Its crucial role in the global supply chain is unquestioned, but freight transportation is also one of the largest contributors to greenhouse gas emissions.
The commercial transportation sector — which includes trucks, planes, ships and trains — currently makes up about 15% of annual global greenhouse gas emissions, according to the Environmental Protection Agency.
Supply chain experts said the transportation sector could soon be the largest contributor to global greenhouse gases. That’s especially true for trucks, which produce 65% of freight’s emissions.
“Growing economies in Asia, Africa and Latin America are expected to triple global demand for freight by 2050, which will double freight’s greenhouse gas emissions,” wrote Suzanne Greene, program manager of the Massachusetts Institute of Technology’s Sustainable Supply Chains Initiative, on an MIT climate website. “If we continue with business as usual, freight will become the highest emitting sector by 2050.”
More and more companies involved in the global supply chain are becoming aware of the carbon cost of shipping goods, but many struggle with knowing what to do, said Jackelyne Hernandez, a logistics and supply chain professional who has worked for Hub Group, J.B. Hunt and Transportation Insight.
“I had a lot of companies and clients who have reached out and said, ‘Our company wants us to start being sustainable, but we have no idea where to start,’” Hernandez told FreightWaves. “These companies were being tasked with being sustainable and reducing their carbon footprint by as much as 30% in 10 years, but they weren’t really given instructions on how to specifically do that within the logistics/transportation portion of their divisions.”
Hernandez recommendations for logistics companies include using carriers certified in the Environmental Protection Agency’s SmartWay Transportation Partnership; converting truckload or less-than-truckload freight to intermodal; and employing multi-stop truckload shipping strategies, which can reduce the number of trucks on the road
“If we have a crystal ball, we know that one of the things that will be happening in the future is you’re going to have to be more sustainable,” Hernandez said. “We see that with electric trucks, with B Corp companies, and just the way that Gen Z and millennials are very invested in knowing that the companies that they’re buying products from are also good companies,” Hernandez said.
Some companies in the transportation and logistics sector are already meeting those challenges and rising to the task of cutting carbon emissions. From reducing packaging waste to eliminating empty transport miles, here are three companies seeking to pave the way to more sustainable supply chains.
Alpha Augmented Services
While many shippers and carriers are struggling to decarbonize their services, Alpha Augmented Services is using a new AI-based approach focused on boosting profit margins while reducing waste.
The Switzerland-based startup was co-founded in 2022 by CEO Massimo Rossetti, along with Chief Administrative Officer Joachim Paech.
Alpha’s solutions include OptiInsight, which uses available client data to pinpoint supply chain inefficiencies and quantify their financial and environmental impacts.
After a shipper’s supply chain inefficiencies are identified, Alpha implements solutions such as OptiShip, OptiPack and OptiOrder.
“These tools simulate millions of shipment configurations, considering all client requirements and constraints,” Rosetti said. “Powered by advanced algorithms and AI, they ensure each shipment is optimized to use all available space as early as possible — before packing by a supplier or even at an internal warehouse.”
Alpha can also monitor a shipper’s carbon footprint using OptiFootprint, which tracks the carbon footprint reduction of each optimized shipment, providing before and after emissions data.
Rosetti said AI can help create a more efficient global supply chain while reducing shipping costs.
“AI can handle vast amounts of data and complex calculations quickly, optimizing shipments in a fraction of the time it would take a human expert, “Rosetti said. “AI can be deployed consistently across all levels of the supply chain, ensuring uniformity and efficiency that human efforts alone cannot achieve. This scalability allows companies to apply best practices across their entire operation, regardless of location or volume.”
Rossetti has worked in the global logistics industry for about 20 years.
“I started my career in logistics over two decades ago right on the warehouse floor, gaining firsthand experience of the fast-paced world of freight forwarding,” Rosetti said. “My career took a significant turn when I joined Agility Logistics. I transitioned into operational roles and was driven by a desire to develop innovative solutions to address client challenges.”
The idea for Alpha Augmented Services came to Rosetti after a chance meeting with Paech in 2020.
“We decided to create such a comprehensive solution. We envisioned a platform that would identify and quantify improvements, implement changes, and monitor progress, all in a streamlined, digital format,” Rossetti said. “Our goal is to empower today’s logistics leaders with the tools they need to drive efficiency, reduce costs and minimize their carbon footprint, creating a more sustainable future for the industry.”
Related: Eternity Group Mexico unveils tool for shippers to monitor carbon footprint
CHEP
CHEP (Commonwealth Handling Equipment Pool) has been a longtime innovator with its pallet, crates and container pooling services for the global supply chain.
The company was founded in 1945 by the Australian government after the U.S. Army left behind millions of blue pallets at the military bases they used during World War II.
Today, CHEP owns approximately 353 million pallets, crates and blue containers through a network of more than 750 service centers. As part of the Brambles Group, CHEP operates in 60 countries with its largest operations in North America and Western Europe. The company employs 11,500 people.
In 2019, CHEP launched Zero Waste World, an initiative aimed at working with other firms to improve operational efficiency, reduce costs and meet sustainability goals.
“At the heart of Zero Waste World is the idea that many organizations share similar sustainability goals, and together we can accelerate our progress toward achieving them,” Angielina Packard, senior manager of Zero Waste World for CHEP North America, told FreightWaves. “The program brings together distributors, manufacturers and retailers across the supply network to eliminate waste, reduce empty transport miles and eliminate inefficiencies.”
