Sustainability, efficiency, and cost reduction are often closely aligned with respect to shipping. Greening your shipments can add to your bottom line while also generating customer goodwill and strengthening your brand with consumers. Being an early adopter of green shipping practices also gives companies an edge against their competition. This article provides an overview of sustainable shipping and presents some easy steps to make your shipments greener.
Strategic Approach to Emission Reductions
The greenest shipment is the one you do not have to ship. A good planning and forecasting system helps you to more closely match supply and demand, so you don’t ship something that is not needed and might have to be returned later. This can be combined with a postponement strategy, where the differentiation into product varieties (like different face plates for cell phones) is done as late in the process and as close to the consumer as possible. In the end, the optimum is shipping only what’s needed, where it’s needed.
Another huge decision in this context is where to manufacture or source your products from. A total landed cost approach is needed to determine whether or not sourcing in Asia is still overall the best solution, or whether near shoring or local sourcing is better overall. From an environmental perspective, a shorter (by miles) supply chain is certainly preferable and it also helps you to be more nimble and flexible in responding to market changes.
Finally, designing a network of warehouses closer to your customers helps you to respond faster to their demand, and enables you to bridge most of the distance to them via more efficient transport modes like rail.
Shipping Distance and Speed
It is important to understand the emission profiles of the various transport modes. The mode(s) of transportation for your shipment has an enormous impact on your overall emissions. On average, moving one ton-mile of airfreight generates eight-fold the emissions than by trucks, which emit four times the emissions of rail, and rail emits three times the CO2 of ocean freight per ton-mile. With a well-designed distribution center network, you can reduce your shipping distances, switch to more efficient modes, reduce costs and still achieve your shipping time goals.
The most common mode conversions are air to truck and truck to rail (domestic US), and air to ocean (international). Obviously you want to make sure the shipments travel at the right speed – some items from overseas cannot travel ocean, as you need them urgently, or because of increased inventory carrying costs.
But why not change the speed of your shipment by asking your clients to change their ordering pattern. Do they really need everything tomorrow or a shipment every day? Amazon.com has the right idea: Slower shipping is free. If you want it faster, you pay extra. It’s good for the planet, good for the bottom line, and good for your company.
Finally, there is a lot of potential in collaboration and thoughtful planning. Reduction of empty miles, consolidation, load sharing, route optimization, and filling trucks to capacity will help reduce fuel, emissions, and cost.
Weight and Cube
You are probably familiar with the terms static weight and volumetric weight. As trucks or containers typically fill up volumetrically (cube out) before they exceed their maximum weight capacity (weigh out), parcel carriers charge extra for boxes that are bigger by volume than weight. This means, efforts you spend on reducing your parcel cube will often save you freight costs. Spending time and effort to reduce packaging sizes for your shipments and products will enable you to reduce your impact and save on shipping costs. Having a broader range of box sizes also allows you to optimize the box to the contents, reducing the use of packaging materials, as well as reducing costs. The potential in this area is huge!
Mode Specific Efforts
While your control of shipments is limited after they are sent, it should be of interest to you to see what your transport partners are doing to reduce their emissions (and cost of doing business). Talk to them and work with them – they might very well share their savings with you!
Trucks are the main focus of optimization efforts (as most of the freight in the US moves on trucks). Some areas for improvements include more efficient engines (hybrids), weight reduction, tires, aerodynamics, speed limiters, idle shut offs, auxiliary power units, alternative fuels and route optimization. And don’t forget driver training – a small investment with huge pay back. Finally, the cube maximization and empty mile reduction (see above) also have a big impact.
Other modes also have taken steps to reduce emissions, like smarter flight patterns and light weighting (air), lower resistance wheels and brake energy recovery (rail), or slow steaming, the usage of larger vessels, and kites (ocean) are good examples.
Measurement Approaches
One of the most commonly used metrics for measuring the environmental impact of a shipment is the shipment’s carbon footprint. With shipping, the carbon footprint is generated primarily by the consumption of fuel. Fuel consumption also represents one of the biggest cost drivers for shipping, thus making the carbon footprint one of the most relevant measures of overall shipping efficiency. Measuring and evaluating your carbon footprint from shipping provides a valuable tool for optimizing your supply chain.
Parcel shipping and 3rd party freight represent a unique challenge when measuring emissions. Typically your package(s) are loaded onto a truck with hundreds of other packages from other shippers. Simple emissions measurement approaches of saving fuel receipts or reading the odometer simply fall apart, because so many shipments are moving through different parts of the carriers’ supply chain. Thus it becomes impossible to allocate fuel consumption down to the package level. Fortunately, this problem has been addressed by weight-distance accounting procedures developed by the Greenhouse Gas Protocol. The weight-distance approach use vehicle emissions factors that estimate the emissions generated by moving one ton over a one-mile distance. These factors are published by organizations like the US EPA. To calculate your shipments emissions, you simply multiply its weight by the distance it travels, and multiply that by the emissions factor for the vehicle type that is used. Multi-modal shipments can be calculated by adding each shipment segment together.
