Green logistics refers to the use of operational techniques that attempt to minimize the environmental impact of transportation and distribution activities. Sustainable logistics sometimes referred to as green logistics, aims to achieve a strong financial performance while simultaneously emphasizing customer satisfaction and environmental preservation. Progressive businesses around the globe are striving hard to understand and implement sustainable logistics management, supported by advanced technologies like artificial intelligence, machine learning, and sophisticated analytics.
Green logistics: benefits across the entire firm
As organizations shift towards adopting more ecologically sustainable logistics, they see benefits across the whole firm, including increased profitability and a favorable demonstration of corporate responsibility. Nevertheless, the primary determinant of this phenomenon is the consumers’ desire. Customers, both businesses and individuals, are quickly shifting their loyalty to firms that demonstrate significant and long-lasting commitment to establishing a sustainable future.
This is because they see the concrete effects of climate change often via newsfeeds and streaming channels. Customers (and shareholders) support the use of a circular supply chain that incorporates reverse logistics and are not content with or influenced by misleading environmental assertions. Suppliers turn raw resources into goods, send them to clients, and dispose of them. Reverse logistics and circular supply chains interrupt this flow by adding value and decreasing environmental impact.
Global e-commerce returns and green logistics
Reverse logistics involves returning products via the supply chain. Repairs, returns, packaging reuse, and end-of-life product recycling are examples. Most firms’ reverse logistics issues are consumer returns. Customer returns are substantially greater for online purchases than in-store transactions. The business strategy of “subscription box” firms (usually fashion) is predicated solely on consumers picking from a broad range of delivered things and returning what they don’t retain, which perpetuates this problem. As this trend continues, global e-commerce returns may approach $1 trillion in a decade. Transporting returned goods generates around 15 million metric tons of CO2 annually in the U.S. alone.
Circular supply chains and green logistics
Companies recycle as much as possible from raw materials to final goods in a circular supply chain. Essentially, this implies recycling end-of-life items to create value. Recycling plastics may even make shipping pallets. Gold, copper, and other recyclable materials from abandoned products are valuable when metal sources decline.
Green logistics, sustainable transportation, and commercial EV growth
Online purchasing reached a record high during the COVID-19 epidemic, with US package volume jumping 37% from 2019 to 2020 to 55 million deliveries per day. The Amazon Effect increased pressure on logistics as customers expected delivery within a day or even a few hours. This prevents consolidation and nationwide distribution of commodities. Local distribution centers store and push commodities to customers in smaller batches to reach such fast delivery rates. This requires bigger fleets of smaller cars.
As pandemic limitations loosen, these patterns continue. By 2030, urban last-mile delivery demand may climb 78% and need 36% more delivery trucks in the world’s top 100 cities, according to the World Economic Forum.
Businesses are increasingly adopting EV fleets as part of green logistics
Businesses are increasingly adopting EV fleets to satisfy delivery needs. EV fleets have lower operational costs and downtime than gas or diesel fleets since electricity costs less per mile and requires no tune-ups or oil changes. Businesses benefit from EVs’ easy integration into cloud-connected supply chains. AI-powered technology can analyze previous and real-time operational data to provide strong (and practical) insights into how to save money, reduce fuel use, and simplify operations. EV capacities and sizes are also diversifying. Light commercial vehicles (LCVs) such as cargo vans, electric semi-trucks, and long-haul transport vehicles are on the increase.
Sea shipping accounts for 80-90% of the world’s products
Sea shipping accounts for 80-90% of the world’s products, making it greener. Container ships emit 1 billion metric tons of carbon dioxide and tons of hazardous garbage into the seas each year, accounting for 3% of greenhouse gas emissions. In September 2021, the International Maritime Organisation (IMO), representing 150 sector leaders, adopted a decarbonization aim to cut emissions by 50% by 2050 from 2008 levels.
Maersk, whose ships released 33 million tons of CO2 in 2020, ordered eight carbon-neutral methanol-powered boats to fulfill that objective. Japan and Norway are also developing fully electric tanker ships and the world’s first autonomous electric cargo carrier that can be remotely operated and moored using radar, infrared, and automotive integrated solutions cameras.
