carbon footprint needs in logistics diego klabjan, northwestern university, evanston, il
TRANSCRIPT
Carbon Footprint Needs in LogisticsDiego Klabjan, Northwestern University, Evanston, IL
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
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
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
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
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?
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
Uncertainty
Data Collection
CO2 Emissions Calculations
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?
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?
LTL Example
• Relay network of an LTL carrier
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?
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
Different Perspective
• One third of total emissions in the US coming from transportation
Emission in Intermodal
Slice it and Dice it
• Region
• State
• Corridor
• Industry
• Operation
Infrastructure
• Intermodal investment decision based on• Economics benefits
• Emission control
• Technological investment• Mode, process
• Investment in which region, corridor
Policies and Regulations
• Cap emissions• Region, mode, process
• Price on freight greenhouse gases
• Accounting standards and guidance• UPS and FedEx: Each does it differently
