the environment,” feels Venkat.
It is anticipated that supply chain businesses with a poor sustainability track record are likely to witness higher investor flight and, a sustainability-focussed business model will remain key to higher revenues and enhanced return on investment. Simple measures like setting up waste recycling facilities or installing facilities to use natural lights will enhance profitability.
Combating carbon emissions
As the concern towards sustainability in logistics is gaining the currency, those involved in unconventional shipping, especially shippers, must not lose the sight of prevailing trends in supply chain being implemented by many organisation to bring down the environmental risk associated with traditional practices.
Talking about the expedient use of technology and innovation to bring in sustanaiblity in logistics, Fergati elaborates, “We are expanding the use of route optimisation and navigation software that reduces fuel and its emissions across our network, from package pick-up to delivery. In London, we are testing smart-grid technology that can charge an entire fleet of electric vehicles simultaneously – a groundbreaking move. Since 2009, we have invested more than $1 bn in alternative fuel and advanced technology vehicles and infrastructure globally, with more than 10,000 of these vehicles in our fleet today.”
Complementing the assertions made by Fergati about tackling the emissions in a multimodal network by the way of incorporating environment-friendly technology and understanding the predicament of their non implementation, Kulkarni enlists some of the initiatives taken by Blue Dart towards maintaining the carbon efficiencies.
Smart Truck: Blue Dart’s Smart Truck technology is designed to provide solutions to urban logistics challenges such as traffic restrictions, density and clogging, while ensuring environmental protection and fulfiling customer need for on-time delivery.
Electric Vehicles: Blue Dart has also piloted electric vehicles in India, another step towards operating its last mile e-tail delivery service with clean pick-up and delivery solutions.
Carbon Neutral Service (CNS): Blue Dart offers a specialised Carbon Neutral Service initiative, wherein customers are provided with an environmentally responsible shipping option to neutralise the carbon emissions produced by the transportation of their shipments. The service allows customers to neutralise their carbon footprint by paying an offset charge over and above their shipping rates.
DPDHL Group has set a target of 30 per cent efficiency improvement over the base of 2007 by 2020 for all its group companies. Blue Dart has achieved an efficiency improvement of 27.9 per cent in 2018 and is poised to achieve the overall target.
The ‘Green’ revolution that is bringing about the adoption of environmentally responsible business practices worldwide, the next wave of disruption for Indian logistics is in the making, with a steady evolution of ‘Green Supply Chain Management (GSCM)’ process that is slowly making its impact. GSCM or Green Logistics is a process of adapting and adopting environmentally responsible processes that are sustainable and effective in minimising the ecological impact of traditional logistics activities.
“Adoption of Green Transportation can help the replacement of fossil fuel-based technology with bio-fuel based or with alternatives like CNG, hybrid, battery-operated vehicles, and equipment, etc. Additionally, taking into account details like fuel efficiency, payload management, routing, and driving techniques can go a long way in making ‘Green Transportation’ more cost-effective and sustainable. Consolidation of shipment and preference to railways or waterways as a preferred mode for transportation can also make a considerable impact on the environment while also saving on cost and time,” suggestsHarpreet Singh Malhotra, Chairman and Managing Director, Tiger Logistics India.
Industry collaboration towards green logistics
Despite the fact that sustainability and commitment to the environment is the responsibility of everyone, collaborative logistics can pragmatically support sustainability goals through creating efficiencies, which will also result in reduced costs and a more streamlined supply chain.
Today, UPS is working directly with a growing number of cities worldwide to create solutions that help reduce traffic congestion and air pollution through innovative shipping and delivery approaches, operational efficiencies, and an ever-increasing fleet of alternative fuel and advanced technology vehicles. The company is also partnering with cities to rethink transport in dense urban cores and create innovative last-mile delivery solutions that minimise congestion and pollution.
The Indian government has also been undertaking several measures through flagship projects like Sagarmala. Further, increase in the share of domestic inland waterways can bring up some sustainable cargo transport solutions, lower the carbon footprint and reduce pollution. Only then, we will be able to ease the pressure on over congested rail and road networks with restrained capacity utilisation rates. Leveraging the efficiencies of coastal shipping through setting up of an integrated network of maritime transport zones, modernised ports, hubs for connectivity are important for creating a sustainable transport ecosystem on a pan-India basis. India’s accession to the recent IMO ship recycling treaty has brought the country one step closer to sustanaibilty. With the required 15 states now party to it, India’s ship recycling volume considerably contributing to the recycling capacity required under the treaty.
Besides collaboration from industry, there is an abject need to jog up the sentiments in every individual to the harms caused by their imprudent attitude towards the environment. Hegde put it as, “Collaborative approach is undoubtedly the way forward to achieve sustainability in the supply chain. The way government creates policies, launches initiatives and works towards sustainability, the same way corporate citizens are also responsible. Collaboration between the stakeholders will bring together shared insights and endeavour to reduce environmental impact. Collaboration always positively impacts the communities in which a company operates. At the end of the day, shared commitments always lead to profitability.”
With the constantly changing scenarios, the time is not far when both consumers and entrepreneurs will become accustomed to green logistics practices and will implement them in full swing which will further lead to the booming of Indian logistics sector while maintaining the originality of the environment.