A review on green logistics

“Sustainable development implies meeting the needs of the present, without compromising the ability of future generations to meet theirs” (UN, 1987). Since the Industrial revolution, the world has seen a dramatic growth wherein technology has played a major role in the global economy. With the implementation of improved technology, industries turned capable to deliver products to their customers in large scale and in relatively reduced time. Also, this allowed industries to continually come up with new and improved production techniques and thus new products to appear in the market with lowered product lifecycle. Consequently, the time of acceptance of newer products by the customers has dramatically dropped with the advancement of technology over time as illustrated below in the figure. (Henriques, 2001)

 1

       Figure 1 : Rate of technology change and the shrinking time of acceptance. Adapted from (Henriques, 2001)

With such a trend in practice, the scale of production is extremely huge at the present day to meet the demand of the customers. Owing to such an increased demand, the use of raw materials has also increased proportionately. However, such a trend cannot continue forever because most of the raw materials being used to manufacture these goods and to supply them to the customers are exhaustible and cannot be replaced. “According to the Global Footprint Network, we currently are using 1.3 times the amount of resources available in the planet”(Taborga, 2010).

It is a well known fact that manufacturing industries play a major role in global warming. Due to the release of CO2 and other SOX/NOx at an overwhelming rate, the temperature of the earth’s atmosphere is on a rise. As a result, changing weather patterns, rising sea levels, changes in wildlife, etc. have been observed around the globe. If corrective action is ignored, an unfavourable condition for survival of ecosystem seems inevitable. In addition to above mentioned environmental issues, several other social and economic issues are also prevalent which constitute the triple bottom line that industries strive to keep a balance.

Hence, it is important not only for the industries but also for individuals to act responsibly to reduce such adverse impacts. It is required to spread awareness and together as one, work our way towards a sustainable and green world. One could add value in our pursuit towards sustainability of by finding ways to reduce their carbon footprint. “Carbon footprint is a measure of the exclusive total amount of CO2 emissions that is directly and indirectly caused by an activity or is accumulated over the life stages of a product.” (Wiedman & Minx, 2008). Given below illustrates an approximate breakdown of carbon footprint of UK households and it shows that the carbon footprint of an average household in the year 2011 was an overwhelming 20.7 tonnes of CO2.

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Figure 2: Carbon dioxide emissions associated with UK household consumption in 2001

Adapted from (Wiedman & Minx, 2008)

                Industries on the other hand need to focus on locating their unwanted energy usage and trying to minimize their carbon footprint, thus taking part in the utopian dream of a green earth. The intensity of globalization has also contributed to the pollution levels adversely in its supply chain. David Rich, an associate at the World Resources Institute says that many companies are agreeing to the fact that almost 90% of their carbon emissions are due to activities in their supply chain (Perkins, 2010).

Sustainability in Supply Chain

In this section, supply chain and importance of sustainability to be implemented into a supply chain are discussed. In essence, a supply chain has inputs which transform into outputs adding value to the supply chain. The design and management activities of a traditional supply chain had been focused keeping just the economic gain in mind. However, since Sustainability has become a prime concern, industries have constantly been working ways to decrease costs, minimize wastes, and increase productivity thus creating a supply chain that’s sustainable. The product life cycle approach that few industries have adapted seems like a sensible way to achieve sustainability. A product goes through four stages during its lifecycle which are pre-manufacture, manufacture, use and post-use stages. Such an approach highlights the importance of taking into considerations, all the above mentioned four stages (Seliger, et al., 2011). Also, an industry trying to implement sustainability needs to encourage its suppliers and consumers to have sustainability all through their activities and integrate them. A typical supply chain with an open loop material flow is illustrated here under in the figure. It can be derived that if more time and energy is spent during concept and design stages, there will be a possibility to reduce the input costs, resources and energy used in the supply chain thus reducing the adverse impacts accordingly. Raw material is extracted, transported to the manufacturing unit where in a finished product is developed which is again transported to retail stores for customer use. Once the product’s life cycle reaches its exit door, it is then transported to be disposed. In this process, huge amounts of material, energy, etc., are underutilized and ways to improve the utilization of a material and consequently improving the product life cycle is important.

