Green logistics: supply chains facing a revolution

Electric trucks raise questions

But some companies – without waiting for EU or national sanctions – have already started on their own initiative to subscribe to the sustainability trend. The aforementioned KRONE, for example, is working on a trailer project that will get better aerodynamics on the one hand and its own electric drive with a connected battery on the other. This will reduce the whole set’s carbon emissions by 40-60%. All major truck manufacturers are also now fitting electric tractors, although these are still exceptions in large fleets, because until recently the doctrine was that the environmentally friendly drive was the LPG one.

On the other hand – despite current trends – CEOs and supply chain managers are still sceptical about the changes proposed by the European Commission. (Actually, these are no longer proposals: the EU’s Fit for 55 package envisages a 55% reduction in greenhouse gas emissions in vans and trucks in eight years’ time, with EU countries achieving climate neutrality by 2050).

– Green solutions for heavy transport are far from being put into practice. Electric trucks are still in the testing phase, while the real alternative, gas-powered trucks, have become unprofitable as a result of the gigantic increases in gas prices, explains Arūnas Strazdas, director of logistics and infrastructure at Linas Agro, the largest supplier of agricultural products in Lithuania. And it is hard to disagree with him. The rapid transition to alternative energy sources (batteries and hydrogen) will create enormous infrastructure and financial challenges for all European economies – not just those “working their way up”. One example is the issue of putting thousands of chargers on European parking spaces. After all, they need to recharge the batteries in the tractor-trailer drive quickly (1-2 hours) to make room for the next drivers and not waste time with unnecessary stops. However, it seems that the path for change has already been set and the European Commission will not back down from an energy revolution.

The last mile, to begin with

All the more so as the figures are drastic. According to the EU Council, transport – including road transport – generates nearly 25% of our continent’s greenhouse gas emissions. And the volume of freight being transported continues to grow: it is estimated that by 2050, this figure will have tripled and in the world’s 100 largest cities, harmful emissions generated by commercial vehicles alone will have increased by more than 30%. A particular challenge, therefore, appears to be the so-called “last mile logistics” (from the warehouse to the customer), which, in view of the surge in e-commerce, generates not only the greatest costs, but also the lion’s share of greenhouse gas emissions.

The international logistics operator No Limit, for example, is well aware of this and it is precisely at the last mile stage that it is making the most important changes leading to lower emissions of carbon dioxide and other environmentally damaging compounds. – It is first necessary to consider which section of the supply chain is to be zero-emission; after all, it is not possible to make all the changes at once. We have opted for the smart city concept – says Maciej Rybak, Director of Sales and Customer Relations at No Limit (excerpt from a discussion on green logistics at the Rzeczpospolita daily newspaper conference in Warsaw). The company has already been investing in environmentally friendly means of transport and making low-emission deliveries to IKEA customers since 2015. In the first half of 2022, for example, it made 35% of home deliveries by electric cars in Warsaw and 15% in Poznań. The company’s management makes no secret of the fact that the inspiration for the subsequent changes came from the cooperation with the Swedish partner.

Green logistics in warehouses

Encouragingly, changes are also progressing in the warehousing sector, which is after all the heart of the supply chain. It is significant, for example, that in Western Europe it is becoming increasingly difficult to obtain approval for the construction of a warehouse that does not meet sustainability and green logistics principles. – We want every new warehouse to meet green requirements, although this is difficult as developers constantly want to build as cheaply as possible. We have recently bought old warehouses in Austria, which we want to convert into low-emission warehouses, reveals Ewald Raben, CEO of Raben Group, at the 4th TSL Industry Leaders’ Meeting.

Raben Group is not alone in such a policy: in Europe, almost a third of its warehouses have already obtained the so-called multi-criteria certification, which takes into account sustainability principles. Market pressure and increasingly strict environmental regulations mean that potential lessees do not want to lease space that has not obtained, for example, BREEAM or LEED certificates. – The need for green solutions is already being communicated by lessees or financial institutions themselves, confirms Patrycja Rubik, CEO of Wareh.com, a warehouse rental company. – EU regulations also encourage investment in green industrial facilities. The challenges are to reduce the carbon footprint, reduce electricity consumption, use water sparingly or manage resources rationally, he adds

What exactly are green logistics solutions for large-scale warehouses about? Mostly about the installation of photovoltaic panels and heat pumps, efficient water consumption, thoughtful inventory management, but also on optimising order picking and automating warehouse processes as much as possible. In a broader context, also on the location of warehouses close to the end-consumers in order to shorten the transport of goods and thus reduce the harmful environmental impact of transport. These activities – more or less complex – can, in fact, be more numerous.

Fighting a fire with a bucket

However, at least some of the activities mentioned are not possible without an advanced supply chain digitalisation process. This has still not quite been achieved in Europe, especially in the planning of deliveries and transport. According to Eurostat, around 70% of European large companies use cloud solutions, for example, but the level of digitalisation in small and medium-sized enterprises is only 40%. Although, after successive waves of pandemics, an increasing percentage of manufacturers, distributors and transporters declared the implementation of technological processes – in practice, they would hardly go beyond declarations.

This mechanism is explained by Paweł Ziaja, Head of Product at CargoON, an organisation that implements digital solutions for logistics. – Manufacturers often explain that they do not have time to implement new solutions because they are too busy putting out current fires. Indeed, logistics managers have an abundance of challenges to face: problems with vehicle availability, extended transport times, driver shortages, etc. – he says. As Ziaja goes on to argue, however, this kind of thinking leads nowhere: invoking the comparison to a fire is most appropriate here. – Giving up on new solutions means trying to put out a big fire with a small bucket. So the bigger the fire, the faster you have to run with that bucket. And yet it is possible to invest in automatic washers, i.e. to streamline logistical processes in the company. If only to respond more quickly to crisis situations – adds Paweł Ziaja.

It pays off

Manager Maximilian Birle from KRONE is also convinced that the digitalisation of logistics processes makes the supply chain more efficient, enables the implementation of sustainability policies and, at the same time, earns money. – If we send a semi-trailer from Berlin to Amsterdam and it is only seventy per cent utilised, and thanks to digitalisation we can still load four pallets on the way, we earn an extra 400 euros. And this is all thanks to digital software that monitors the use of the loading space, Birle explains.

Because green logistics does not just mean costly investments to save the planet, it also translates into concrete financial results in practice. Either now or in the next few years.