Packard said companies that engage with the program can benefit from the knowledge sharing and collaboration to help realize both environmental and financial savings.
“One recent example of CHEP helping its customers eliminate waste involved connecting a retailer that generates single-use plastic wrap waste with a company that could help upcycle this waste into regenerative products,” Packard said. “Another example — we helped North American customers eliminate 3.5 million empty miles from their networks (averting 11.7 million pounds of CO2) during our 2023 fiscal year, through a variety of transportation collaboration initiatives.”
Zero Waste World also can help create a circular economy, a system in which materials never become waste and nature can be regenerated.
“CHEP’s circular business model, which shares, repairs and reuses assets across the global supply network, is inherently more sustainable than single-use alternatives,” Packard said. “The Zero Waste World program takes this a step further by using our network density and end-to-end supply chain visibility to identify additional opportunities to reduce waste in our customers’ supply networks.”
For companies that want to reduce their supply chain footprint, Packard recommended identifying the largest areas of opportunity and setting realistic goals.
“The most ambitious goals take patience, perseverance and partnership to achieve. This means that it’s healthy to have a balance of short-term, easier goals that generate immediate impact with lofty long-term targets,” Packard said. “Organizations should seek the right partners to support their sustainability journey by finding a collaborator with shared goals and values, including reporting integrity and transparency.”
ReturnBear
Former Shopify executive Sylvia Ng saw an opportunity to leverage her experience in e-commerce to solve one of the industry’s biggest challenges: the $800 billion worth of goods returned every year across North America, most of which end up in landfills.
Ng is CEO of Toronto-based ReturnBear, a cross-border reverse logistics platform with a mission to make e-commerce returns simpler for shippers and customers, while reducing fraud and landfill waste.
Ng said she became interested in ReturnBear after working at Shopify and seeing the complexities involved in the cross-border returns process.
“When I was at Shopify, I started running against this returns problem and decided after I left to work at ReturnBear and do something about the returns problem from an environmental perspective,” Ng told FreightWaves.
Consumers returned more than $816 billion worth of retail merchandise purchased in 2022, according to a report by the National Retail Federation and Appriss Retail. Optoro, a firm specializing in sustainable returns and resales, estimates that returned inventory creates 5.8 billion pounds of landfill waste each year, and the shipping of returns emits 35 billion pounds (16 million metric tons) of carbon dioxide annually.
“I think a lot of people say, ‘We should just buy less. If we don’t consume, then we don’t have a return problem,’” Ng said. “I feel like things that have to work for the environment also have to work for human behavior. I think with humans, it’s so much harder to tell us not to consume than to use the technology that we have just to fix the problems behind this.”
ReturnBear was founded in 2021. The platform gives shippers access to more than 1,000 package-free, label-free return drop-off locations across Canada, as well as regional mail-in returns hubs. Its end-to-end reverse logistics network aims to create both convenience for consumers and increased profitability for brands.
“There’s no single bullet to solve returns. The part that ReturnBear is focused on is actually cross-border returns,” Ng said. “When we buy online, we don’t really look at where these products are coming from, and then when we return them, obviously, we also don’t think about where it needs to go back to.”
Ng said two trends are driving return rates to be so high for brands right now.
“One trend is bracket buying or bracketing. The younger you are, the more you do this. It’s become a trend, where you buy multiple sizes of the same thing, knowing that you’ll only select one out of the eight items and return everything else,” Ng said. “The other one is the try before you buy option, as a promise and a trend. Amazon is feeding into that trend, because they’re allowing a lot of the U.S. consumers to try things before they decide to actually pay for it.”
Related: Texas company aims to help keep returns out of landfills
Ng said those two things are driving return rates to an all-time high.
“A lot of the retailers that we work with at ReturnBear are experiencing 25%, if not 30% return rate costs. It’s a huge hit to their bottom line,” Ng said. “On the cross-border side, if you are a retailer based in the U.S. and you traditionally have your base there, you have a logistics presence there, it’s easy for you to optimize returns domestically. But it’s a lot harder internationally where you might not have boots on the ground, you might not have physical hubs or warehouses.”
Ng said ReturnBear offers a network of drop-off locations and hubs in local markets, which helps retailers offer faster refunds to consumers.
“Then we also consolidate shipments back to the centralized brands warehouses. Then thinking ahead, we can even process returns locally and then forward fulfillment to the local customers in the local markets, so that we actually cut out the shipping that is needed back to the U.S. completely,” Ng said. “That’s really where all the savings come in in terms of reducing the return costs and also the environmental piece because now we’re actually taking emissions directly out by reducing the shipping needed to go back for returns.”
ReturnBear is reducing the cost of returns by around 40% for the brands, Ng said.
Creating a sustainable supply chain and reducing waste is important to her as the mother of young children, Ng said.
“I remember going to the Cayman Islands 20 years ago and loving snorkeling there. The fish were everywhere. It was so nice,” Ng said. “But now it’s sad. The coral reefs just aren’t the same. It was hard to find fish. There is the Starfish Point in the Caymans that barely has any starfish anymore. You see things like that and you just feel like we do have to do something.”