Towards greenerlogistics: how cane-tailers embracemore sustainableshipping ?

08/03/2023

5mn

Europe-wide companies are increasingly committed to reducing their environmental impact through a range of strategies:

Reducing their carbon footprint, implementing regenerative practices, adopting digital sobriety principles… Today, they are facing a new challenge, related to their shipments: sustainable logistics. To meet these challenges, companies must reinvent the way they ship, deliver and recycle their products. As a result, a sustainable logistics strategy is becoming essential to the overall coherence of companies’ eco-responsibility strategies, from production to when the end customer receives their product in their hands. We spoke with Anicia Jaegler, Senior Professor in Supply Chain Management and Associate dean for sustainability and inclusivity at KEDGE Business School, to learn more about how sustainable logistics can transform corporate strategies.

Sustainable logistics and regulations

On February 23, 2022, the European Commission presented its proposal for a directive on Corporate Sustainability Due Diligence (CSDD). Its aim is to regulate the way companies manage their logistics, while making them accountable for the environmental and social impacts they generate throughout their production and supply chain. The duty of care of companies (and its subsidiaries) is applicable to its commercial activity as well but also to their direct or indirect suppliers, or to the use and disposal of goods and services produced. If sustainable logistics is essential to the coherence of a company’s eco-responsibility strategy, this draft directive is vital to the coherence of the European strategy, since today the legislation is specific to each country.

Germany has already adopted its law on the duty of care (or Lieferkettensorgfaltspflichtengesetz) on June 11, 2021. On the other hand, France has introduced a Charter of Commitment to reduce the environmental impact of online trade, following the introduction of duty of care in French law the same year. This charter was born from exchanges between Fevad (Federation of e-commerce and remote sales) and an alliance of 14 merchants (including Cdiscount and Darty) to standardize sustainable practices in logistics. The aim is to raise consumer awareness by turning them into “consum’actors”, and to create guidelines for packaging, green deliveries and warehouse certifications.

Our expert reminds us of the importance of inter-European communication on these matters: “If we take urban logistics, there will be different solutions and constraints in each country. Out of these differences, exchanges and good practices can emerge, to adapt to the strengths and weaknesses of cities or countries – such as the presence of rivers for example.”

Sustainable logistics and its challenges

In a context where the transport and logistics industry is responsible for nearly a quarter of greenhouse gas emissions in Europe^[1] – particularly following the rise of e-commerce during the pandemic – companies must transform their logistics strategies to reduce their carbon footprint. But finding the right balance between economic and environmental factors is not an easy task. The sector’s players must deal with limited alternatives to fossil fuels, the management of returns and waste, regulations relating to logistics infrastructures (e.g. in terms of energy), or even issues directly linked to their activity such as the “last mile”: the increase in the number of parcels densifies urban traffic, while the presence of motor vehicles in city centers is sometimes questioned (as with the French Crit’Air stickers and “ZFE-m”, or low emission mobility zones).

In addition, last-mile delivery accounts for between 25 and 30% of emissions in urban areas^[2], emphasizing the need to transform vehicle fleets and to choose other transportation modes (for example, collective transport such as rivers, canals or urban rail). As our expert points out, “many studies are being developed on the use of public transport in the context of logistics, outside of peak hours.”

Logistics players must innovate throughout the supply chain to meet these challenges and satisfy consumers who are demanding fast, responsible and flexible delivery solutions. Indeed, consumers are more and more sensitive to sustainable initiatives, from the choice of their products to their shipping and delivery. According to a FEVAD survey, 70% of consumers are willing to wait up to five extra days if it means their delivery will have less impact on the environment^[3]. This principle is known as slow logistics. Our expert explains: “Today, as a consumer, I can choose express delivery, which is expensive for me, but also in terms of environmental cost. By choosing a ‘slow’ delivery, it does not cost me more as a buyer, because businesses are the ones who take on the cost of sustainable logistics. And as a company, it allows me to optimize my transportation, and therefore make my logistics greener.”

^[1] https://www.headmind.com/fr/rse-enjeu-logistique/

^[2] https://octopia.com/blog/logistique-verte-et-durabilite-du-e-commerce/

^[3] https://www.ecommerce-nation.fr/enjeux-rse-secteur-livraison/

Solutions for more sustainable logistics

To make logistics processes greener, industry players can act on several levels. On the one hand, businesses can optimize their processes using tools that measure their carbon footprint. As our expert tells us, identifying the source of greenhouse gas emissions throughout the supply chain is the key to reducing them: “The first step is to measure greenhouse gas emissions in order to target the sources of these emissions and thus determine the appropriate action levers. It is possible to think about optimizing routes, and therefore the traveled distance. We can also think about maximizing the load ratio, or even multimodal transport. By using several modes of transport, we can benefit from the advantages of each regarding decarbonization.”

For example, it is possible to reduce one’s carbon footprint by grouping shipments and optimizing delivery routes. Such strategies help reduce the distance traveled and therefore fuel consumption, while limiting greenhouse gas emissions. Moreover, it is not only shipments that can be grouped (and thus meet the principles of the circular economy): to make warehouses more sustainable, it is possible to share them between several businesses and thus optimize energy expenses and the space used. In terms of waste, companies can opt for recyclable packaging, adapted to the size of the order.

This means implementing the principles of the physical internet, in other words, using uniform packaging that complies with the new regulations and can be used by all stakeholders to optimize shipments. Indeed, if today’s consumers are increasingly choosing eco-designed products, it is important that this approach is reflected in the product packaging: sustainability is a matter of consistency. The packaging selection is all the more important since, according to a study conducted by the MIT, packaging accounts for up to 2/3 of the emissions generated by the e-commerce industry, including its production, supply, use and end of life.

This alignment must also be reflected in the suppliers’ selection. By choosing suppliers who are closer to their warehouses and who offer more responsible products, companies ensure that they are working with partners who share their commitment to sustainable development. Finally, it is also possible to compensate for carbon emissions that cannot be eliminated by financing positive impact projects that are in line with the UN’s Sustainable Development Goals, such as committing to replant trees.

The benefits of sustainable logistics

By shifting their logistics processes to be more sustainable, companies can reduce their carbon footprint but also their long-term costs. For example, streamlining energy consumption in warehouses allows companies to reduce their energy bills.

In Europe, initiatives implemented by some European carriers, such as GLS Germany, which delivers its parcels in a 100% climate-neutral way as part of its KlimaProtect program, reflect a better image of the brand to consumers who are sensitive to green actions. Employees are also affected by these strategies, as they can benefit from better working conditions or help them choose between different employers, depending on their interest in these environmental issues. Working for a green logistics player also means evolving in an environment where the circular economy and its principles are promoted, particularly that of employee well-being. “I strongly believe that the players in the industry can be persuasive by explaining that, in addition to the environmental dimension, there is an associated significant social dimension. And consumers will follow if these actors align with their values.”