Sustainable logistics: how to reduce the transport carbon footprint

Professor Alan McKinnon

CEFIC Safe and Sustainable Chemical Transport and Logistics Conference

Antwerp

26th November 2014

Kühne Logistics University Hamburg

A private, independent, state- recognized university – founded in 2010

A university with expertise in logistics and management

2 MSc, a Bachelors, an executive MBA and a PhD program – 200 students

17 resident faculty plus contributions from a group of external professors

4

Alarming Arithmetic of Climate Change

Since 1850 roughly 2000 billion tonnes of CO2 emitted by Mankind

Aim : achieve 75% chance that rise in average temperature kept below 2o C by 2100

Need to limit future CO2 emissions to 700 billion tonnes for the rest of this century

Currently emitting around 36 billion tonnes of CO2 (steadily rising)

We are on a trajectory that will lead to 4-6o C of warming by 2100

Catastrophic in ecological and human terms

Sources: Berners-Lee and Clark, 2013,

Only able to burn 20% of the known reserves of coal, oil and gas

The Scale of the Climate Change Challenge

Source: Clark, 2013

Bn to

nnes o

f C

O2 p

er

annum

UN COP 21

Conference on

Climate Change

December 2015

Transport (passenger + freight):

2010: 7 Gtonnes of CO2

2050 (business as usual trend): 12 Gtonnes of CO2

2050 cap on CO2 emissions from all human activity 20 Gtonnes

5th Assessment Report of the IPCC

Developing a Carbon Management Strategy for Logistics

carbon commitment measuring and reporting

logistics CO2e footprint

EU COFRET project

Inventory of existing measurement schemes

www.cofret-project.eu

Inventory of Carbon Measurement and Reporting Initiatives freight transport / logistics / supply chain

Source: Marc Cottinge, ADEME

System Boundaries for Carbon Auditing of Freight Transport

Adapted from NTM

need a comprehensive SB1-5 assessment of the environmental benefits of modal shift

Developing a Carbon Management Strategy for Logistics

carbon commitment measuring and reporting

logistics CO2e footprint

set target for CO2e reductions

Examples of Carbon Reduction Targets Set by Major Logistics Providers

company

normaliser

time period % carbon

reduction

target

Deutsche Post / DHL ‘every letter and parcel delivered,

every tonne of cargo transported and

every sq.m. of warehouse space’

2007-2020 30%

DB-Schenker Tonne-km 2006-2020 At least 20%

UPS UPS Transportation Index 2010-2017 5%

UPS Airlines –Global Pounds of CO2 emitted for every ton of

capacity transported on nautical mile 2005-2020 20%

Fedex (aircraft) available ton mile (ATM) 2005-2020 20%

TNT (Mail and Express) not specified 2007-2020 45%

Maersk Line not specified 2007-2020 25%

NYK ‘unit of transportation from vessels’ 2006-2013 10%

40% improvement in CO2 efficiency of logistics 2010 – 2020

http://www.unilever.co.uk/sustainable-living/greenhousegases/

40% reduction in carbon intensity by 2020

Technology

Infrastructure

Market

Behaviour

Energy

Regulation

Modal split

Utilisation

Fuel efficiency

Energy mix

categories of external factor decarbonisation lever

TIMBER framework

for assessing the effect of external factors on the decarbonisation of logistics

Developing a Carbon Management Strategy for Logistics

carbon commitment measuring and reporting

logistics CO2e footprint

set target for CO2e reductions Identify decarbonisation measures

Inventory of Carbon-reduction Measures

1. Reduce number of links in the supply chain: 5. Reduce empty running:

Dis-intermediation – bypassing agencies / nodes in the supply chain Use load matching services (online freight exchanges / web-based procurement)

Greater vertical integration of processing – reduce intermediate journeys between processing plants Promote collaborative initiatives – both vertical and horizontal collaboration

Explore backloading opportunities during purchasing negotiations

2. Reduce the average length of haul: Incorporate the planning of backloading into vehicle routing and scheduling software

More localised sourcing of inbound supplies Use telematics to increase ‘visibility’ of the fleet and help exploit backloading opportunities

Decentralise processing, storage and distribution operations Consolidate return of handling equipment (roll-cages / dollies) in a fewer vehicles

Move production / storage / distribution facilities into more ‘transport efficient’ locations Maximise use of returning shop delivery vehicles for collection of packaging material

Swap arrangements - to minimise delivery distances Relax delivery schedules to accommodate more backloads

Improve vehicle routing (e.g. use CVRS) / recalibrate routing packages to minimise fuel consumption Improve the reliability of loading and off-loading operations to build confidence in backloading schedules

Use telematics (possibly in association with CVRS) to determine most fuel efficient route Increase the ratio of trailers to tractors (i.e. the ‘articulation ratio’) to create more flexibility for backloading

3. Promote transfer of freight to lower carbon modes 6. Reduce exposure to traffic congestion

Send greater % of freight by rail Reschedule deliveries to inter-peak periods and evening / night