Alternate distribution networks and environmentally-friendly logistics solutions
Undoubtedly, transitioning to electric vehicles (EVs) and alternative fuels stands out as the most substantial transformation in achieving more environmentally friendly logistics. According to Bernd Heid from McKinsey, if public and private entities collaborate well in an “ecosystem scenario,” the emissions and congestion related to delivery might be decreased by 30% compared to a situation where no action is taken. To attain optimal cost-effectiveness, expedited delivery rates, and significant reductions in emissions and waste, firms must contemplate adopting more cooperative logistics approaches and a more advanced range of optimizations.
Several supplementary optimization methodologies include:
Consolidation of loads
An emerging practice in efficient supply chain management is collaborating across comparable (and often rival) organizations to combine their warehousing and logistics capabilities. Initially, this may seem to be a complex idea, but happily, cloud-connected logistics management solutions are assisting firms in collaborating and cooperating with utmost transparency and authority.
Parcel lockers without a specific brand
Amazon introduced the concept of local parcel lockers as a means to reduce travel distances and expedite the delivery process. This approach has shown to be incredibly efficient, however it has often resulted in excluding competitors. Unbranded community parcel lockers operate similarly to the current Amazon locker networks but are available to a wider variety of delivery companies. By increasing the accessibility of this resource, the prominent logistics providers may collaborate to enhance efficiency and cost-effectiveness, while also enhancing customer options.
Automated load optimization
This pertains to the synchronization of commodities stored in warehouses and distribution centers that have comparable estimated times of arrival (ETAs) and destinations. Given the current high volumes, it is very difficult to do this task manually. However, intelligent supply chain solutions can detect and automate the process of loading vehicles, therefore eliminating the expensive practice of dispatching delivery vans with insufficient cargo.
Delivery throughout the night
As the duration of cars’ presence on the road increases, the consumption of fuel and energy also increases proportionally. Delivering goods at nighttime, particularly in metropolitan regions, may decrease travel time and traffic congestion by as much as 15%. In addition, due to the reduced noise emissions of electric vehicles (EVs), there is a lower likelihood of contributing to nocturnal noise pollution.
Instantaneous micro-mobility networks
Micro-mobility encompasses compact, often two-wheeled modes of transportation such as electric scooters and e-bikes. Contemporary logistics technology already provides drivers with convenient access to cloud-connected applications. This refers to the ability to establish real-time communication between the central office (dispatch) and the client (delivery estimated time of arrival). Companies are achieving substantial cost reductions in fuel consumption and fleet maintenance by using a flexible network of freelance drivers who are not exclusively hired by any one organization.
Cloud-connected route allocation technologies
Cloud-connected route allocation technologies in urban environments may evaluate traffic, parking, and potential delays caused by construction or other factors. In remote locations, other elements that may have more significance include road and weather conditions, as well as the proximity to electric vehicle charging facilities. By integrating this kind of information into immediate route optimization, organizations may enhance delivery velocity and save fuel use.
Unmanned aerial vehicles and self-driving cars
It is visually captivating to imagine drones traversing the sky and delivering gifts like automated storks, or autonomous robots moving down city sidewalks, carrying presents. However, it is important to note that we are still a few years away from achieving completely automated logistics networks. However, rapid advancements in this industry have led to the prominence of digital automation in several environmentally friendly solutions. Therefore, it is advisable to closely monitor the progress in this area.
Advantages of using green logistics
The advantages of green logistics include the company, its suppliers and collaborators, its customers, and all individuals in society. Here are a few select examples:
Increased long-term financial profit through green logistics
Green logistics minimizes waste, costs, and carbon emissions across the whole delivery process, spanning from the starting phase to the final phase. Although there may be an upfront cost, the long-term advantages of adopting green logistics outweigh the related expenditures. A recent study has provided convincing evidence that firms that prioritize sustainability routinely produce exceptional long-term profitability, as shown by their better stock market performance and accounting performance. What is the central thesis or ultimate inference? Adopting sustainable business strategies results in lucrative benefits.
Novel or enhanced partnerships
Companies may boost their attractiveness to both customers and corporate partners by developing sustainable supply chains and green logistics. A recent study done by HBR found that the leading multinational organizations globally use the United Nations Global Compact or the Carbon Disclosure Project’s (CDP’s) Supply Chain Program to assess the sustainability and environmental impact of its suppliers. Suppliers, however, are eager to collaborate with major brands and are actively investing to reduce their carbon emissions.
