Why supply chain transformation is happening globally
Addressing supply-chain emissions enables many customer-facing companies to impact a volume of emissions several times higher than they could if they were to focus on decarbonizing their own direct operations and power consumption alone – and achieving a net-zero supply chain is possible with very limited additional costs."
- World Economic Forum report produced in collaboration with Boston Consulting Group.
In our interconnected world, supply chains have grown increasingly complex, spanning multiple industries and geographies. As environmental sustainability takes centre stage, it becomes crucial to examine the role of freight within these supply chains.
Why developing a Sustainable Supply Chain Strategy is important
Despite some improvements in fuel consumption efficiency in recent years, carbon dioxide (CO2) emissions are still rising, mainly due to road freight.
The European Commission has set a new target of decreasing CO2 emissions per km from new HGVs by 90% by 2040.
Businesses involved in production, distribution, and transportation of goods need to change.
To achieve supply chain sustainability, organisations must develop a comprehensive strategy that integrates environmental, social, and economic considerations into decision-making processes. A sustainable supply chain strategy encompasses responsible sourcing, waste reduction, energy efficiency, and the adoption of eco-friendly transport solutions.
In a Harvard Business Review Whiteboard Session, Andrew Winston, a globally-recognised expert, suggests a focus on four components to redefine supply chain sustainability:
Cost reduction: reducing material waste, improving efficiency and reducing their carbon footprint
Revenue growth: examining how a sustainable supply chain can affect market share, stock price and profitability
Risk management: managing regulatory and compliance risks, and building resilient sourcing strategies
Intangibles: exploring how sustainability improves customer loyalty, brand reputation, innovation, employee quality of life and retaining talent
How much freight is moved by road?
Ultimately, everything has to travel by road! Road freight plays a pivotal role in supply chains. It offers a cost-effective and flexible mode of transport, providing the majority of ‘middle mile’ freight movement and all store-to-door delivery capabilities.
However, road freight presents significant environmental challenges due to its reliance on fossil fuels and the emissions generated by diesel-powered trucks.
What is the environmental impact of road freight?
In 2020, road transport contributed to 24% of the EU's total emissions of carbon dioxide, the main greenhouse gas. Heavy goods vehicles are responsible for about a quarter of CO2 emissions from road transport in the EU.
The environmental impact of road freight is a pressing concern. Diesel-powered vehicles contribute to air pollution, greenhouse gas emissions, and climate change. It is imperative that all companies work to reduce the negative environmental impact of road freight while maintaining its efficiency and effectiveness.
Solutions for reducing the environmental impact of your freight
To mitigate the environmental impact of road freight, embracing sustainable transport solutions is crucial. Adopting alternative fuel sources, such as electric, hybrid, or hydrogen-powered vehicles, is one key solution. These vehicles offer lower emissions and can significantly reduce the carbon footprint of road freight.
Optimising route planning and load efficiency is another effective approach. By leveraging advanced technologies, organisations can optimise their transport operations, minimising empty miles and reducing fuel consumption. Real-time tracking systems and telematics enable improved fleet management, leading to more efficient routing, reduced congestion, and lower emissions. This is what Zeus’s existing freight management system does today.
Intermodal/multimodal transport solutions, combining road, rail, and sea transportation, can also contribute to sustainability. By leveraging multiple modes of transportation, organisations can optimise their supply chain networks, reducing reliance on road freight alone. This approach not only reduces emissions but also improves overall supply chain resilience and alleviates congestion on roads. Zeus’s new multimodal solutions use this approach.
Knowing ‘how’ your freight is moved is crucial
The nature of freight movement across nations and globally plays a crucial role in achieving supply chain sustainability.
In 2022, Ernst & Young found that executives struggled to measure progress in sustainable supply chain practices. Many have long-term strategies, but struggle to measure their progress. EY research found that eight in 10 supply chain executives are increasing their efforts toward sustainable supply chain operations.
By incorporating sustainable road freight practices, organisations can reduce the environmental impact of their supply chains.
Zeus’s low carbon multimodal solution has been proved to reduce emissions by 84% – compared to diesel-fuelled HGVs. If all of our customers implemented this solution for just 10% of their European routes, we estimate this could reduce GHG emissions by 200 million tonnes in one year alone.
As the world continues to prioritise sustainability, it is essential for businesses to recognise the significance of freight in shaping a more sustainable future.