Building a Sustainable Supply Chain: Solutions for Decarbonizing Logistics

The logistics sector accounts for 7% of total carbon emissions. While logistics seems to contribute less compared to industry and electricity, which together share 54% of total global greenhouse gas (GHG) emissions, immediate changes in the sector are needed as never.

Transportation generates 80% of annual CO2 emissions in the logistics sector. Road freight releases more than half of the greenhouse gases in logistics. Ocean freight transport transferring cargo between continents contributes significantly (21%) to pollution.

Nearly half of businesses surveyed by McKinsey have no decarbonization goals. 25% have targets set and intend to meet them, while another quarter admit they do not believe in meeting the required low-carbon limits.

Why is the drive to reduce carbon footprint so weak among logistics companies? One of the main elements holding back the pursuit of sustainability is money. Investment in a low-carbon fleet requires a significant amount of capital. In addition, many decision-makers struggle to find sufficient support to effectively carry out a green transformation that benefits their company and the environment.

Current initiatives using biofuels and other renewable energy sources have limitations. That’s why companies testing low-carbon technologies don’t want to or can’t scale them to the entire business. Green logistics solutions won’t match the efficiency of vehicles and appliances powered by fossil fuels.

If your company is at the beginning of the decarbonization journey, achieving net zero logistics emissions may seem a long way off. However, you don’t have to replace your entire fleet with electric vehicles. To effectively decarbonize your logistics operations, start with digital transformation.

Upgrading legacy IT systems will improve data collection on your company’s daily operations. You can plan future operations more accurately with accurate information on truckloads, routes, and warehouse filling levels. A data-driven approach can help you downsize your current fleet size, which will reduce emissions.

If you want to monitor details such as warehouse energy demands and resource cycles, custom software development provides software that integrates AI and IoT for sustainable energy management in the supply chain.

As mentioned above, data analytics of logistics services can help you reduce road transport, positively impacting the environment and the company budget. How exactly do advanced freight transportation trackers work, and what else can you optimize with them?

With accurate vehicle routing data, you can identify weak points and plan more efficient routes that reduce fuel consumption and emissions. You can create optimal routes that shorten travel distances and avoid traffic jams using advanced algorithms, GPS technology, and real-time data.

As a result, your company will use less fuel for the same transport and increase delivery efficiency and customer satisfaction.

The type of packaging you use for your products also matters to the environment. Don’t forget to adjust your packaging design to reduce material consumption and increase transportation efficiency. Inefficient packaging will leave a clear footprint in fuel consumption and greenhouse gas emissions data.

Your vehicles should not be traveling without a load. Advanced cargo management systems will enable your company to optimize cargo space, increasing overall efficiency. Maximizing cargo efficiency ensures that vehicles operate at full capacity, reducing the number of trips and emissions.

Has your company implemented the above solutions and planning to reach a higher sustainability level? Or are you defining the low-carbon transition for upcoming years and want to know what trends you should include? Discover what investments you might consider in the next few years to get as close as possible to the expected 2030 emission reduction.

What is green warehousing? It involves using energy-efficient technologies and sustainable building practices in warehouse spaces. Solar panels, LED lighting, and advanced insulation significantly reduce energy consumption.

Moreover, you can further optimize energy usage through automated and intelligent lighting, heating, and cooling management based on current needs.

Introducing electric and alternative fuel vehicles into the transport sector is a significant step toward sustainability. Fleet electrification reduces emissions and dependence on fossil fuels. Hydrogen fuel cells and biofuels are viable alternatives to traditional diesel engines. As a result, different logistics needs can be met in a diverse manner.

The only inconvenience at this point is the inadequate deployment of commercial EV chargers, which would make it easier to plan routes without the hassle of recharging green cars.

Digital technologies such as IoT and AI are revolutionizing logistics operations. They improve transparency and efficiency, leading to better inventory management. By 2024, 50% of supply chain organizations were expected to invest in applications supporting AI and advanced analytics capabilities.

Advanced inventory management systems reduce storage costs and waste. Products are delivered according to current needs, preventing overproduction and unnecessary consumption. This makes supply chain and logistics operations more efficient and sustainable.

What actions could your logistics company take if it reached decarbonization targets? We believe you don’t have to wait until 2030. Take on the following challenges and create the future, growing your business while reducing drastic climate changes.

What is reverse logistics? This process focuses on the return, restoration, recycling, and responsible use of products. Your company can incorporate efficient systems for handling returns to reduce waste and close the product cycle.

Reverse logistics is an environmental savior because it reduces pollution. Besides, your company can save on reusing packaging or regain the value of returned goods.

Is your organization planting trees? Many companies are mitigating the environmental impact of their logistics operations through carbon offset programs. These programs involve investing in projects that reduce greenhouse gas emissions, such as reforesting lands and using renewable energy and sustainable fuels.

By offsetting your carbon footprint, your company can contribute to broader environmental goals. This also positively impacts your brand image, as customers are increasingly willing to choose companies that care about the planet.

It is easier to motivate each other to implement decarbonization initiatives if you work in a group. Collaborative transportation networks are partnerships between companies that share transportation resources and optimize shipments.

By pooling cargo and coordinating deliveries, networked companies can reduce the number of vehicles on the road, lower emissions, and increase overall logistics efficiency. A collaborative approach should be one of the logistics industry’s critical decarbonization strategies.

Effective decarbonization of logistics and supply chain management does not have to be revolutionary. It is essential that your company take the first steps ASAP, such as modernizing legacy software solutions or developing new analytical technologies.

Want to find out what applications will best support your company’s day-to-day operations? Schedule a consult, and Scalo experts will verify your needs and offer tailored solutions.