(Ethans, et al., 2009) On the contrary, in a closed loop material flow, the disposal phase reconnects back to the raw material extraction phase. Such a process is termed as ‘remanufacturing’. In remanufacturing, a product once used, is subjected to industrial checks and any components of the product that are still ‘alive’ are reused in the making of a fresh product thus pushing pre-manufactured material into its manufacturing process. Xerox, a global document managing company founded in the US who have adapted remanufacturing and have gone a long way creating a sustainable infrastructure. They design, manufacture, sell and support printers, multifunction systems, photo copiers, digital production printing presses, etc. They have been recovering used equipment since the 1960s and have had success in maximizing profitability by using recovered equipment in remanufacturing operations.

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Green Logistics

Logistics involves acquiring incoming materials and distributing the finished products to their destined locations in desired time and in optimal quantities (Markley & Davis, 2007).  It can be noticed from the figure 3, that transportation plays an important part in a supply chain. Freight transportation involves emission of GHGs (Green House Gases) which affect the environment polluting the atmosphere. Also, such emissions mainly depend on the type of fuel used, diesel & fuel oil being one of the main fuel and a proportionately smaller amount of them using petrol (gasoline) as fuel. These fuels contain hydrogen and carbon in them. delete. In an ideal world, if the fuel undergoes complete combustion, hydrogen and carbon converts to water and CO2. However, complete combustion of fuel does not occur due to engine inefficiency, which gives way to toxic pollutants like carbon monoxide, hydrocarbons, nitrogen oxides, etc It is estimated that freight transportation, warehousing and goods handling account to approximately 10% to 11% of global CO2 emissions (Kahn & Kobayashi, 2007). The reason why CO2 has fallen under the environmental ‘spotlight’ is for the fact that CO2 accounts to about 85% of the GHGs in the atmosphere. (McKinnon, et al., 2010). Hence it is important to implement sustainability in logistics to avoid firms exploiting non renewable resources like fuel oil. In July 2008, the price of oil reached $147.30 per barrel increasing the transportation costs from 20% to 50% of total trans ocean shipping. This event enabled many firms to squeeze sustainability into their operations to reduce wastes. About 60% of operating costs of Xerox’s Canadian logistics operations were attributed to fuel consumption in 2006 (Dey, et al., 2011).

Sustainability in Shipping Industry

Shipping has been traditionally considered to be the most favorable and sustainable modes of transportation (Bode, et al., 2002). Since globalization has accelerated over time, the growth of shipping has increased at a fast pace. Shipping is relatively sustainable because of its low energy consumption per unit freight movement which has enabled firms to prefer ship liners to transport goods thus reducing logistic costs. However, with advantages come disadvantages too. Sulphur is considered to be the weak link of this industry. Ships burn very dirty ‘bunker fuel’ rich in sulphur content during the refining process. They also contribute to about 17% of the global nitrous oxide emissions. The table below shows collated information on energy consumption and sulphur content in fuels used for different modes of transportation (McKinnon, et al., 2010).

Table 1: Energy consumption and sulphur content statistics of different modes of transportation

S.No.

Mode of transport

CO2 emitted per metric tonne of freight per km of transportation (gms)

Energy consumption per unit movement (kW)

Sulphur content in respective fuels (ppm)

