The jury is still out on whether or not the automotive logistics sector is really going to make carbon emissions a definable KPI ahead of government regulation. But as Maxine Elkin discovers, companies at least have plenty to talk about
We keep being told that carbon management will become a part of corporate supply chain strategy for major global companies, but in the absence of government legislation and customised guidance on how to measure and reduce carbon emissions, most of the work being done is by motivated individuals working within corporate constraints.
However, a recent report by the Carbon Disclosure Project revealed that 56% of its members expect to deselect some suppliers in future for failing to meet carbon management criteria set by those companies in the future. While automotive suppliers, such as Johnson Controls and Eaton Corporation, form part of that study, it is unclear whether a purely automotive poll would reveal such a high percentage. Nonetheless during the course of research for this report, many of you suggested that carbon reduction initiatives, or information gathering for carbon analysis, will become a standard part of logistics contracts.
One very good reason for this is that cutting carbon nearly always leads to cutting costs–always top of the agenda in this industry. Here we have canvassed the sector to learn about some of the new projects underway to address cutting supply chain emissions.
JCB’s Joannes Van Osta, general manager, group transport and logistics, reveals that in 2009 JCB introduced finished machine distribution by rail to Italy for its compact range. Beginning in 2009, the machines moved from JCB’s UK plant by truck to Belgium and were then sent by rail to Italy. By the end of 2009, JCB began transports by rail from the UK into Italy directly, reducing costs on the route by 20%, and carbon by 75%. JCB is now looking at combining inand outbound flows on rail for material coming from Italy.
According to Van Osta, JCB is also exploring the option of shipping to Scotland by rail. The company is challenging rail operators to design a rail wagon that can carry its mid-range finished machines, which represents 50% of its volume.
Together with its existing service provider, JCB is also looking into fitting twist locks onto its trailers that deliver finished machines to the ports, which would ideally allow the provider to pick-up full container loads on the return journey. “The biggest challenge is the repositioning of the empty containers since the UK is one of a few countries where we still see carrier’s haulage in the container trade,” says Van Osta.
“It is just at the design stage and we are exploring the waters there,” he adds. “The question will be if we can return that container locally at an inland depot, or can use that container again for outbound transport. It is not that straightforward, but we are looking at these options.”
He outlines the possibility of future business for providers able to help JCB develop more intermodal transport: “Those shipping lines showing more flexibility in looking at the total supply chain costs, and in allowing companies like JCB to deposit containers at inland depots, they might have some more business from us going forward.”
On a wider scale JCB is currently reviewing its inbound logistics completely by shifting to ex-works delivery terms. “One of the biggest challenges we will have is the optimisation of those trucks that are operational today: reducing empty mileage plus optimising the cube and load factors.”
The carbon reduction measurement in use now is based on the data that is being provided by the carriers. “No one so far has generally provided a clear model that is European or industry-wide accepted as the model to measure your carbon reduction initiatives,” Van Osta says (although there could be progress on this front by the ECG, as the next case study demonstrates, as well as by Damco).
JCB has just started to measure the emissions for its in- and outbound movements and Van Osta believes that the company will have to develop its own standard tool for calculating emissions. “What we have to discuss is what type of data do we want from our carriers?” he says. “We want to avoid the situation when everyone uses different standards and then comes up with a number and you are potentially not comparing apples to apples.”
The issue Van Osta raises is precisely the question on the minds of many carmakers and LSPs: how to calculate emissions should they become a standard part of contracts? The Association of European Vehicle Logistics (ECG) has taken one step toward answering that together with software specialist Vehnet. The two have partnered to develop a ‘Carbon Calculator’ that automates the measurement of CO2 per car/km for all vehicles moved in Europe. At the time of writing, the tool was about to be made available for approval by OEMs, and as such only limited details could be discussed. But there is already OEM interest.
In a jointly-prepared statement, the ECG and Vehnet revealed that the carbon calculator would be integrated into manufacturers’ contracts where it could help identify high CO2 areas of operation and start the process of developing strategies for reducing levels. Benefits for both logistics providers and OEMs would include a reduction in administrative costs, as such measurement would otherwise have to be extracted and calculated each month.
