How can we collaborate to decarbonise the supply chain?

How can we collaborate to decarbonise the supply chain?

January 03, 2022

How can we collaborate to decarbonise the supply chain?

Five years on from the Paris Agreement, just one month on from COP26 and governments, regulators, investors, and customers are increasingly demanding that businesses play their part in global efforts to tackle climate change.

Hundreds of the world’s largest organisations have now set targets to reduce greenhouse gas emissions across their supply chains – setting ambitious goals to be carbon neutral in the next 5 to 10 years. According to McKinsey, the typical consumer company’s supply chain creates much greater social and environmental costs than its own operations. Supply chain impacts account for more than 80% of greenhouse gas emissions and more than 90% of the impact on air, land, water, biodiversity, and geological resources.

With more attention on carbon emission reduction than ever before – how will transport and logistics companies begin to address these challenges?

Load consolidation and asset sharing

decarbonising the supply chain CHEP

 

 

When I book a train or plane ticket, I do so on the understanding that I will be sharing that mode of transport with others. Sometimes that transport might be full, sometimes it might not be. It doesn’t really matter to me who I might be sharing with – it’s a given that it’s highly unlikely I’ll be the only passenger. We’ll all be travelling along the same route to (mostly) the same destination, therefore spreading the cost between us, decreasing the amount of fuel required for multiple journeys and, of course, saving on harmful CO2 emissions.

Why then do we not always apply the same logic to load consolidation and asset sharing in the supply chain?

According to the IGD – empty running of freight transport and poor weight loading costs Europe around €160bn annually, with more than 25% of journeys in the EU running with partial or empty loads.

If we want to begin to decarbonise this, we need to look at changing manufacturing locations, or by filling each load to the limit. What we don’t have is clear uniform data that measures deck fill or cube fill. But we all know that there’s a substantial opportunity here.

CHEP is a big shipper of both loaded and empty pallets and containers– we have 345 million pallets in circulation across the globe. This makes decarbonisation of the supply chain all the more important to us, as a specialist in the share and re-use of reusable packaging, and as advocates for greater efficiency throughout the supply chain.

Our share and re-use system enables distances travelled by empty packaging to be minimised; we routinely collaborate with customers to use empty legs to move empty pallets rather than sending an additional truck. Our packaging solutions are designed to enable better truck fill; we use the visibility we have from our pallet business of our customers’ supply chains to encourage them to share vehicles. And our relationships with both manufacturers and retailers allow us to challenge some of the systematic barriers that hold down these levels of truck fill.

“Decarbonizing Logistics” - A guide

Decarbonizing Logistic

 

I am delighted to have recently joined the leadership team at ALICE (Alliance for Logistics Innovation through Collaboration in Europe), with the responsibility of chairing the group focused on co-operation and collaboration to share assets to the max.

Above is an image from Prof. Alan McKinnon’s book “Decarbonizing Logistics” that we at ALICE are using to guide our thinking.

We need to continue to find ways to decarbonise our own, and others, footprints and move less. “Moving less” involves reducing the demand for freight (the first column) “With less” requires that what we move uses resources and energy more efficiently to reduce CO2, costs, urban pollution, congestion, and the number of drivers required (columns 2-5). The two outer columns are wide society agendas: reducing the demand for freight and low/carbon-free power. But these are not enough. As an industry we need to lead progress in the central three pillars, scaling up to create impact.

The key area of focus for me is the middle column.

I want to understand how we can better address the systematic constraints that reduce truck fill in favour of efficiency in the warehouse network.

Examples of loading efficiency

Decarbonizing Logistic

For example, in many countries pallet heights are limited to 1.7 meters, which fits the warehouse racking systems, but leaves 0.8 meters of ‘empty’ air at the top of a typical truck. For some loads, weight limits are a constraint, but for 70% of loads in the grocery sector this is not the case.

However, in Scandinavia, where distances are long and transport costs are high, trucks are routinely loaded to 2.4 meters with racking systems expecting pallets 1.2 meters high (that are double-stacked in the truck). How are the Scandinavians able to achieve this when other countries can’t?

Another example of loading efficiency is where the lower level of a truck is loaded with heavy product and the higher level a lighter product to optimise both weight and cube. Take up of this solution is not systematic, but you can’t deny that it could be simple and effective.

It is clear that truck fill could be much higher and more efficient and that there are lots of empty kilometres that could be addressed.

Collaboration is required if we are to make genuine progress on carbon emissions

We must work together to better understand what the barriers to success are and where the opportunities for improvements lie. This is a shared challenge across the supply chain, across retailers and manufacturers. The prize, of course, is resource efficiency that will be reflected in CO2 savings, costs, drivers required, road congestion and pollution.

What examples of successful load optimisation have you seen? Where else can we collaborate to improve load fill and reduce the number of truckloads required? I welcome your thoughts, comments, and input.

working together
Working together to decarbonise the supply chain

Michael Archer

Director Market Development & Customer Collaboration

Michael has worked for CHEP for 32 years, working with retailers and their suppliers across Europe, launching CHEP into 8 markets, and innovating around both reusable packaging and transport collaboration. He has co-chaired the ECR Europe Profit Impact of ECR Taskforce, and was recently elected to chair the Co-operation and Collaboration Thematic Group of ALICE.

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How can we collaborate to decarbonise the supply chain? | CHEP