1

Shipping

10 – 40

0.02

27,000

2

Rail

30 – 150

0.067

400

3

Road

60 – 150

0.18

10-15

4

Air freight

500 – 950

2

<20

(McKinnon, et al., 2010) The implementation of sustainability in shipping practices has been at a considerably lower rate as it is argued that it has attracted less public attention as they usually operate away from land. However, according to International Council on Clean Transportation (ICCT), about three quarters of their toxic emissions are emitted within 400km of land areas thus affecting the coastal ecosystem (Kassel, 2008). This has forced the International Maritime Organization (IMO) to establish limits on global as well as zonal emission of sulphur and nitrogen related oxides and other GHGs. Regulations and standards such as Euro III, Euro IV, Marpol regulations, Kyoto Protocol, etc have been implemented. Since then, shipping firms have constantly been trying to head towards sustainability by increasing their carrying capacity, energy efficiency, etc. The carrying capacity overtime has increased from Ideal X carrying just a mere 58 TEUs during 1956 to Emma Maersk carrying 13,000 TEUs by 2008. Ships with larger carrying capacity being more stable require less ballast water and thus consuming less fuel. It is believed that ships nowadays carry ten times as many containers emitting just about a quarter of the CO2 as it did during the 1970s. NYK, a Japanese shipping line has released design for a ‘Super Eco Ship’ planned to be launched before 2030 and they claim that their latest design would offer a 69% reduction in the CO2 footprint per container. With a case study on Maersk Line below, initiatives undertaken, their pros n cons are discussed in detail and comparisons are made wherever necessary.

Maersk Line: A Case Study

‘Maersk, the shipping giant, launched their manifesto for change in June, 2011. Shipping has had many changes in its commercial life – shifting from sail to steam, from steam to oil, from individual loading to containerization. Maersk believe that it is now time for the next revolution – to sustainability.’ Companies don’t change the status quo when they are performing well. However, leading industries Maersk have changed their system for a better future reaping profits and addressing global concerns (Draper, 2011). With low end customers like Walmart, Ikea, etc demanding better sustainability in their supply chain, Maersk is put under pressure to ‘go green’ by decreasing their sulphur content in their bunker fuel, reducing GHGs and other such traditional pollutions (Draper, 2011).

‘Triple E’ is what Maersk have named their latest, technologically advanced, environmentally sound container vessel project which claims to reduce CO2 emissions by more than 50% per container. Energy efficiency, Economy of scale and Environment are the three factors that have influenced the design of the vessel and also explains why the vessel series is named as Triple E.

Brief History

On July 14, 1928, ‘Leise Maersk’, the first  cargo ship by Maersk launched its voyage from the American east cost via the Panama Canal to the far east and returned back. It was a project tie-up between Maersk and Ford who transported Ford car parts and other cargo. Mr.Maersk McKinney Møller after graduating eventually took over his father, Mr.A.P.Moller’s business after the latter expired. After the Second World War, they expanded their activities developing cargo and tanker vessels, establishing shipyards, etc. They built at one of their yards, the largest gantry at that point in time. During the 1960s, Maersk concentrated on expanding their oil, off-shore and retail activities. During the late 1970s, Maersk group invested DKK 2 billion in containers, vessels, terminals marking the biggest projects taken up by far (Anon., n.d.). During this period, ships were loaded and unloaded piece by piece, ports were chaotic and dangerous to operate, and material handling was of low quality. These unfavourable activities formed a bottleneck. Although the concept of containerization was in existence, it was not implemented due to complications until it was a success upon intensive research by Malcolm McLean, a trucker and industry outsider, who worked with Keith Tantlinger, an engineer to design standardized containers. It was during this period that Maersk adopted containerization; the first shipping firm to do so and their commitment and investment made containerization to be an efficient method of transporting goods. ‘Adrian Maersk’, the first container vessel made its first voyage from Port Newark, USA on September 5, 1975 (Draper, 2011). Since then, Maersk witnessed a tremendous growth making them now one of the biggest shipping industries around.

Road to Sustainability

Since Maersk has realised sustainability to be one of their driving forces to have a competitive edge, they have invested a lot to achieve their set targets. In this section, various initiatives undertaken by Maersk are discussed keeping the environment as the prime focus for analysis.

As already discussed, Maersk have had the privilege to be the first one to adapt containerisation which set as a benchmark for their competitors. John Kornerup Bank, Maersk’s lead advisor on climate and environment expressed his pleasure in Maersk being a member of Ocean Sustainability Group and stated their involvement in sustaining use of sea (Leach, 2011). Containers used in the shipping industry usually have their floors made of illegal uncertified tropical hardwood. Maersk have extended their commitment by ensuring that they would phase out the use of such wood and replace them with timber from suppliers using responsible forestry practices or other alternatives such as bamboo or recycled plastic (Barnard, 2011). With many end customers demanding CO2 footprint reduction in their supply chain, Maersk has taken a step ahead by becoming the first shipping line to receive independent verification of its CO2 emissions data for every vessel. This initiative is in collaboration with Lloyd’s register and Maersk include CO2 data in their scorecards which they provide it to their customers (Leach, 2011).