Emission Calculation Platforms
Until recently, transportation emissions accounting had been a tedious, manual process. Sustainability consultants would descend on your company once a year and assemble a huge spreadsheet of assumptions and estimates. While the effort would ultimately produce a result, the data would be difficult to segment and analyze, and it was therefore difficult to create concrete plans to improve efficiency.
Today, automated emissions accounting systems have finally started to hit the market. Some of them can extract data directly from your existing business systems to provide a real-time view of your transportation emissions and efficiency. The data can be segmented to provide insights into specific areas of your supply chain. Because the data is real-time, it allows you to develop reduction strategies and receive instant feedback on how they’re impacting your bottom line. Many of the tools also provide simulation functionality to help you develop and test reduction strategies before they’re ever implemented.
Carbon Neutral Shipping
The optimization methods that were discussed earlier in this article can help make significant improvements in cost, efficiency, and emissions. However, our transportation infrastructure will rely on fossil fuels for years to come and thus will continue to have a non-zero footprint. You’ve probably heard of carbon neutral shipping and may be wondering what that means, how it works, and why companies do it.
Carbon neutral shipping involves the purchase of carbon offsets to balance out the emissions generated by a shipment. Carbon offsets are carbon reduction credits that are generated through investments in carbon reduction projects such as solar power, wind power, and methane capture. These projects result in measurable reductions of carbon dioxide emissions. Carbon offsets average just a few pennies for a typical shipment. There are several companies now offering these carbon neutral services.
As shipping is often the most customer-facing aspect of a business, companies are choosing to ship carbon neutral as a cost effective way to show their environmental commitment to their customers. These programs often include branding and messaging to help communicate companies’ efforts.
Summary
Shipping greener has to do with doing more efficiently, and by planning ahead. Along the way you can save money, make your clients happy, and add to your bottom line. You can also get ahead of future carbon regulations, satisfy the demands of your stakeholders (e.g. shareholders, communities, employees) with regards to sustainability, and get ahead of your competitors! So what are you waiting for?
Ken Whiteman is the founder and CEO of GreenShipping.com. GreenShipping.com provides automated carbon accounting services for parcel and freight transportation and helps companies measure, analyze, and improve their supply chain efficiency. Their GreenShipper program also provides a carrier-independent carbon neutral shipping platform.
Wolf Liebchen is the owner of GREEN WOLF SCS, a green supply chain consultancy, helping clients set up green programs, determine their supply chain emissions, and reducing those emissions through supply chain improvements. Check out his website www.gogreenwolf.com or emailwolf@gogreenwolf.com
Strategic Approach to Emission Reductions
The greenest shipment is the one you do not have to ship. A good planning and forecasting system helps you to more closely match supply and demand, so you don’t ship something that is not needed and might have to be returned later. This can be combined with a postponement strategy, where the differentiation into product varieties (like different face plates for cell phones) is done as late in the process and as close to the consumer as possible. In the end, the optimum is shipping only what’s needed, where it’s needed.
Another huge decision in this context is where to manufacture or source your products from. A total landed cost approach is needed to determine whether or not sourcing in Asia is still overall the best solution, or whether near shoring or local sourcing is better overall. From an environmental perspective, a shorter (by miles) supply chain is certainly preferable and it also helps you to be more nimble and flexible in responding to market changes.
Finally, designing a network of warehouses closer to your customers helps you to respond faster to their demand, and enables you to bridge most of the distance to them via more efficient transport modes like rail.
Shipping Distance and Speed
It is important to understand the emission profiles of the various transport modes. The mode(s) of transportation for your shipment has an enormous impact on your overall emissions. On average, moving one ton-mile of airfreight generates eight-fold the emissions than by trucks, which emit four times the emissions of rail, and rail emits three times the CO2 of ocean freight per ton-mile. With a well-designed distribution center network, you can reduce your shipping distances, switch to more efficient modes, reduce costs and still achieve your shipping time goals.
The most common mode conversions are air to truck and truck to rail (domestic US), and air to ocean (international). Obviously you want to make sure the shipments travel at the right speed – some items from overseas cannot travel ocean, as you need them urgently, or because of increased inventory carrying costs.
But why not change the speed of your shipment by asking your clients to change their ordering pattern. Do they really need everything tomorrow or a shipment every day? Amazon.com has the right idea: Slower shipping is free. If you want it faster, you pay extra. It’s good for the planet, good for the bottom line, and good for your company.
Finally, there is a lot of potential in collaboration and thoughtful planning. Reduction of empty miles, consolidation, load sharing, route optimization, and filling trucks to capacity will help reduce fuel, emissions, and cost.
