Doing well and doing good: Sustainability and profitability go hand in hand

Sustainability has become one of the hottest topics across the logistics industry. Companies are taking a variety of approaches to cleaning up their supply chains — from purchasing electric trucks and investing in automation to reimagining packaging and paperwork processes. In addition to more specific eco-conscious changes, many companies are helping the planet by simply making their operations more efficient, therefore cutting down on waste and empty miles.

The push for greener transportation could not have come at a more urgent time. Scientists and government leaders across the world are pushing corporations across industries to clean up their acts in order to combat an ongoing climate crisis.

The U.S. is one of the largest carbon emitters in the world, and the movement of vehicles is the No. 1 source of those emissions. Freight trucks are responsible for about 23% of overall transportation in America, making these diesel-burning vehicles responsible for a whole lot of ozone-threatening emissions. 

Companies aren’t just facing pressure from lawmakers; consumers are becoming more aware of both the urgency of climate change and the complexities of the supply chain as well. Companies should be prepared for consumers to start calculating supply chain sustainability into their purchasing decisions.

“As the awareness around sustainability continues to grow, you’ll see more and more shippers give preferential treatment to carriers and capacity providers that are making an effort to reduce  their carbon footprint,” Derek Doddridge, Emerge’s Vice President of Enterprise Sales, said. 

Shippers have the opportunity to vet transportation partners during the procurement process. They can gather information and credentials about the capacity providers — including the age of the fleet and whether or not it is SmartWay certified — that intend to bid their freight, allowing them to gain a better understanding of how dedicated a carrier is to making environmentally responsible choices. 

Shippers already consider factors such as key performance indicators and billing terms when deciding which partners to award their freight. The same line of thinking could be used to ensure more of the shipper’s freight is moved by capacity providers with similar environmental values. 

“One surefire, low-cost solution to sustainability is treating their network in a more dynamic fashion. Traditionally most shippers look to have 90-95% of their freight under contract,” Doddridge said. “In a ‘normal’ market, that makes sense due to the ability for capacity providers to build density on that awarded freight. However, in today’s volatile market, there is too much route guide deterioration, which leads to using backup options that aren’t cost effective.”  

Often, solutions that are not cost -effective are also not environmentally friendly. The same things that drive up costs — empty miles, fuel surcharges and generally inefficiencies — also take a toll on the planet. Getting smart about spot procurement can have a serious environmental ripple effect.

Using a procurement platform like Emerge, a shipper can access real-time load options from available capacity providers and compare them to its route guide. This allows more cost-conscious options with a “truck in hand.” Ideally, these options are near the load’s origin point, leading to fewer empty miles and lower carbon emissions.

Overall, there has been such a shift toward technology within the logistics industry in the past decade that will continue to help companies become more efficient and sustainable in all areas of operation.

“It could be capacity providers moving toward more fuel-efficient/electric trucks, using visibility platforms to help with real-time tracking or using procurement platforms like Emerge to use scenario modeling during procurement events to give more freight to those capacity providers that are more focused on sustainability,” Doddridge said. 

As time marches on, this combination of emerging solutions will lead to significantly fewer empty miles on the road, simultaneously helping decrease the industry’s carbon footprint and increase each player’s profitability.

Source: freightwaves - Doing well and doing good: Sustainability and profitability go hand in hand
Editor: Ashley Coker, Associate Editor