Send greater % of freight by waterborne services Extend opening hours of premises for collections and deliveries

Relocate production facilities / warehousing to be adjacent to alternative transport network Introduce unattended delivery systems for out-of-hours delivery

Invest in rail siding and / or rolling stock

Apply for government freight facilities grants 7. Improve fuel efficiency

Develop / invest in equipment to facilitate intermodal transfers Development fuel management programme

Reschedule distribution operations to match timetables of the alternative mode Appoint fuel champion

Collect and analyse disaggregated fuel consumption data

4. Increase vehicle payloads on laden trips: Train drivers in the techniques of fuel efficient driving (eco-driving)

Relax just-in-time replenishment schedules to permit greater load consolidation Use telematics / onboard devices to monitor driving performance

Increase use of primary consolidation (at expense of adding an extra link to the supply chain) Regularly debrief drivers on fuel performance

Give hauliers / transport departments more advanced warning of traffic demands Give drivers financial and other incentives to drive more fuel efficiently

Promote collaborative initiatives – both vertical and horizontal collaboration Reduce the vehicle replacement cycle to accelerate adoption of more fuel efficient vehicles

Shift from dedicated contracts with 3PL to shared-user contracts / network services Prioritise fuel efficiency as a vehicle purchase criterion

Suppress the ‘bullwhip effect’ in supply chains Use vehicle with stop-start system

Adopt ‘vendor-managed inventory’ (VMI) arrangement with suppliers Use vehicle with turbocharging

Expand the use of ‘nominated day’ delivery systems Reduce vehicle tare weight

Replace the monthly ‘order – invoice’ cycle with a system of rolling credit Improve aerodynamic profiling of vehicles

Use more ‘space-efficient’ handling equipment Improve vehicle maintenance, wheel-alignment etc.

Minimise the amount of secondary and primary packaging Adopt vehicles with automatic transmission

Stack loads to greater height (within warehouse slot height constraints) Ensure effective tyre management / inflation of tyres to fuel efficient level

Reduce the height of rigid vehicles / trailers to match internal load Use supersingle tyres

Use longer and/or heavier vehicles when justified by load size / weight Use low ‘rolling-resistance’ tyres

Make greater use of double-deck vehicles / drawbar trailer combinations. Set vehicle speed limiters at lower speeds

Switch from powered- to fixed-double deck trailer Reduce engine idling

Use compartmentalised vehicles to increase load consolidation opportunities Match vehicle size and weight to the characteristics of the load

Increase storage capacity at delivery points – to permit delivery of larger loads Adopt more energy efficient forms of refrigeration

Use of online procurement platforms (‘freight exchanges’) to increase opportunities for load consolidation Reduce pre-loading time for refrigerated vehicles

Deploy load optimisation software (including agent-based systems) Power tanker pumps externally rather than from vehicle engine

Use telematics to improve management of the vehicle fleet

8. Reduce emissions per litre of fuel consumed:

Use hybrid vehicles

Use new electric vehicles

Use new biogas vehicle

Use new CNG vehicle

Use dual-fuel vehicle (biogas or LNG with conventional diesel)

Increase % blend with environmentally-sustainable biofuel

Recharge vehicle batteries with low carbon electricity

Use lower carbon energy in refrigeration equipment

Minimise refrigerant gas leakage from vehicles

Measures to Reduce Energy Consumption

1. Vehicle design and settings

1.1  Adopt vehicles with automatic (manual) transmission

1.2  Set vehicle speed limiters at lower speed

1.3  Install anti-idling device

1.4 Switch from powered to fixed-deck trailers (for double-decks)

1.5 Reduce vehicle tare weight

Aerodynamic profiling:

