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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
Adapted from Pacala and Socolow, 2004
freight modal shift
reduced transport intensity
Diverging from Business-as-Usual Energy / Emissions Trend freight transport sector
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
Adapted from Pacala and Socolow, 2004
Diverging from Business-as-Usual Energy / Emissions Trend freight transport sector
increased vehicle utilisation
freight modal shift
reduced transport intensity
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
Adapted from Pacala and Socolow, 2004
electrification of transport low / zero carbon electricity
80%
improved fuel efficiency
increased vehicle utilisation
freight modal shift
reduced transport intensity
Diverging from Business-as-Usual Energy / Emissions Trend freight transport sector
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
Adapted from Pacala and Socolow, 2004
electrification of transport low / zero carbon electricity
80%
improved fuel efficiency
increased vehicle utilisation
freight modal shift
reduced transport intensity
Diverging from Business-as-Usual Energy / Emissions Trend freight transport sector
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: alan.mckinnon@the-klu.org
Website: www.the-klu.org
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