Provision gaps in green logistics
More than 23% of total global CO2 emissions are attributed to the logistics industry (UNFCCC, 2018), and such figures are expected to escalate due to increasing demands on transportation and warehousing practices in conjunction with growing world economies (ITF, 2017). Logistics service providers (LSPs) are under constant stakeholders’ pressure to minimise the environmental damage of their logistics practices, given their expertise in carrying out such practices, and due to their central and strategic positions amid supply chains (Bask et al., 2018; Colicchia et al., 2013).
A recent study (Jaizary & von Haartman, 2020)¹, on which this paper is based, identified three principal gaps in the Green Logistics Practices (GLPs), which the study revealed were not consistent from provider to provider nor dependent on the same factors that influenced them in each instance. Albeit there were patterns and, further, the Shippers and/or Logistics Service Providers (LSPs) were able to identify the differences and similarities and vary their marketing and purchasing strategies accordingly.
The study revealed six misalignment situations between shippers and LSPs when pursuing GLPs throughout the logistics purchasing process, being:
- Shippers place less importance on green issues than LSPs do.
- Shippers do not incorporate the green measures specified in their requests for proposal (RFPs) into their logistics contracts, despite frequent discussions about these measures between the two parties during negotiations.
- LSPs lack proactivity in offering green solutions in the negotiations beyond the ones specified in shippers’ RFPs.
- Shippers seldom follow up on the green measures that were previously agreed upon in the contract.
- LSPs tend to focus on cheap and easily implemented GLPs (operational “quick fixes”) rather than those associated with strategic long-term investments.
- The two parties lack consensus on their respective responsibilities for operationalising GLPs.
The study also made some other valuable observations too:
- Interactions and inter-relationships are variable.
- Some aspects are more easily implementable while others require substantial investment.
- There is a need to consider both pre and post contractual phases.
- The variations between buyers and sellers are referenced as “gaps”, which ideally should be closed. However, negative gaps equate to a service failure and positive gaps equate to over provision/"service overkill” (an indicator of wasted value).
- Packaging can constrain transport efficiency and intensify hazardous/non-hazardous waste across supply chains.
- 13% of the total supply chain emissions are associated with warehousing functions, according to the WEF.
- Internal misalignment was a major cause of the gaps referred to above.
- (Lack of) Desire to audit what is contracted.
- Risk/reward sharing in contracts is not always evenly balanced and can create downstream issues.
The GLP’s were assessed on the model and criteria shown in the following table:
|GLP||Description and examples|
|1. Green modal shifts||Shifting to a more environmentally friendly transport mode (e.g. from road to rail, intermodal platforms)|
|2. Green transport management||Increasing fill rates, consolidating shipments, optimising routes|
|3. Green logistics systems||Improving distribution networks, reducing haul length|
|4. Green vehicle technologies||Operating more efficient engines, engine stopping when stationary|
|5. Eco-driving||Driving techniques to decrease fuel consumption|
|6. Alternative fuels||Operating alternative fuel-powered vehicles (e.g. electric trucks, trucks powered by biofuels such as hydrotreated vegetable oil)|
|7. Environmental management systems (EMS)||Acquiring certificates such as ISO 14001, EMAS and ISO 5001|
|8. Choice partners||Selecting and evaluating suppliers based on their green performance|
|9. Emissions data||Calculating, reporting and analysing CO2 emissions|
|10. Green warehousing||Increasing energy efficiency of warehousing operations, supplying warehouse facilities with renewable energy|
|11. Green packaging||Packaging design, reduction, reuse and recycling for the environment|
In conclusion, the researchers summarised their findings as follows:
- Shippers gradually lose interest in the green demands that were specified in their RFPs with four GLPs. Namely: green vehicle technologies, alternative fuels, EMS and choice of partners. Shippers’ interest in these GLPs drops on both a phase-to-phase and an overall (“RFP execution”) basis. Among these GLPs, a strongly significant overall decrease is reported on green vehicle technologies and choice of partners. In contrast, shippers’ interest develops (post-contractually) only in green transport management and emissions data. Post-contractual emergent interest in these two GLPs is also found with LSPs, in addition to green vehicle technologies, eco-driving, choice of partners and green warehousing.
- Further, eco-driving techniques assist LSPs in reducing their costs through minimising fuel consumption and maximising fuel efficiency, which may explain why LSPs are keen on engaging in them despite shippers’ lack of interest. Equally, green transport management (although prioritised by shippers), it comprises increasing fill rates and optimising routes, two activities that not only lower CO2 emissions but also aid in minimising costs through increased utilisation of trucks, shortened travel distances and decreased number of trips. Finally, LSPs cannot achieve green transport management in isolation, as their ability to increase fill rates still depends on, for example, the quality and diversity of their shippers.
- Engagements in GLPs is reported as more significant at the later phases compared to the earlier ones. This is seen with five GLPs: green logisticssystems, green vehicle technologies, alternative fuels, emissions data, and green warehousing.
Prof. David L. Loseby MCIOB (Chartered CM), FAPM, FCMI, FCIPS Chartered, FRSA, MICW
¹ Jazairy, A. and Von Haartman, R., 2021. Measuring the gaps between shippers and logistics service providers on green logistics throughout the logistics purchasing process. International Journal of Physical Distribution & Logistics Management, 51(1), pp.25-47.
Bask, A., Rajahonka, M., Laari, S., Solakivi, T., Toyli, J. and Ojala, L. (2018), “Environmental sustainability in shipper-LSP relationships” , Journal of Cleaner Production, Vol. 172, pp. 2986-2998.
ITF (International Transport Forum) (2017), ITF Transport Outlook 2017, OECD Publishing, Paris, available at: https://www.itf-oecd.org/transport-outlook-2017
UNFCCC (United Nations Framework Convention on Climate Change) (2018).
WEF (World Economic Forum) (2009), Supply Chain Decarbonization: The Role of Logistics and Transport in Reducing Supply Chain Carbon Emissions, World Economic Forum, Geneva