Customers who are more satisfied and loyal
Clients, regardless of whether they are retail or commercial clients, need expedient delivery and easy item returns. The buyers want to verify the sources of their merchandise, guaranteeing that they are acquired and transported in an environmentally responsible way, and to monitor their advancement in real-time. Companies that provide these useful insights and willingness to consider new ideas attract new customers and foster long-term loyalty from existing ones.
Improved corporate responsibility perception
Large businesses are under more scrutiny and responsibility for their contribution to the worsening of global warming, which is generally acknowledged as a question of social justice. Publicly exploiting the advantages of environmentally friendly logistics will help enterprises gain an edge in the court of public opinion. Progressive companies are carefully assessing their environmental footprint at both local and global levels. Individuals who are hesitant to adapt, especially in shifting away from fossil fuels, endanger their status and suffer a competitive disadvantage.
Streamlined recruitment procedure
In the present fiercely competitive job market, every advantage that a company has becomes vital. Young professionals who are looking for jobs that correspond with their values are more attracted to organizations that promote ecologically friendly logistics.
Strategies for environmentally-friendly transportation and supply chain management
Organizations that integrate a cloud-based intelligent supply chain with mobile technology have a comprehensive overview of their whole logistics operation, spanning from production to distribution to product returns. However, the implementation of green logistics cannot be accomplished in a solitary manner. Effective execution requires meticulous strategizing and the active involvement of all relevant parties.
Here are many recommended procedures
- Engage in cooperation with suppliers, vendors, third- and fourth-party logistics (3PL and 4PL) partners and knowledgeable advisers to establish environmentally-conscious procurement procedures and sustainable shipping alternatives.
- Utilize AI-driven solutions such as supply chain control towers to include carbon footprint measurement in every phase of the operation.
- Collaborate with business networks to exchange logistical resources and insights based on data analysis. Even companies that are usually in competition with one another might collaborate as partners for a common goal.
- Develop a strategic plan and optimize the size of your fleet. Incorporate the capacity to manage varying demands by implementing flexible logistic networks, hence avoiding the idleness of vehicles. To enhance last-mile delivery, it is advisable to include micro-mobility vehicles, such as electric bicycles or unmanned aerial vehicles (drones).
- Inform clients about the consequences of opting for expedited delivery times compared to selecting more environmentally friendly alternatives. Amazon, for instance, promotes the selection of an “Amazon Day” when consumers may consolidate their products into fewer shipments, resulting in cost savings for packing and delivery.
Final Words
Green logistics revolutionizes supply chain management with an emphasis on environmental stewardship and resource efficiency. A deep grasp of logistics operations and ecological impact has led to a new era of responsible and forward-thinking corporate practices. Resource efficiency is another green logistics trait. Advanced technologies include automated inventory management, energy-efficient machinery, and ecological packaging to optimize resource consumption. This reduces waste and boosts recycling, creating a circular economy where materials are reused. Resource efficiency minimizes operational expenses and supports global environmental goals.
Green logistics relies on innovation and technology integration. Modern technology like electric and hybrid vehicles, smart sensors, and real-time tracking systems transform logistics operations by improving efficiency and minimizing environmental impact. Supply chain innovations like blockchain for transparency and AI for predictive analytics improve operations and promote sustainability.
A major benefit of green logistics is economic and competitive advantage. Sustainable practices boost brand reputation and environmental compliance, giving companies an edge as consumer awareness and regulatory constraints rise. Through operational efficiency and waste reduction, green logistics may reduce costs and boost long-term profitability.
Green logistics easily integrates CSR. Companies improve their CSR profiles and build trust with stakeholders, customers, and communities by committing to environmental sustainability. This ethical and environmental commitment boosts brand loyalty and commercial positioning with more concerned consumers.
Green logistics transforms supply chain management by lowering environmental impact, improving resource efficiency, and using technology. Beyond operational efficiency, it has ecological and social implications, making it a cornerstone of modern sustainable business practices. Green logistics is not just a strategic choice but a basic obligation for a resilient and sustainable future.