Logistics leaders ‘must pursue strategic partnerships’ to achieve green goal

10:48pm 4th November 2021

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Logistics leaders must move beyond in-house optimisation measures and pursue strategic external partnerships to achieve their organisation’s sustainability goals, according to consultancy group Gartner, which urges companies to work closely with 3PLs, customers and industry peers to support them in making significant cuts to greenhouse gas (GHG) emissions.

“Organisations on an emissions reduction journey initially leverage optimisation strategies. These strategies include modal shift, load optimisation and network design all aimed at emissions reduction,” said Sarah Watt, senior director analyst with the Gartner Supply Chain practice. “However, for organisations with significant emissions reduction goals, these initial inhouse activities don’t go far enough.”

In addition to internal GHG emissions reduction activities, logistics leaders looking to improve their organisation’s emissions footprint should pursue three external partnerships – with their third-party logistics providers (3PLs), “sustainability-savvy customers”, and industry peers.

Questions for 3PLs

Watt said that while an organisation’s ‘C-suite’ senior executives “may set ambitious emissions reduction goals for Scope 3 emissions, transportation and logistics leaders rely on 3PL partnerships to meet these expectations. Ambitious GHG reduction goals can’t be achieved through optimisation alone. It will require investment in new vehicles and engine technologies to move goods.”

Watt highlighted: “Before contracting a 3PL, logistics leaders should ask three questions. Firstly, does the 3PL’s ambition for emissions reduction match that of the organisation? Secondly, what investments will the 3PL be making to improve emissions management, such as new vehicle technologies? Lastly, logistics leaders must understand if there is an investment gap, and if the enterprise is willing to play a part to bridge this gap,” Watt said.

Transparency of emissions

Watt said some GHG emissions created by customers could be avoided by offering greater transparency about emissions impacts. “For example, demand for short delivery times may increase the use of air freight,” she highlighted.

“While many customers want to create less GHG emissions, they lack visibility into how their decisions can impact the environment. Logistics leaders need to challenge the assumption that faster is always better and communicate that some shipping options may take longer to arrive but are more sustainable than same-day-delivery.”

Watt noted: “This is not about taking away shipping options from clients to enable emissions reduction. This is about client choice of shipping options by creating visibility.”

Industry peers

She said that for many organisations, reducing GHG emissions “is a precompetitive issue”, noting: “By working together, for example in an industry association, leaders from different organisations can share their experience and best practices and bring their collective effort to the challenge. This may also lead to co-investment in opportunities or collective collaboration with 3PL partners.”

Watt concluded: “It’s important to evaluate an industry association before joining. Significant time can easily be sunk into collaboration, with no clear outcome or benefit. Take an outcomes-based approach when assessing where to join or to continue to engage with an industry association.”

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