Logistics companies are working to reduce emissions in freight and transportation services to help create a more sustainable supply chain and reap the many benefits that come along with making such a decision.
Third-party logistics (3PLs) providers, for instance, are including ESG priorities in their supply chain and growth strategies. They’re using modern engines, low-carbon fuels, and more efficient practices, such as utilizing vehicle space more efficiently and reducing freight demand.
Chris Burroughs, vice president of government affairs at the Transportation Intermediaries Association (TIA), which is the professional organization representing the $232 billion 3PL industry, told Transportation Today that there are several advantages for freight brokers and logistics providers to adopt sustainable business practices.
In fact, such practices, Burroughs said, “are more and more becoming a requirement from their shipper customers, who are heavily focused on environmental sustainability and want their providers to share in their green initiatives.”
One of the main benefits for 3PLs to use sustainable business practices is the competitive advantage they can gain, said Burroughs.
“Sustainability has become an increasingly important factor for businesses and customers,” he said. “Logistics companies that prioritize sustainability can differentiate themselves in the market, attract environmentally conscious customers, and gain a competitive edge over their competitors.”
Burroughs called the U.S. Environmental Protection Agency’s (EPA’s) SmartWay program is an excellent program where 3PLs submit their data to the agency to get a snapshot of how green their operation is.
“Additionally, a lot of shipper customers require their brokers and the 3PLs to be SmartWay certified to do business with them,” he said, noting that TIA is a proud affiliate member of the program.
Taking the ‘SmartWay’
Experts project that by 2050, global freight transport emissions will surpass those from passenger vehicles, a trend that’s spurred many companies to seek opportunities to assess and streamline shipping operations so they can use less fuel and generate less pollution.
To address such trends and challenges, the EPA in 2004 launched the SmartWay® Transport Partnership, a collaboration between the agency and the transportation industry that provides a framework to assess the environmental and energy efficiency of goods movement supply chains.
Specifically, the voluntary public-private program provides a comprehensive, well-recognized system for tracking, documenting, and sharing information about fuel use and freight emissions across supply chains.
SmartWay also helps companies identify and select more efficient freight carriers, transport modes, equipment, and operational strategies to improve supply chain sustainability and lower costs from goods movement.
And the program supports global energy security and offsets environmental risk for companies and countries, and helps reduce freight transportation-related emissions by accelerating the use of advanced fuel-saving technologies.
Major transportation industry associations, environmental groups, state and local governments, international agencies, and the corporate community support the program.
RCT Logistics LLC, a Rocky River, Ohio-based 3PL, recently joined the SmartWay program, which currently has more than 3,000 partners, including shipper, logistics companies, truck, rail, barge, and multimodal carriers.
RCT Logistics wants to contribute to the partnership’s savings of 357 million barrels of oil, $47.6 billion in fuel costs, and the elimination of annual energy use, according to Tim McManamon, RCT’s general manager, who says joining the SmartWay program demonstrates his company’s environmental leadership and corporate responsibility.
“The advantages for all shippers, carriers, and 3PLs is leaving a lighter footprint on the environment through using better alternatives, whether routing, different transportation modes, or use of recycled packaging materials,” McManamon told Transportation Today. “The challenge is to make it make sense financially for these companies.”
RCT Logistics, which offers full truckload, flatbed, over-dimensional, refrigerated and less-than-truckload transportation services, is actively trying to use carriers on Smartway Transport, he said.
“In addition, we offer options to customers utilizing better routes or different modes, which are more efficient in all aspects,” said McManamon. “We joined Smartway to be a good steward in our industry trying to reduce the impact transportation has on the environment.”
More benefits abound
TIA’s Burroughs outlined more benefits for 3PLs to adopt sustainable business practices, such as cost savings.
“The third-party logistics industry by nature is a green industry that was created to fill the need of filling empty backhaul loads and making sure there were no empty miles wasted,” Burroughs said. “Implementing sustainability measures such as energy-efficient transportation, optimized routing, and improved supply chain management can lead to reduced fuel consumption, lower operational costs for our carriers, and increased efficiency resulting in lower operational costs throughout the supply chain.”
Regulatory compliance is another benefit as governments and regulatory bodies are increasingly placing a greater emphasis on environmental regulations and carbon footprint reduction, he said.
“By adopting sustainable practices, logistics can ensure compliance with these regulations, avoiding penalties and legal issues,” said Burroughs.
At the same time, 3PLs can also gain brand reputation and customer loyalty via such practices.
“Operating sustainably enhances a company’s brand reputation,” Burroughs said. “Customers are more likely to support and remain loyal to logistics companies that demonstrate a commitment to environmental responsibility and social impact, leading to increased customer satisfaction and long-term loyalty.”
Lastly, access to new markets and partnerships can be achieved as many industries and organizations have sustainability requirements or preferences when selecting their logistics partners, said Burroughs.
“By embracing sustainability, logistics companies can access new markets, forge partnerships with environmentally conscious suppliers or customers, and expand their business opportunities,” he said.