(Maersk, 2011) On the 27th June, 2011, Maersk came in terms with Shipbuilding & Marine Engineering Co., Ltd. to build the worlds largest and the most efficient container vessels by far. They call it the ‘Triple E’ with a capacity of 18,000 TEUs as opposed to their previous series, ‘Emma Maersk’ whose capacity is 15,000 TEUs, 16% less than that of ‘Triple E’ which is considered to be the biggest ship as of today. The ‘Triple E’ series claims to produce 20% less CO2 per container moved compared to Emma Maersk and 50% less than the rest on the Asia-Europe trade lane. It is also calculated to consume 35% less fuel per container compared to its 13,000 TEU competitors. These vessels are equipped with waste heat recovery system which would save up to 10% of the engine power. They would travel 184 kilometres using 1 kWh of energy per ton of cargo as opposed to a jumbo jet travels half a kilometre using the same amount of energy per ton of cargo.

(Maersk, 2011) Maersk have released their Sustainability reports in which they have described in great detail their achievements, current projects they are working on and their vision for a greener future. The table below which includes statistical data collated from the sustainability report 2011 shows clearly that Maersk have taken the road to sustainability which has given them a competitive edge over the other shipping lines with many suppliers preferring Maersk to reduce their direct and indirect CO2 footprint.

Table 2: Sustainable Performance Growth

S.No

Subject under Analysis

2007

2008

2009

2010

1

Fuel oil consumption (1,000 tonnes)

13,848

13,017

11,390

10,724

2

Diesel consumption (1,000 tonnes)

577

422

383

296

3

Direct CO2 emissions (1,000 tonnes)

50,296

46,555

40,766

37,700

4

Direct N2O emissions (1,000 tonnes of CO2 eq)

1,076

200

192

188

5

Sulphur oxide emissions (1,000 tonnes)

656

653

501

456

6

Profit for the year USD million

3,422

3,462

-1,024

5,018

Limitations & Improvements

It is understood that efficiency would increase proportionately with the carrying capacity of a vessel, the very reason why Maersk are building the ‘Triple E’. However, the infrastructure at most of the ports are not yet capable of accommodating such vessels with high draft limiting its trade to only three ports in Europe, one port in Egypt and four ports in Asia as of today who handle these mega-ships. Moreover, they can pass through the Suez Canal but not the Panama Canal (DiBenedtto, 2011). Also, improvements in sustainable performance of ‘Triple E’ series as claimed by Maersk remains to be seen.

Ports could invest in using advanced technology to upgrade their draft levels so that they would accommodate vessels of high capacities. This would enable trade between many more countries whose consequence will be the extended use of greener modes for transportation. Maersk should also consider encouraging the use of green methods. Mr.Hutienne, the Managing Director of the Port Authority at Hamburg revealed their plans to expand the facilities at the Burchardkai terminal, Hamburg to accommodate high capacity containers like the ‘Triple E’ (Anonymous, 2011).

NYK, the Japanese shipping liners have released a design for their ‘Super Eco Ship 2030’. It is said that by decreasing the weight of the hull and reducing water friction, the power required to propel the ship can be reduced. With the use of LNG-based fuel cells, solar cells, and wind power, the propulsion power can be increased leading to a CO2 footprint reduction by 69% per container carried (NYK, 2009). Maersk should consider using alternative sources of energy in their design like NYK as benchmark.

The figure below illustrates a mind map of Maersk and their plot for Sustainable development and Environmental protection.

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Figure 4: Mind map of Maersk’s Sustainable Growth

Conclusions

From the discussions on importance of sustainability in a supply chain with an environmental perspective and case study to analyze the methods used by Maersk to achieve their set goals gives a clear idea of what it takes to head towards an environmental stability and achieve one of the three bottomlines.

An old proverb says that the planet we live is not inherited from our ancestors but is borrowed from our children; it boils down to taking good care of what is already ours.

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