Logistics can be a sustainability manager’s “secret weapon,” because this theater of operations often gets passed over. It’s easy to think addressing logistics will be too complicated, given that most of the emissions are from equipment owned and operated by suppliers (i.e. scope 3). But freight operations often sit in the top five contributors of greenhouse gas emissions at any given corporation, so there are rich pickings to be had here.
How does a company start “greening” its freight operations? The key is to recognize that improving the environmental performance of logistics operations is a long journey. The first step on this journey is to define what the company is seeking to accomplish.
There are two layers to this. The first involves clarifying the outcomes the company wants to track and reduce, such as climate pollution, air toxics or fossil fuel use. The second involves specifying the metrics the company will use to track success, such as greenhouse gas emissions per ton-mile. The EDF Green Freight Handbook contains guidance on calculating the downstream (scope 3) greenhouse gas emissions, plus a number of links to additional technical resources.
Even the most hardened sustainability professional could feel daunted by the complexity of logistics operations, so the work should not be attempted alone. Seek the guidance and input of a cross-functional team that includes supply chain or transportation executives, sustainability officers and an executive sponsor.
Depending on data availability and capacity, the team might decide to limit the initial Green Freight focus to a specific segment of distribution, such as inbound or outbound moves. It’s critical to formulate and manage this first effort for success. Don’t try to demonstrate the total span of the company’s logistics sustainability effort just yet. There will be time for that later.
With the area of focus decided and the right internal partners on board, it’s time to launch one or two pilot projects that are manageable in scale and scope. These should also be projects that can be replicated elsewhere in the organization, once successful. The best pilots are those into which you have good visibility and where you can quickly demonstrate results.
By nature, logistics involves external partners. While this adds complexity, it adds critical know-how, too. Take the experience of partners into account too when choosing the pilots. It’s likely they will bring valuable experience to the table, earned through working with other clients.
Even though multiple parties might be involved, your company is the cargo owner, and therefore makes the decisions that have the greatest impact on the environmental footprint of your freight operations. Such decisions include mode of transport, time allocated for delivery, and density of the load. It’s best to first choose pilots that require actions you control, such as increasing load factors. Projects that require actions by logistics service providers, such as switching to trucks that run on alternative fuels, are harder to pull off.
Ocean Spray Cranberries [demonstrated](http://ctl.mit.edu/sites/default/files/library/public/MIT CTL Ocean Spray Case Study_FNL_0.pdf) the power of a successful pilot a few years ago when it undertook an effort to shift stock transfers from truckload to intermodal. The company found that this change generated a 65 percent reduction in emissions, while cutting costs 40 percent. Along the way, the company learned it needed to make several process improvements in order to make the switch to rail successful. These included working with a third-party logistics provider to deliver and collect rail boxcars. Given the success of this pilot effort, Ocean Spray identified additional opportunities to use intermodal, in part with the help of an EDF Climate Corps fellow.
There are several reasons for starting with a relatively modest pilot program. One, you’re more likely to complete the project and succeed in reducing emissions. Two, you’ll be building a template for future, more ambitious, projects. You’ll know what a successful Green Freight program actually looks like, in your company, under your control. Three, you’ll learn how to integrate logistics into the wider push for sustainability in your company. Ideally, all divisions of a company work in tandem to drive sustainability improvements – sourcing, packaging, design, marketing, and, of course, logistics.
Finally, a clearly defined, well-measured Green Freight pilot project is something you can share all around the company to increase enthusiasm and support for future projects, often in the form of increased resources. This will make your Green Freight journey much smoother.
Once you’ve gained that internal momentum and credibility, it’s time to accelerate. That’s the next step in your Green Freight journey, and the subject of our next article.