carbon footprint needs in logistics
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Carbon Footprint Needs in Logistics. Diego Klabjan, Northwestern University, Evanston, IL. Why? Green image Innovations to drive economical benefits Cannot manage if you cannot measure Proactive to future mandates Wal-Mart’s eco labels Large logistics services provider - PowerPoint PPT PresentationTRANSCRIPT
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Carbon Footprint Needs in LogisticsDiego Klabjan, Northwestern University, Evanston, IL
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Shippers Want to Know Carbon Footprint
• Why?• Green image• Innovations to drive economical benefits
• Cannot manage if you cannot measure• Proactive to future mandates
• Wal-Mart’s eco labels• Large logistics services provider
• A year ago a handful of requests for footprint• Now more than a hundred
• A different one• Each shipper receives carbon footprint
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Not so Fast
• Picture is not so rosy• Many large less-than-truckload (LTL) operators do not provide
such service• Too few requests• Do not yet view it as a competitive advantage
• Shippers not yet trading cost for eco image• Cost being equal, selection based on eco attributes
• Different in EU• Regulations require trade-off• Proctor & Gamble
• Switch from truck to rail in Western Europe• Ship on Amazon river instead of trucking south
• 40% longer lead time, but 60% lower emissions
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EPA SmartWay
• SmartWay transport partnership • Commitment to conserve fuel and reduce emissions in transport
• SmartWay is free to join and open to companies • Trucking companies
• Commit to improve fuel efficiency and reduce emissions
• Shipping companies • Commit to ship with SmartWay trucking partners• Improve freight operations
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EPA SmartWay
• Freight Logistics Environmental and Energy Tracking (FLEET) Performance Model• Carriers
• Calculate tons of CO2, NOx, and PM• Determine effectiveness of strategies used in the fleet
• Aerodynamics, idling reduction• Project the effectiveness of strategies a fleet could add in the
future• Estimate cost savings and payback period for strategies
• Shippers• Track percentage of freight shipped with SmartWay Transport
Carrier Partners• Measure the environmental footprint
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Challenges in Carbon Footprint Accounting
• Challenges• Data
• Collection• Transparency• Quality
• Processes• Not in place
• Find the source, pick up the phone
• SmartWay• How will the new tool affect me?
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Complexity
CO2 Emissions
FAP
FAP
FAP
FAP
Parcel
Shipper
FAP
Parcel
Parcel
Parcel
Shipper FAP
Division 3
Division 2
Division 1
Country X (all divisions)
FAP = freight audit and payment
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Uncertainty
Data Collection
CO2 Emissions Calculations
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Different Angle
• “Easy” to derive emissions of the entire system• LTL carrier can account for the total emissions
• How to allocate emission contributions to individual users of the system?• Shared resources
• Split by weight or volume?
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Allocations
• Two parcel carriers – direct competitors• Internally developed allocation schemes• No alignment
• Need for guidance• What is the carbon footprint of a package from Peoria, IL
to Fresno, CA?
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LTL Example
• Relay network of an LTL carrier
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Needs Statement
• SmartWay• Reporting at a macro level
• Total quantity shipped during a year• Receive a score
• Works nicely in a static environment• Today’s environment is dynamic
• Routes and quantities change often• What is the value of a more micro level reporting?
• What is left on the table?
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Summary of Challenges
• Data• The same old story
• Source• Quality• Governance
• Allocation schemas• Empty moves
(backhauls)• Shared resources
• Consolidation• Rail cars
• Terminals
• Allocation by• Weight• Volume• Bill
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Different Perspective
• One third of total emissions in the US coming from transportation
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Emission in Intermodal
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Slice it and Dice it
• Region• State• Corridor• Industry• Operation
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Infrastructure
• Intermodal investment decision based on• Economics benefits• Emission control
• Technological investment• Mode, process
• Investment in which region, corridor
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Policies and Regulations
• Cap emissions• Region, mode, process• Price on freight greenhouse gases
• Accounting standards and guidance• UPS and FedEx: Each does it differently