Sustainability Push to Drive Big Changes in Supply Chain Logistics

Finding a way to deliver goods in a sustainable way to mitigate climate change is one of the major challenges that also is creating new opportunities for companies with a stake in the mobility industry. 

The revolution in the delivery of goods began with the launch of just-in-time manufacturing in the 1980s and expanded as digitalization took hold in the 1990s and globalization lengthened supply chains by after the turn of the century, Bruce Belzowski, managing director of the Automotive Futures project, says at a recent online conference addressing Mobility as a Service.

The third revolution in the movement of goods and services now is at hand with the new emphasis on sustainable delivery that conserves resources and pays heed to the societal impact of freight transport, says Belzowski, who notes reshoring some manufacturing to shorten the supply chain is part of the effort underway. 

The pandemic has led automakers to increase what Belzowski describes as the “zone of visibility” within the movement of goods, extending it from their Tier 1 suppliers to Tier 2 suppliers and Tier 3 providers of raw materials. A break in any link in the chain has the potential to disrupt production, he notes. 

The sustainable movement of goods requires a variety of approaches, from more accurate forecasting to re-shoring production and vertical integration, he adds. 

Sina Zhen, sustainable mobility officer for ICLEI, which works with local governments in developing sustainable policies and practices, says the solutions range from improvements in infrastructure to deployment of clean delivery vehicles with low or zero emissions.

In Barcelona, for example, local officials have begun to experiment with cargo bikes to handle last-mile delivery, she notes.  

Freight movement accounts for 25% of the traffic, 40% of the road space and, depending on the city, 30%-50% of transport-related pollution, Zhen adds. 

Bikes are an old technology, but they fit easily into urban environments, she says. Local governments around the world have begun to regulate for zero emissions from delivery vehicles of all kinds in urban areas to fight climate change, Zhen notes. 

The decarbonization of the logistics sector or the movement of freight is critical to curbing greenhouse-gas emissions, says Rik Arends, program director at the Smart Freight Centre.

But the average distance goods travel steadily has increased, he points out. In China in the 1990s, goods moved an average of 11 miles (18 km); now they move 182 times from the warehouse to the end user. 

According to Arends, freight transport, or the amount of goods moved around the world, is set to triple by the middle of the century.  

Curbing the growth of emissions not only will require tighter regulation and fleets of cleaner vehicles, but also new strategies, Arends says. For one thing, greater cooperation between major shippers will be needed, including sharing trucks and containers even for sensitive freight, he says.

Reorganizing the operations of warehouses to make them more efficient could help as well, Arends adds. 

Nathan Niese, associate director of the Boston Consulting Group’s study of automotive electrification, says to meet the necessary targets for reducing worldwide emissions, the automotive industry needs to transition to EVs more rapidly than the present pace. 

BCG sees zero-emission vehicles replacing those powered by internal-combustion engines and becoming the dominant powertrain for new light-vehicle sales globally just after 2035. 

However, automakers need to create a zero-emission supply chain to help fight climate change, Niese adds. Suppliers can have a huge impact, he says, noting the production of steel, aluminum, a plastic still creates emissions, making the net-zero target more difficult to reach. 

Niese says supply chains are essential in the fight against climate change and thus face continuous pressure to reform.