With this calculator, logistics service providers would only have to submit one set of data from their transport management systems. The software will be free to ECG members, and available on “reasonable terms” for nonmembers.
Both Vehnet and the ECG also stress the political dimensions for the automotive industry in adapting this initiative. In particular, it is an area that will play well with the powers that be in the European Commission. “The industry is therefore now able to demonstrate in a practical way to the European Commission that it does not need legislation to become a more responsible citizen,” write the companies in their statement.
Vehnet and the ECG aren’t the only ones learning carbon maths. Last year Tata and Wallenius Wilhelmsen Logistics did an intense pilot study of the carbon cost of vehicle transport on one of Tata’s outbound routes from India to South Africa. Prakash Shende, head of supply chain international business at Tata says: “We realised that we needed to look at the impact of global warming in the supply chain. Our research indicates that sales of vehicles will grow to 80m units globally–what sort of impact is this going to have on the environment?”
The project looked at the emissions from the Pune manufacturing site through the port of Mumbai and the port of Durban and finally on to the dealer network. According to WWL’s Nils Lie, VP business development, SCM, carbon emissions were introduced as the fourth factor in network analysis alongside time, cost and quality.
WWL put two people on the ground to gather the information required to calculate the carbon emissions. They measured distances, idling and turnaround times, as well as how much travelling on ‘own wheels’ was being done. “This was not based on high level calculators, but actual emissions,” reveals Melanie Moore, WWLs global head of environment and quality.
“For each activity we took the time taken to drive point to point, distance, fuel consumption, active and passive load times,” says Lie.
The team identified cost and carbon saving factors such as using more aerodynamic trucks, and the benefits of putting less fuel in the tanks of the vehicles being transported. The research highlighted that improved scheduling for shipping would reduce the length of time cars needed to be stored at the port of Mumbai, reducing storage costs as well as the risk of damage from extra handling.
The project team noted that a switch to rail from Durban to the major markets of Johannesburg and Cape Town would provide a huge reduction in carbon impact and costs. “We are in the process of implementing one of the short-term improvements–reducing fuel filling–and are investigating other potential implementations,” says Tata Motors’ S. Ravishankar, a member of the project Steering Committee.
WWL invested significant time and resources in the project and plans to use the findings as the basis for wider supply chain optimisations. Melanie Moore says, “The value in projects like this is that a good one-off study sets you up with a baseline for things you need to tackle. It is part of building our expertise and a critical element of assessing the carbon impact of operations is setting up the right systems to collect the data. Then you can form optimisation models.”
Nils Lie adds the WWL is currently setting up two further studies for automotive OEMs to do this type of analysis.
In 2009 BLG Logistics’ managing board established a “Green Logistics” project, supported by the Federal German government, to coordinate the company’s efforts to cut carbon emissions and waste in the supply chain.
The company has recently built a wood-chip heat generation plant in Bremerhaven used to heat the gatehouse as well as BLG’s technical services buildings. But green activities extend deeper into transport and handling. “Our next project is to get electric-mobility in the seaport,” says a BLG spokeswoman.
The company is examining the possibility of using zero emission, electric cars for the terminal operation and the development of a prototype of a charging station in the seaport.
“Together with the shipping lines and our port management company, Bremenports, we are working on a project to substitute the power supply to vessels by their own engines to a power supply from the shore side,” says Wolfgang Stöver, BLG’s director of sales and marketing.
The company already operates seven barges on the rivers Rhine (five) and Danube (two), transporting, for example, Ford cars from Cologne to the port of Flushing or Suzuki cars from Esztergom to its Bavarian Terminal in Kelheim. On the rail side, BLG has a fleet of more than 300 railcars and is investing in a further 1,000 before 2014. The company is working on a project to replace truck transport with rail on long-distance routes such as Romania to Germany with Renault’s Dacia cars.