1.6 Install cab-roof fairing

1.7 Install body / trailer side panels

1.8 Use trailers with sloping front roof (double-deck / high-cube vehicles)

1.9 Use tear-drop trailer

1.10 Reduce height of vehicle

Tyres

1.11 More regular tyre inflation checks

1.12 Fit low rolling resistance tyres

1.13 Fit super singles

1.14 Automatic tyre pressure adjustment

2. Fuel type:

2.1    Use fuel additive

2.2    Use low-friction oil / lubricant

3. Driver training and monitoring

3.1    Give drivers training in fuel efficiency

3.2    Monitor and manage driver fuel performance (including telematics)

4. Delivery operations

4.1    Increase proportion of evening / night-time delivery

4.2 Use of telematics to optimise vehicle routing

4.3    Accelerate turnaround times at collection and delivery points

Measures to Reduce the Carbon Content of Energy Used

5. Use of alternative fuels / energy sources

5.1 Increase use of hybrid vehicles

5.2 Increase use of electric vehicles

5.3 Increase use of biodiesel

5.4 Increase use of biomethane / CNG

Measures to Reduce Distance Travelled by Road Vehicles

6. Improve vehicle loading

Increase vehicle carrying capacity

6.1 Make greater use of double-deck / high-cube vehicles

6.2 Make greater use of longer and / or heavier vehicles

6.3 Reduce vehicle tare weight

6.4 Switch from powered to fixed-deck trailers (for double-decks)

Make better use of available carrying capacity

6.5 Reduce empty running / increase backloading

6.6 Improve vehicle fill on laden trips (by weight and / or volume)

6.6 Use more space-efficient handling equipment

6.7 Rationalise the return of empty handling equipment

7. Improve vehicle routing

7.1    Introduce computerised vehicle routing and scheduling

7.2    Zone deliveries on a ‘nominated day’ basis

8. Shift freight to alternative modes

8.1 Send a greater % of freight by rail

8.2 Send a greater % of freight sea or waterway

9. Reconfigure the logistics system

9.1 Reposition inventory within the existing system

9.2 Relocate distribution facilities

Long list: 82 carbon-reducing measures

38 measured modelled

• Reducing energy consumption (relative to distance travelled)

• Reduce carbon content of the energy consumed

• Reduce distance that vehicles travel

Development of software tool to help companies devise carbon-reduction strategies

15

16 http://www.fta.co.uk/policy_and_compliance/environment/decarbonisation_tool.html

Carbon intervention modelling tool

16

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

Avoiding unnecessary transport

Swap arrangements

for basic chemicals:

an effective means of

cutting tonne-kms

Freight-Transport Intensity of Economies

0

20

40

60

80

100

120

140

160

180

200

Bulgaria

Poland

Germany

EU27

UK

Belgium

Ratio of freight tonne-kms to GDP (index values 2000 = 100)

Source: Eurostat 2014

More localised sourcing? - -

- need to conduct full

Life Cycle Analysis first

Restructuring of Logistics Systems within the EU?

Potential for future centralisation of production and warehousing?

At an advanced stage within countries, but at an EU level?

Source: Prologis, 2013

centralisation deecentralisation % of DCs serving areas of

differing geographical extent

Shifting transport mode

Modal Split for Inland Freight Transport in 2009 and 2030

22

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

2009 actual without target with target

Road

Rail

IWW

% o

f to

nne-k

ms

Target: EU 2011 Transport White Paper target for 30% of freight tonnes

moving over 300km to be carried by rail or inland waterway

Without target: Business-as-Usual projection of modal split

Analysis by Tavasszy and van Meijeren (2011) – based on Trans-Tools analysis

Railfreight share forecast

European Freight Modal Split: major shift to rail?

SCI/Verkehr Berlin, 2019

9 European Rail Freight Corridors

Improving efficiency

Dimensions of Supply Chain Collaboration

Collaboration

with LSPs Horizontal

collaboration

Vertical collaboration

Core

individual

company

capability

Between companies at the same level in

the supply chain:

within same sector in different sectors

Between companies at different

levels in the supply chain

Creation of partnerships

Contractual relationship

already exists

http://www.cefic.be/files/Publications/

supply_chain_excellence.pdf

Horizontal Collaboration

Source: Cap Gemini (2008)

opportunistic systematic network based

Gain sharing calculator

Shapley Value

27

1. Separate delivery operations 2. Groupage through 3PL

3. Collaborative synchronisation

Kg CO2

/ tonne

1. Separate delivery 43.8

2. Groupage 27.3

3. Collaborative synchronisation 20.3

Nestle – Pepsico Horizontal Collaboration in Benelux

Source: Jacobs et al 2014

28

Source: Steer Davies Gleave, 2013

4.5%

% of EU tonne-km moved by HCT

Collaborative bundling of freight to maximise load consolidation benefits from high capacity trucks

Studies of Low Carbon Truck Technology

US Supertruck Program

Improvements relative to 2009 baseline vehicle Imposition of fuel economy

standards for trucks in

Japan, US and China –

similar plans for the EU

Eco-driver training with fuel performance monitoring.

http://www.microlise.com

UK Department for Transport, 2010)

Source: International Energy Agency, 2009

Predicted Decarbonisation of Electricity Generation around the World

As carbon-intensity of electricity

reduces, electrification of highways

becomes a more cost-effective

way of decarbonising trucking Siemens e-Highway

test track, Berlin

strategic commitment measuring and reporting

environmental impacts of logistics

set target for reducing impacts Identify appropriate green measures

evaluate environmental and

cost impacts of these measures

Stages in the Development of a Sustainable Logistics Strategy

strategic commitment measuring and reporting

environmental impacts of logistics

set target for reducing impacts Identify appropriate green measures

evaluate environmental and

cost impacts of these measures devise implementation plan

and schedule

exploit / monitor benefits feedback

Stages in the Development of a Sustainable Logistics Strategy

Kühne Logistics University – the KLU Wissenschaftliche Hochschule für Logistik und Unternehmensführung Grosser Grasbrook 17 20457 Hamburg tel.: +49 40 328707-271 fax: +49 40 328707-109 e-mail: Alan.McKinnon@the-klu.org website: www.the-klu.org

Professor Alan McKinnon