Green Logistics: reducing the environmental impact while increasing profit

The Covid-19 pandemic has made it clear, now more than ever, how much logistics is of pivotal importance in everyday life. And, together with the impressive growth of eCommerce and digital shopping, the past months have seen the rise of new challenges. Among these, there is the environmental one. The logistics sector is notoriously responsible for several environmental issues like air and noise pollution. In fact, as stated by the European Environment Agency, transport makes it to the podium of sectors with the highest shares of Greenhouse Gas emissions in Europe with an unflattering second place – preceded only by the Energy supply industry.

Hence, the challenge lies, at the same time, into reducing the environmental impact of goods transport and increasing the efficiency of supply chains to enable the delivery of services in the most eco-friendly way. This is what green logistics is set out to do.

What does green logistics mean?

Since heavy trucks appeared in the 1970s, the first concerns around the pollution caused by freight rose and grew. In the late 80s, the term “green” began to be used referring to the lack thereof in the transport industry. In particular, logistics was one of the main issues addressed by the World Commission on Environment and Development Report in 1987.

Despite this, green logistics has become truly notorious only later, in response to the growing attention to global warming and the higher contribution to CO2 emissions from the logistics sector.

The fundamental idea behind green logistics is to use advanced technology and equipment to operate in a sustainable trade-off that balances economic and environmental efficiency. This concept translates into flexible principles that can be applied to the company’s Operations. The 3 main pillars of green logistics are:

• Planning: make sure to enable a waste-free and optimized planning to maximize fleet utilization and minimize resources consumption. This can be done, for example, by minimizing the total route traveled and filling up trucks to avoid empty spaces;

• Impact tracking: set up a control tower to track the carbon footprint of the fleet in space and time. This helps understanding where the issues lie and allows for best-practice sharing across the network;

• Supporting technology: optimize physical logistics processes by providing a fit-for-purpose IT support.

Why pursuing a sustainable logistics?

First of all, the demand for sustainability is loud, clear and comes from several sources:

• Governments, which agreed to sustainability targets in the legally binding global climate change agreement, adopted at the Paris climate conference (COP21) in December 2015;

• Consumers, who are more and more aware of the need for businesses to reduce their carbon footprint and which are changing their purchasing behaviors favoring companies with a clear ESG strategy and roadmap;

• Employees, who are pressuring organizations to develop a sustainable production and an environmental-friendly supply chain.

In this context, logistics companies will have to re-think their processes and operating models in a sustainable perspective. What is often believed is that shifting to sustainable solutions bears only additional costs. However, thinking about sustainability as a negative impact on the company’s profit is far from true. In fact, the benefits of sustainability expand everywhere across the business, positively impacting both the top and bottom lines. Most notably, sustainability can be seen as:

• Cost-saving: having an optimized and efficient planning means reducing variable costs such as fuel and tolls, as well as helping with the drivers’ shortage and predictive maintenance schedule. Furthermore, the digitalization of processes through ad-hoc technology allows to reduce paper consumption, avoid errors, increase the collaboration across commercial, planning and traffic teams and, most importantly, significantly reduce the amount of time used for planning tasks – freeing up precious resources to grow your business;

• Revenue boost: optimized and digitalized Operations are a strategic competitive advantage against competitors. Therefore, increasing fleet utilization means having more resources available to serve more customers, thus expanding the business. Moreover, pursuing a green strategy improves the company’s reputation and brand image and it is quickly becoming a criteria of supplier selection together with price and quality of service.

Notwithstanding the undeniable benefits, indeed transforming a traditional logistics company into a truly “green” one is a step-by-step process and involves an investment in time and cost. Let us now see how a company can start embedding a sustainability strategy in all its processes.

The road to sustainability

There are many ways to become green. Our advice is to focus on one step at a time, starting from setting up an optimized planning process.

An optimal scheduling process allows to plan shipments by combining orders with the most efficient routing, minimizing the total number of kilometers traveled by the entire fleet every day. This also translates into reducing your fleet’s carbon footprint and, at the same time, reducing transportation costs.

However, manually optimizing planning is very complex and time-consuming, because it requires allocating drivers and trucks to orders with very different constraints (e.g., delivery windows, multiple destinations, required trucks type).

A logistics planning software is the best answer to this complex problem. In fact, Cargoful gives you exactly what you need: an automatic and intuitive planning and order-to-truck allocation, with the flexibility to tailor the planning algorithm to your and your client’s needs. By adopting this technology, you can save precious time and cut your emissions. In particular, with our technology, you can reduce your carbon footprint by 9% and lower the time spent in planning by more than 75%. Do you want to find out more about our solution? Visit our website and discover all Cargoful features.

Let’s go green: book a demo with us!