Focal Earth has undertaken to reduce empty rail running for carmakers. Given that the return run from a delivery of finished vehicles is effectively included in the one-way price for OEMs, Focal has developed a solution that will save major inbound logistics costs and cut carbon emissions by transferring inbound freight from road to rail. As there is no appropriate means of loading empty outbound finished vehicle rail wagons, trains return to the automotive manufacturing plants empty, 24 wagons at a time. Focal designed and patented an appropriate ‘BackHaul Trolley’ which can be loaded with engines, transmissions and other inbound components on the return (inbound) journey. Rod Hilditch, founder of Focal says: “It was designed initially for a solution for Jaguar Land Rover when they were owned by Ford Europe and the ‘back-haul’ solution is now being exported to India.”
The trolley system uses the design of the double-deck wagons and their equipment for the export of new cars to secure the trolley.
Since 2008 Ford of Europe’s river and sea mileage made up 64% of overall finished vehicle transport movements, a significant decline in road truck use. For inbound, Ford ships thousands of tonnes of components via river and sea transport. Ford is also using road-going trailers that can be lifted physically on and off suitably designed rail wagons. Examples of this include shipments from suppliers in Italy to Ford’s Genk plant in Belgium. For more on Ford Europe’s carbon cutting see the Automotive Logistics Europe report from Bonn on page 10.
Damco’s SupplyChain CarbonCheck (SCCC) product, developed with MIT, provides detailed data to help shippers get visibility to their global supply chain carbon emissions, reduce CO2 and increase efficiencies. SCCC analyses global supply chains to determine the carbon footprint for the various supply chain legs. Alternative supply chain configurations, with estimated carbon footprints for each, are compared to a company’s current footprint. The comparison reveals carbon emission reduction potentials and supply chain cost saving opportunities.
Filippo Rizzi Ariani of Grimaldi Lines’ commercial department believes that the shipping line’s Valencia- Salerno sea leg can be defined as a “low-carbon route”. A comparison between the Valencia-Salerno service and the road alternative shows that transporting 3,000 cars by vessels along the 1,315km of the sea leg would produce about 17.71 CO2 g/car. If these cars were moved by truck, along the 1,937kms of roads between Valencia and Salerno, the emissions would be about 137.50 CO2 g/car.
IFS has launched an integrated Eco-footprint Management tool as part of an applications suite to help businesses meet impending environmental regulations. Users will be able to configure IFS Applications to capture environmental impact information, and be able to track the impact of a broad spectrum of activities ranging from raw material sourcing to product design to logistics and emissions.
Two years ago Kuehne+Nagel launched a series of initiatives to reduce carbon in the supply chain with the Global Facility Carbon Calculator and the K+N Energy Reduction Programme. The results have been assembled and some of K+N’s automotive customers have seen significant carbon (and cost) savings as a result. In North America, following actions to reduce electricity consumption for Pirelli Tires, the company reduced the carbon emissions from 244.5 tonnes in 2008, to 187.1 in 2009.
Roberts Europe achieved a relative reduction of 5.1% in CO2 emission of its Europe-wide premium freight driven kilometres during 2009 through a combination of analysis, network and load optimisation and using modern transporters. The company achieved this through the efficient use of freight capacity, by decreasing empty mileage (thanks to an advanced dispatch planning and scheduling system) and the energy-saving qualities of the vehicles used.
A new Teardrop trailer design has recently been unveiled by DHL Supply Chain and is now in operation between the Netherlands and Germany. The new trailer is expected to save up to 10% in fuel thanks to its innovative design and compliance with European legislation.
Alongside more traditional carbon cutting initiatives such as network redesign, Ryder has been teaching drivers green techniques, including how to reduce idle time and set a reasonable maximum speed. Ryder also participates in the EPA’s Smartway transport program, which issues green guidelines for transport and vehicle specifications.
Penske’s focus is on helping customers reduce environmental impact via dynamic routing and fuel management technology–an approach it says saved one US customer several hundred thousand dollars. Other projects include: flexible asset management, commingling of freight shipments to reduce less-than-truck load shipments and managing driver behaviours.
K-Line is running its container services on the basis of “slow steaming” and is exploring so-called “extremely slow steaming”, which reduces a vessel’s speed 50% to just 12-13 knots. The daily fuel consumption would go down to 10% compared with full steam, a reduction of 90% consumption. This is the gross saving, however, since to maintain the annual shipping (and earning) capacity more ships have to be employed in the given service.
