With energy legislation tabled, sustainability efforts go forward
August 09, 2010 - LM Editorial
Now that the United States Senate has reached a stalemate of sorts regarding a national energy policy, the subsequent effects of this political stalemate from a transportation and logistics perspective remain to be seen, it seems.
On one hand, it is good that current oil and diesel prices are nowhere near the record highs seen two years ago. But at the same time, that does not mean that shippers and carriers are abandoning sustainability and “green” efforts—in an effort to save money and be more efficient either. In fact, it seems that the combination of stalled legislation, a slow economy and fairly modest energy prices may actually provide an opportunity for freight transportation stakeholders to get a true green-plan in place so they are prepared for the next spike in prices or whatever else the future may bring.
The legislation, introduced by Senators John Kerry and Joseph Lieberman in May, pledged to reduce greenhouse gas emissions by 17 percent compared to 2005 levels by 2020 and 83 percent by 2050, matching an objective put forth by the White House in 2009. And from a supply chain and freight transportation perspective, one of the bill’s most notable takeaways was a goal to decrease the United States dependence on foreign oil. Also included was a form of so-called “cap and trade” to control pollution by offering economic incentives in order to achieve reductions in emissions pollutants and put limits on emissions from motor vehicles, coal-fired plants, and factories.
With no closure coming anytime soon on the legislative front, what happens now when it comes to the business of “green logistics” remains to be seen.
“I am afraid that what is going to happen is because this legislation has stalled everyone will probably go back to business as usual and probably not do some of the things they should be doing when it comes to sustainability,” said Kevin Smith, president and CEO of Sustainable Supply Chain Consulting. “One thing we do not have in the supply chain industry is a unified lobbying process for these matters. So you have trucking and rail and other sectors with their own groups and associations, but there is no unified structure inside or outside of Washington, DC that is saying for the good of the economy in general there needs to be a structure or guidelines for things to do and to get a unified message across as opposed to being a bunch of special interest groups.”
And with no legislative mandates coming down anytime soon, Smith said shippers and carriers need to rely on a combination of common sense and lessons learned from the recession to be green-minded, whether it be improving efforts to maximize trailer space, run supply operations more leaner, leveraging Software-as-a-Service technologies to link systems together, and use less energy and fuel, and doing things that create economic benefit for a company.
From a shipper’s perspective, Ryan Boccelli, Director of Logistics at Stonyfield Farm Inc., said waiting for legislation to come into play is likely the wrong approach.
“If we are waiting to do that, then we are going to have carriers knocking on the door for a rate increase,” he said. “I don’t think that is the way to go, but unfortunately that may be the only way to have broad change.”
Boccelli said that Stonyfield is working with its carriers to “incentivize” them by seeing the actual performance of a carrier and potentially working with them through forms of gain- or cost-sharing. This could be by having a carrier update vehicles and then a shipper in return offering up more business and preferential lane treatment or subsidizing equipment purchases at a certain percent. Another thing Stonyfield has done to get greener was triple its rail volume in 2010 to reduce fuel savings.
When asked for advice for shippers that may be new to the sustainability movement, Boccelli said a good place to start is emissions measurement.
“With fuel you need to start somewhere and understand what you are measuring for emissions,” he said. “If you cannot understand that to begin with then it would not matter if diesel goes up, because you don’t know your starting emissions point for making improvements.”
While legislation remains in flux, one thing not to do when it concerns a company’s sustainability efforts is just waiting for something to occur, said Brittain Ladd, a global supply chain consultant for a leading consulting firm.
Without any type of confirmation as to what’s next in terms of potential climate legislation, many companies are sitting on the side lines waiting to see which way the political winds will blow and are trying to predict the future, noted Ladd.
“My advice is to stop wasting time trying to predict the future and instead implement strategies and innovations that will shape the future to the benefit of the company,” he said. “3PL’s should be conducting carbon footprint analysis for all of their customers and identifying strategies for reducing carbon emissions and costs.”
And shippers who have the internal capability to model their supply chains and capture their own carbon footprint can take a proactive approach to begin moving towards a low emission supply chain while at the same time collaborating with suppliers and customers to roll out carbon reduction strategies across the value chain, said Ladd.
“By inviting carriers across all modes to take part in such a transformation, shippers will be able to make strategic adjustments to their business models that will support the needs of their customers while at the same time allowing carriers a seat at the table to offer their guidance on ways to reduce transportation costs and emissions,” he said.