Sustainable LCL
With an abundance of cargo handling equipment, port operations stand out as the biggest carbon emitters in the maritime industry. One can draw similarities, although on a smaller scale, about the hubs of non-vessel-operating common carriers with their parking lots full of trucks and containers and forklifts wheeling around less-than-containerload shipments in their warehouses.
Many large NVOs realize this and have started scrutinizing their LCL operations to make them more sustainable, or in other words less carbon-emitting.
Deutsche Post, along with its DHL subsidiary, has committed to a goal of improving carbon efficiency 30 percent by 2020 (baseline 2007). To this end, DHL has implemented several initiatives under 'GoGreen,' one of three corporate social responsibility pillars. Under this pillar, DHL has a large staff working on environmental matters in all areas of the company.
'LCL is an important part of this due to the fact that it enables a more flexible shipping pattern, better consolidation and overall utilization of capacity,' said Marc Meier, senior vice president and head of global LCL services at DHL Global Forwarding. 'DHL has a responsibility to its customers to continuously improve its services, and by introducing them into our customers' supply chains has a tremendous effect on ocean freight carbon efficiency.'
In 2009, Panalpina launched a similar comprehensive carbon reduction program, 'PanGreen.' Last year the Swiss freight forwarder developed a tool that calculates carbon emissions from cargo transported by air, sea and over the road. While not broken down between LCL and full containerloads, the tool is linked to Panalpina's database, where information on each shipment regarding its origin, destination, weight and mode of transport is consolidated and centrally stored.
'The output is a concise report that shows Panalpina's customers on a quarterly basis their total CO2 emissions by mode of transport, KPIs (key performance indicators) for the overall CO2 efficiency, statistics on total tonnage and transport performance, and analyses of the top 10 trade lanes utilized,' said Lindsay Zingg, the company's corporate business sustainability and improvement manager. 'Panalpina's customers may use this tool for their own carbon reporting requirements and also to identify opportunities where they can reduce carbon emissions.'
PanGreen's rollout consists of three phases. The first phase was obtaining ISO 14011 certification in 2009. 'We are currently in phase two, which is about establishing transparency,' Zingg said. 'We are giving our customers the data they need for informed decision making. Providing additional specific LCL data is an option Panalpina is looking into.'
For the third phase of PanGreen, Panalpina will make specific recommendations for the reduction of carbon emissions. Zingg said the recommendations will take into account the results of an upcoming PanGreen survey of the forwarder's top 100 customers.
'The key to managing carbon emissions is measurement,' Meier said. 'DHL has developed a certified and audited way of measuring and reporting CO2 emissions, be it for LCL, FCL or any other service. We are applying extremely granular data as well as audited rules in calculating our own and our customers' carbon footprints.
'This process is automated as far as possible, and our customers can choose the service level they need in terms of the period within or channel through which they receive our reports (a simple report or on an 'interactive dashboard'). It's also possible for customers to offset emissions through DHL at a reasonable rate and quality,' he said.
Whether they realize it or not, NVOs have been ahead of the carbon reduction effort long before it became fashionable in the transportation industry via their quest to offer LCL shippers as many direct services as possible to speed up transits and avoid additional handling at hubs.
For example, Panalpina's Buyers Consolidation Services are primarily designed to reduce total logistics costs, but have contributed to carbon reductions.
'Consolidating LCL shipments from various suppliers for a single customer in an FCL delivered directly to the premises of the customer by Panalpina eliminates the LCL deconsolidation process and results in less shipment handling and ultimately less carbon emissions,' Zingg said.
'In respect to cost and CO2 emissions, it is therefore desirable to break away from multinational gateway scenarios and increase the share of direct/bilateral services within our network,' DHL's Meier explained. 'This is a major lever for CO2 savings in our LCL network. Of course, it still remains necessary to connect various large feeder networks with multinational gateways to guarantee service flexibility and the best customer service options.'
DHL has also concentrated on carbon emission reductions for inland transport to final destinations.
'We opened a multinational gateway in Koper, Slovenia, last year to have a better service connection to Eastern European countries,' Meier said. 'In this case the CO2 reduction is around 40 percent, as LCL cargo to Eastern Europe reaches Koper directly on large mother vessels instead of being routed via European main ports such as Hamburg or Rotterdam. The route via Koper is approximately 2,000 nautical miles shorter than via Hamburg.'
Meier further highlighted the 'green' benefits of DHL's multicountry consolidation feeder network. If a single shipper, let's say in Europe, sources its cargo from suppliers across different countries in Asia, DHL can consolidate the shipper's cargo through its feeder network into an FCL shipment.
'This helps preempt a situation where each shipment is shipped as a single LCL load from pickup to destination with multiple points of handling the cargo physically as well as indirect routings,' he said. 'In doing so, we save approximately 30 percent of CO2 emissions depending on the specific scenario in addition to overall cost reduction for the customer.
'We are also making great efforts in the area of supplier management to actively and effectively reduce our carbon footprint,' Meier added. 'Suppliers range from shipping lines and truckers to other inland transportation providers and container freight stations.'
With its Eco-Transport and Eco-Consumption programs, Panalpina emphasizes its commitment to helping customers find ways to minimize the impact of their shipments and the forwarder's own environmental footprint. In the coming years, these programs will be extended to include Panalpina's primary subcontractors across the supply chain, Zingg said. ' Chris Gillis