Weight and Cube
You are probably familiar with the terms static weight and volumetric weight. As trucks or containers typically fill up volumetrically (cube out) before they exceed their maximum weight capacity (weigh out), parcel carriers charge extra for boxes that are bigger by volume than weight. This means, efforts you spend on reducing your parcel cube will often save you freight costs. Spending time and effort to reduce packaging sizes for your shipments and products will enable you to reduce your impact and save on shipping costs. Having a broader range of box sizes also allows you to optimize the box to the contents, reducing the use of packaging materials, as well as reducing costs. The potential in this area is huge!
Mode Specific Efforts
While your control of shipments is limited after they are sent, it should be of interest to you to see what your transport partners are doing to reduce their emissions (and cost of doing business). Talk to them and work with them – they might very well share their savings with you!
Trucks are the main focus of optimization efforts (as most of the freight in the US moves on trucks). Some areas for improvements include more efficient engines (hybrids), weight reduction, tires, aerodynamics, speed limiters, idle shut offs, auxiliary power units, alternative fuels and route optimization. And don’t forget driver training – a small investment with huge pay back. Finally, the cube maximization and empty mile reduction (see above) also have a big impact.
Other modes also have taken steps to reduce emissions, like smarter flight patterns and light weighting (air), lower resistance wheels and brake energy recovery (rail), or slow steaming, the usage of larger vessels, and kites (ocean) are good examples.
Measurement Approaches
One of the most commonly used metrics for measuring the environmental impact of a shipment is the shipment’s carbon footprint. With shipping, the carbon footprint is generated primarily by the consumption of fuel. Fuel consumption also represents one of the biggest cost drivers for shipping, thus making the carbon footprint one of the most relevant measures of overall shipping efficiency. Measuring and evaluating your carbon footprint from shipping provides a valuable tool for optimizing your supply chain.
Parcel shipping and 3rd party freight represent a unique challenge when measuring emissions. Typically your package(s) are loaded onto a truck with hundreds of other packages from other shippers. Simple emissions measurement approaches of saving fuel receipts or reading the odometer simply fall apart, because so many shipments are moving through different parts of the carriers’ supply chain. Thus it becomes impossible to allocate fuel consumption down to the package level. Fortunately, this problem has been addressed by weight-distance accounting procedures developed by the Greenhouse Gas Protocol. The weight-distance approach use vehicle emissions factors that estimate the emissions generated by moving one ton over a one-mile distance. These factors are published by organizations like the US EPA. To calculate your shipments emissions, you simply multiply its weight by the distance it travels, and multiply that by the emissions factor for the vehicle type that is used. Multi-modal shipments can be calculated by adding each shipment segment together.
Emission Calculation Platforms
Until recently, transportation emissions accounting had been a tedious, manual process. Sustainability consultants would descend on your company once a year and assemble a huge spreadsheet of assumptions and estimates. While the effort would ultimately produce a result, the data would be difficult to segment and analyze, and it was therefore difficult to create concrete plans to improve efficiency.
Today, automated emissions accounting systems have finally started to hit the market. Some of them can extract data directly from your existing business systems to provide a real-time view of your transportation emissions and efficiency. The data can be segmented to provide insights into specific areas of your supply chain. Because the data is real-time, it allows you to develop reduction strategies and receive instant feedback on how they’re impacting your bottom line. Many of the tools also provide simulation functionality to help you develop and test reduction strategies before they’re ever implemented.
Carbon Neutral Shipping
The optimization methods that were discussed earlier in this article can help make significant improvements in cost, efficiency, and emissions. However, our transportation infrastructure will rely on fossil fuels for years to come and thus will continue to have a non-zero footprint. You’ve probably heard of carbon neutral shipping and may be wondering what that means, how it works, and why companies do it.
Carbon neutral shipping involves the purchase of carbon offsets to balance out the emissions generated by a shipment. Carbon offsets are carbon reduction credits that are generated through investments in carbon reduction projects such as solar power, wind power, and methane capture. These projects result in measurable reductions of carbon dioxide emissions. Carbon offsets average just a few pennies for a typical shipment. There are several companies now offering these carbon neutral services.
As shipping is often the most customer-facing aspect of a business, companies are choosing to ship carbon neutral as a cost effective way to show their environmental commitment to their customers. These programs often include branding and messaging to help communicate companies’ efforts.
Summary
Shipping greener has to do with doing more efficiently, and by planning ahead. Along the way you can save money, make your clients happy, and add to your bottom line. You can also get ahead of future carbon regulations, satisfy the demands of your stakeholders (e.g. shareholders, communities, employees) with regards to sustainability, and get ahead of your competitors! So what are you waiting for?
Ken Whiteman is the founder and CEO of GreenShipping.com. GreenShipping.com provides automated carbon accounting services for parcel and freight transportation and helps companies measure, analyze, and improve their supply chain efficiency. Their GreenShipper program also provides a carrier-independent carbon neutral shipping platform.
Wolf Liebchen is the owner of GREEN WOLF SCS, a green supply chain consultancy, helping clients set up green programs, determine their supply chain emissions, and reducing those emissions through supply chain improvements. Check out his website www.gogreenwolf.com or emailwolf@gogreenwolf.com
