Distribution group strives to reduce carbon footprint

When the package banged to the door, customers could only glimpse the last few meters of their long and complicated journey in the global supply chain.

Most consumer goods delivered in developed countries are manufactured thousands of miles away before being transported or airfreighted to ports, transported by road or rail to warehouses or regional fulfillment centers, and then delivered to customers’ doorsteps.

Therefore, each stage of the process will have an impact on the environment. According to data from the International Transport Forum, freight related to international trade now accounts for 7% of global carbon emissions. And this kind of global freight activity is only expected to grow: according to the forecast released by the ITF this year, by 2050, it will be 2.5 times the level of 2015. The agency also warned that by 2050, the absolute carbon emissions of freight will be more than 20% higher than in 2015., Even under the current decarbonization policy, it is marked as “insufficient”.

Possible solutions for decarbonizing the industry include improving efficiency to help reduce inventory and deliveries, as well as shifting to more sustainable fuel and energy supplies.

But the decarbonization of this industry is particularly complicated. Whether it is a sofa or an iPhone, a package journey usually involves several independent companies, from large shipping companies to freight forwarders, warehousing groups and last-mile express companies.

Céline Hourcade, managing director of logistics consulting firm Change Horizon??n pointed out that given the fragmented nature of the industry, no institution or organization can lead decarbonization. “I think you need to be pragmatic and see how various companies and stakeholders will contribute,” she said.

The largest companies in the industry have all begun to take action, issuing numerous sustainability commitments.

Shipping group Maersk Its goal is to achieve net zero emissions by 2050 and have the first carbon neutral ship on the water by 2023. At the same time, some of the most ambitious commitments to use sustainable aviation fuel come from the air cargo industry.

Delivery commitment: Jeff Bezos at COP26 © Bloomberg

Amazon founder Jeff Bezos promised to use the “scale and scale to work” of his e-commerce group. The company said that by 2030, it will achieve net zero emissions for 50% of all shipments, and achieve total net zero emissions in 10 years.

Amazon has launched a venture capital fund to invest in companies that develop new technologies to help decarbonize logistics, with an initial capital of US$2 billion.

This has invested in start-ups, including a company that makes small electric airplanes for package delivery, a sustainable fuel manufacturer and an electric car manufacturer. The fund and its futuristic investments highlight how logistics companies hope that new technologies will emerge to provide a “silver bullet” to help them decarbonize energy-intensive industries.

One of the biggest challenges will be to change the intricate supply chain without increasing consumer costs. They have begun to expect fast and cheap delivery to become a part of daily life in the Western world.

Currently, new technologies are often more expensive than old, more carbon-intensive solutions. For example, the price of sustainable fuel that powers cargo aircraft is five times that of conventional jet fuel.

However, some of the most significant pressures to tackle climate change are not from consumers, but from large companies. They all rely on the logistics industry to bring their products to the market, but they are also paying more and more attention to addressing broader “Scope 3” emissions, including emissions from the transportation and distribution of goods and services.

Nine leading companies, including IKEA, Unilever and Michelin, pledged last month to use only zero-carbon fuel-powered ships by 2040.

Dominic Waughray, managing director of the World Economic Forum, said: “Companies have the opportunity to decarbonize their supply chains and have a huge impact in the fight against climate change.” The interaction with this opportunity is an important activity.”

However, according to a report co-authored by Waughray by the World Economic Forum and the Boston Consulting Group, so far, even leading companies are struggling to find the data they need and set clear goals for their suppliers.

For example, consumer goods multinational companies have tens of thousands of companies in their supply chains that need to be monitored, while fashion companies usually use small manufacturers to produce clothing.

Nevertheless, in the obstacles, there are also opportunities. “The big challenge we face is how to understand the thousands of farmers in our supply chain, but we think this is an opportunity for more and more farmers to directly participate,” said Greg Downing, an executive at the American food giant Cargill, in the WEF/BCG report.

Change Horizon’s Hourcade said: “It will take time, but I think we have the right momentum now, with so many players at every level [within the industry] Knowing that they have no choice. “

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