The global supply chain is routinely beset by challenges, both large and small, but the past couple of years have delivered a string of significant logistics disruptions that have threatened to upend the tightly choreographed dance of global freight transportation. The coronavirus pandemic is the most obvious of these hurdles, but everything from the threat of tariffs to the temporary blockage of the Suez Canal (and even the ongoing closure of the I-40 bridge in Memphis) could have had lasting ramifications for global commerce.
These disruptions, which will only get more frequent in the coming years as major weather events wreak havoc on freight transportation, have supply chain stakeholders scrambling from crisis to crisis. There’s been little room for long-term planning, and supply chain sustainability has mostly been an afterthought, a “nice-to-have” initiative that is not of critical importance. That’s starting to change. More and more large U.S. companies, both inside and outside of freight transportation, are pledging to become carbon-neutral operations. The airline lobbying group Airlines for America announced in March that its member carriers will all go green by 2050.
Customers are asking companies to make supply chain sustainability a priority, and younger logistics employees are making the push from the inside. Potential employees want to make sure they work at an environmentally conscious supply chain technology provider. Regulations may be more of a driver in the future.
In fact, in its 2020 report on supply chain sustainability, the MIT Center for Transportation & Logistics and the Council of Supply Chain Management Professionals found that sustainability is becoming a mandate at the corporate level, with more than 80 percent of the 1,100 industry stakeholders surveyed saying sustainability is now an important issue. More than 45 percent of respondents said they were under pressure to adopt supply chain sustainability practices. Though corporations are starting to pay attention to supply chain sustainability, less than half of those surveyed in the CSCMP report know how to make their processes more sustainable.
How can companies hit the ground running on creating a sustainable supply chain? Including CO2 emissions as a key criterion for carrier selection and using logistics technology to reduce or eliminate empty miles are the biggest opportunities to make an immediate difference.
Working with a strong supply chain technology provider with a holistic digital operating platform is key. These companies are fueled by creating innovative solutions that allow stakeholders to weigh the carbon emissions of transportation modes against service and cost. This thinking can also shift how companies view freight transportation in general. In many organizations, freight shipping has become static: companies use air cargo because that’s what they’ve always done. With advanced planning, these same organizations can start dynamically selecting freight transportation routes and modes based on their current needs, bleeding carbon emissions from their supply chains in the process.
Supply chain digitization can also offer more direct solutions to creating sustainable freight transportation processes. In the U.S., empty miles are a significant driver of increased supply chain costs and carbon emissions. Reducing empty miles from the supply chain will help drive down the $1 trillion in waste throughout the global supply chain and help make the industry more green. This can be done through street turn matching, which reduces empty miles that generate significant carbon emissions. For rail users, domestic reload solutions enable steamship lines to reduce or eliminate the cost of returning containers via rail from inland ports by allowing shippers to use the container for a domestic move. This eliminates repositioning empty boxes – quite literally, shipping air.
For retailers, supply chain sustainability is part of the conversation about inventory. Just-in-time inventory levels have helped retailers and other shippers grow without holding vast amounts of inventory in their warehouses, but I-need-it-now shipping practices prioritize speed at all costs. If shippers work to better balance customer demand and inventory levels, they can choose more sustainable, slower freight transportation options. Selecting service levels and modes with an eye toward supply chain sustainability, and not solely based on price, will help turn supply chain sustainability from a concept to an engrained practice.
Supply chain sustainability isn’t a passing fad, and there is a more mainstream acknowledgment of the costs of doing nothing than ever before. Every freight transportation user should be asking: Am I accounting for my carbon footprint when balancing logistics costs with inventory costs? This is part of the social and environmental responsibility of supply chain stakeholders.
Glenn Jones is global vice president of product strategy and marketing for carbon-neutral supply chain technology provider Blume Global. He has a proven track record of growing businesses by building and leading R&D and product marketing organizations to define, develop, position and sell highly innovative and high value enterprise solutions delivered in the cloud. He was formerly the COO of Sweetbridge, the CTO of Steelwedge Software and also held leadership positions at other supply chain software companies including Elementum, E2Open and i2 Technologies.