Do you want to reduce cost in your logistics operation? - Go Green!

More than 47.000 ships and over 3 million trucks around the world are responsible for moving and delivering happiness to millions of final customers. However this delivery traffic created a significant environmental problem due to the C02 footprint this movement has generated.

Transportation and courier companies are focusing their efforts in developing more environmentally-friendly logistics operations, as it is estimated that transport accounts for almost a quarter of all global produced C02.

Reducing the C02 footprint, has become a priority for some of the largest logistics operations in the world , such as Heineken, Wal-mart or L’Oreal.

This year, the transportation sector became the number one contributor of C02 emissionsin the United States, which raised a collective awareness over the B2B transportation industry.

The consensus is to tackle and calculate CO2 emissions by providing the necessary tools and partnerships to create cost-effective solutions for low-carbon road freight.

Solutions are required urgently as the logistics and transportation sector is responsible for about 32.1% of all C02 emissions in the US only, which is equal to almost 2,000 cubic metrics tons of carbon dioxide pumped out of transportation vehicles.

“There is no doubt that reducing emissions in line with global climate goals for in the US is a big challenge for much of transport as compared to electricity” – Environmental Leader

It is not only the eco-green logistics movement that has put pressure on fleet managers to change their strategies. Also the need to reduce the fuel consumption, even doe cost of fuel has been driven down within the last year by an international oil price crisis.

However, the rebound will most likely come across the coming years, and optimizing it before is a good idea, and may be of interest. Between 2002 to 2012 the cost of a tonne of CO2 emissions has increased by almost 80%.

Logistics and supply chain companies should look at this opportunity to optimize fuel consumption and improve fleet management efficiency as more than being eco-friendly or purely environmental reasons. It is a “must” for transportation companies to have the capability to track and analyze the fuel consumption and carbon emissions generated by vehicle and drivers. These emissions may be hidden costs currently or at best marked as associated costs, which makes it hard to review, manage and optimize.

As such, green logistics operations could generate a significant impact on cost reductions and improving profit margins. Existing technology proves to be cost-effective and efficient and it could save 624 million tons of CO2 by 2022 if adopted by freight fleets, according to BSR.

3 ways to reduce your C02 fleet emissions

So, how can you manage to reduce your C02 emissions by lowering your fleet fuel consumption?

1. Switch to low-carbon vehicles

The first thought you may have is “This is gonna be expensive” and is understandable as green technologies are still associated with higher costs. But, is this really the case?

The Environment Agency added almost 70 plug-in hybrid commercial vehicles to its fleet last year, and they described the decision as a "win-win" situation.

“They cost the same to buy as the diesel variant, they cost slightly less to run, and they have got a resale value that’s not too dissimilar based on what we know at the moment.” – Dale Eynon, Head of Fleet Services

In Europe alone, fleet managers could cut their fuel costs by almost 14% if they switch to low-carbon or hybrid commercial vehicles, which means to save around 53 million tonnes of C02 equivalent in emissions and roughly .

In the United States, fleet vehicles account for nearly one of every five new commercial cars purchased according to The Economic and Environmental Impacts of a Corporate Fleet Vehicle Purchase Program. As fleets have a faster vehicle turnover than regular companies and individuals, if logistics companies start refreshing their fleets with low-carbon vehicles, cleaner fleets can be a road reality in just a few years.

The vehicle rotation will also allow easier access to these models to private owners and smaller companies looking for a used model. The effect of adopting greener fleets could positively impact entire cities and populations and generate a snowball effect.

2. Fuel efficiency measures

The Think-tank CE Delft report states that there are several steps that any logistics and transportation manager should adopt to maximize their fuel efficiency.

– Purchasing smaller cars, or cars with higher fuel efficiency such as hybrids;

– Purchasing electric or semi-electric vehicles;

Purchasing electric or semi-electric vehicles; – Enacting cultural changes such as eco-driving and teleconferencing;

Enacting cultural changes such as eco-driving and teleconferencing; – Adjustments to HGVs such as tire retrofits or tweaks to increase aerodynamics;

3. Driver behavior and route optimization

Is known that for every gallon of fuel burned, 20 pounds of C02 is emitted. CE Delft report states Driver behavior has a direct relation to fuel efficiency, it can be improved by almost 20% just by a trained eco-driving staff.

Three important things drivers must have in the count to achieve operational efficiency on the road.

A. Understand best practice and geo-referencing

B. Check regularly the state of their car/truck

C. Setting goals and performance indicators

To complement the drivers work is important for logistics managers to provide their fleets with the necessary technology to improve their field work.

With today's GPS solutions or Fleet Management Software providers - As Beetrack - logistics managers can plan their delivery routes in advance, which is a useful resource, not only to optimize fuel usage, but also to prevent failed deliveries.

"When you have a fleet of thousands of vehicles, and you can save 1 or 2 percent of fuel or maintenance costs because of more efficient routing, it is big money at the end of the year." – Jean-Paul Rodriguez, Professor at Hofstra University

Some other facilities that this systems can monitor are; speeding and idle times, geofencing alerts notification and tracking of miles driven.

Besides what we have previously mentioned, transportation companies have other ways to reduce their carbon emissions as; align inbound and outbound shipments, optimized reverse logistics with fleet use, etc.

Important transportation companies, like UPS or General Mills, are taking the lead to set performance goals to reduce and calculate C02 emissions. Walmart, for example, has set a goal to double its fleet efficiency compared to 2005, and is 87 percent of the way to meeting this target. General Mills has cut its fuel consumption 22 percentcompared to 2005 levels.

Transportation and logistics companies have an important challenge ahead in order to reduce the sector’s impact on climate change and pollution in the cities. But is important to remark and realize the significant cost saving and efficiency gains that this measures can have in every company.