The global logistics industry plays a pivotal role in the movement of goods worldwide. However, this crucial function also has significant environmental consequences, primarily due to its carbon footprint. The transportation and storage of goods are responsible for a substantial portion of greenhouse gas emissions. Decarbonising the supply chain has become an imperative goal in this era of increasing environmental awareness.
Before we delve into strategies, it's essential to comprehend the supply chain's carbon footprint. The carbon footprint represents the total greenhouse gas emissions produced directly or indirectly by an individual, organisation, event, or product.
In the logistics sector, emissions primarily result from transportation, warehousing, and the manufacturing of packaging materials. The primary greenhouse gases emitted include carbon dioxide (CO2), methane (CH4), and nitrous oxide (N2O).
Multimodal approach
The multimodal approach, a cornerstone of the ambitious Sagar Mala Project, is set to emerge as a transformative strategy to alleviate road congestion and enhance efficiency. By seamlessly integrating various modes of transportation, such as road, rail, and coastal shipping, the Sagar Mala Project seeks to optimise the transportation network along India's vast coastline.
This strategic shift towards coastal shipping will mitigate the burden on congested roads and capitalise on the maritime potential, fostering sustainable and streamlined logistics. The Sagar Mala Project stands as a beacon for holistic, multimodal solutions that address congestion and harness the vast potential of coastal infrastructure for a more connected and efficient transportation system.
Route optimisation, utilising triangulation, is a powerful tool to curtail unnecessary legs of transportation, contributing significantly to reducing the supply chain's carbon footprint. A notable use case is Direct Port Delivery (DPD), where triangulation ensures the most efficient and direct routes for goods transportation, minimising detours and optimising overall logistics efficiency.
Among the myriad strategies for decarbonising the supply chain on land, incorporating triangulation and DPD stands out as a practical and effective approach to streamline transportation networks and promote sustainability. Among the most impactful strategies for reducing the supply chain’s carbon footprint on land is transitioning to eco-friendly transportation options like electric vehicles (EVs), hybrid vehicles, and vehicles running on biofuels.
In conjunction with route optimisation and triangulation, the implementation of Hub and Spoke arrangements further amplifies the efficiency of supply chain operations. By establishing central hubs strategically connected to various spokes, this logistical configuration minimises the need for direct point-to-point transportation, reducing overall transit distances. Hub and Spoke arrangements enhance the consolidation and distribution of goods, allowing for more efficient use of resources and lowering the carbon footprint.
This interconnected system optimises routes and facilitates the seamless movement of goods, contributing to a more sustainable and eco-friendly supply chain landscape.
Implementing Sustainable Practices
Route optimisation is another key strategy to minimise emissions in the supply chain. Advanced software can help logistics companies plan more efficient routes. Additionally, optimising the loading of vehicles to maximise capacity ensures fewer trips are needed to transport the same amount of goods. Post Covid, there was a strategic shift towards nearshoring which not only will reduce cost but will also optimise carbon footprint. Packaging materials and practices are significant in the logistics industry's carbon footprint.
To address this, companies can transition to using recycled materials, which can significantly reduce their environmental impact and discourage the usage of wood and plastic. Similarly, leveraging intermodal transport involves using multiple modes of transportation to optimise the supply chain. For example, rail or sea transport for long-distance shipping can be much more carbon-efficient than relying solely on trucks or air freight.
Investing in Renewable Energy
Another critical aspect of decarbonising the supply chain is adopting renewable energy sources. Warehouses, distribution centres, and transportation hubs can benefit from solar panels, wind turbines, and other renewable energy systems. Many logistics companies increasingly invest in sustainability by adopting renewable energy technologies and energy-efficient buildings.
Circular Economy in Logistics
The concept of a circular economy has gained significant traction and has profound implications for the logistics industry. In a linear economy, products are made, used, and disposed off. In contrast, a circular economy focuses on keeping products and materials in use for as long as possible. Logistics can achieve this by reusing packaging materials and transportation equipment. This not only reduces waste but also lowers procurement costs.
Recycling is a core element of a circular economy. Logistics companies can implement recycling programmes for cardboard, plastics, and metals. Additionally, repurposing materials can be an innovative way to reduce waste. By ensuring that products are utilised fully and not wasted, logistics companies can minimise excess stock, which often leads to destruction when products become perishable.
Reverse Logistics
Reverse logistics, the process of moving goods from their final destination back to the manufacturer or another location for returns, remanufacturing, recycling, or disposal, is a vital component of a circular economy in logistics. By efficiently handling returns and repurposing or recycling products, companies can reduce waste and create value from items that would otherwise be discarded.
Sharing platforms and collaborative logistics models are gaining popularity as ways to optimise resources and reduce waste. Having a complete visibility of demand and supply patterns, equipment inventories at various locations will optimise the need to back-haul equipment by discouraging empty movements of containers and trucks.
Embracing Digital Technologies
Digital technologies, including adopting paperless back offices, further propel the implementation of circular economy practices in logistics. Embracing online submission of documents to statutory authorities streamlines administrative processes, reducing the reliance on paper and minimising environmental impact.
This digital transformation enhances operational efficiency and aligns with the broader goal of sustainable logistics practices. As IoT sensors monitor product conditions and blockchain ensures transparency in the supply chain, integrating paperless back offices into this technological landscape underscores a holistic approach towards reducing waste and maximising efficiency in the logistics sector.
Finally, decarbonising the supply chain and embracing a circular economy in logistics are not just responsible choices; they are imperative for a sustainable future. By slashing greenhouse gas emissions, the logistics industry can contribute to a healthier planet and reap the rewards of cost savings and heightened efficiency.
—The author, Darshan Ghodawat, is CEO and Managing Director, AVA Global Logistics LLP. The views expressed are personal.
(Edited by : C H Unnikrishnan)
First Published: Jan 20, 2024 1:12 PM IST
Check out our in-depth Market Coverage, Business News & get real-time Stock Market Updates on CNBC-TV18. Also, Watch our channels CNBC-TV18, CNBC Awaaz and CNBC Bajar Live on-the-go!
Khunti Lok Sabha Elections 2024: Arjun Munda and Kali Charan to lock horns in this clash of tribal leaders
May 12, 2024 8:59 PM
Malkajgiri Lok Sabha election: A three-way contest among turncoats
May 12, 2024 8:45 PM