Delivering greener logistics

15th August 2011


Greentruck

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IEMA

Hauliers and logistics companies are trying to maximise loads to improve efficiency and cut transport emissions. Catherine Early reports

Lorries are seen by many as a necessary evil, as there will always be a need to transport goods from their place of manufacture to their point of sale. But in around one-quarter of the journeys that are adding to the UK’s CO2 emissions, not to mention air and noise pollution, the lorries are actually driving around empty.

There have been calls for companies to take action on so-called “empty running”. Haulage firm Stobart Group has gone as far as to ask the government to tax empty running after it managed to cut its own rate down to 15% of its vehicles.

Meanwhile, the Committee on Climate Change has recommended increasing load sharing and backloading of vehicles – where companies fill their lorries with recyclate, produce or even another firm’s load for delivery elsewhere – as part of a package of abatement measures the freight industry could take to reduce its carbon impact.

Taking action

The transport sector accounts for approximately 21% of UK domestic greenhouse-gas emissions, and heavy-goods vehicles (HGVs) are responsible for 20% of that figure. The freight industry is already taking action.

In 2009, the Freight Transport Association (FTA) launched its Logistics Carbon Reduction Scheme as a voluntary, industry-led response to climate change.

The campaign has 53 member organisations, representing about 48,000 commercial vehicles, or around 5% of the total national fleet. Participants have been set a target of reducing emissions by 8% by 2015, from a 2010 baseline.

Cutting empty running by increasing backhauling is one of the actions members have undertaken to work towards the target. It is not a new concept, but it is one that companies are increasingly seeing the benefit of.

Professor Alan McKinnon, who has been studying the environmental impacts of freight at the Logistics Research Centre at Heriot-Watt University for 20 years, reports a real change in mood in recent years.

“There’s a new seriousness on the part of many companies – they are intent particularly on cutting their CO2 emissions, either on their own, or increasingly collaborating to share vehicles and looking at how they can work together on their supply chain to reduce their carbon impact. I’ve detected a genuine change in attitude on this.”

Of course, one of the major reasons behind this is the rocketing cost of fuel. But McKinnon is adamant that companies are not just greenwashing their intentions. “I think there’s a genuine realisation that sustainability has an economic and an environmental dimension,” he says.

Rachael Dillon, FTA climate change policy manager, agrees. “Fuel duty is very high. But by the same token, if you cut your fuel use you cut your emissions.”

The proportion of kilometres covered by empty HGVs has steadily declined over time. In 1973, empty running rates were 33.7%. By 2003, this had reduced to 26.5%, according to the Department for Transport. If the percentage of empty running had remained at its 1973 level, road haulage costs would have been £1.3 billion higher and an extra 1.1 million tonnes of CO2 would have been emitted into the atmosphere, a study by Heriot-Watt University has found.

The increasing length of journeys made by HGVs can partly explain the fall in empty running over the past 30 years. The longer the journey, the greater the incentive for hauliers to find a return load. Many supply chains have also strengthened the return flow of packaging waste because of government regulations.

The rate of empty running has increased slightly to 27% in recent years, however. Nonetheless, a survey by McKinnon found that logistics experts believe that, combined with other actions such as driver training, carbon emissions from road freight could be cut by 10% by 2020, even with a projected 25% increase in freight transport.

Matchmaking

One way the 10% figure could be reached is through the increasing trend for companies to fill their vehicles with loads belonging to other companies, rather than with their own product or waste. The Institute of Grocery Distribution (IGD) has been encouraging its members to collaborate in just such a way.

Karen Chalmers, senior supply chain analyst at the IGD, says: “Lorries are expensive to buy and transport networks are expensive to run, and we know that there’s a huge amount of tailpipe emissions from lorries, so anything an organisation can do to be more efficient makes good business sense as well as environmental sense.”

Companies need to look outside their own operations when considering how to improve the sustainability of their networks, she adds.

The IGD has run events aimed at matching up organisations to share distribution operations, which has resulted in a number of collaborations, even between companies that are direct competitiors on the shop shelf.

Nestlé and United Biscuits have joined forces despite their rival positions as manufacturers of products such as Kit Kat and Penguin biscuits.

Rob Wright, logistics controller at United Biscuits, explains how this came about after a chance meeting at an IGD event which aimed to match manufacturers and retailers so that they could explore opportunities to work together. “It was a bit of a speed-dating experience. We weren’t put together [with Nestlé] because we were competitors. But we got talking at the coffee machine in a break and realised we have the same customers.”

The companies identified a potential to work together in flows operating between York, Halifax and Leicestershire. United Biscuits was delivering into one area and coming back empty, while Nestlé had the opposite run. So, in 2008, the companies began collecting each other’s loads after making their own deliveries. The practice was expanded in 2009 and 2010, and together they have removed journeys amounting to more than 400,000 kilometres from the UK roads.

“It’s captured everyone’s imagination because we are competitors – United Biscuits is the number one biscuit manufacturer, but Nestlé makes Kit Kat, the UK’s number one biscuit,” Wright says. “But we took the view that we compete on the shelf, not as logistics providers.”

The collaboration is an extension of United Biscuits’ green logistics strategy, which involved the company backhauling waste and packaging for its customers and other suppliers. It has now reduced empty running from 22% to 13% in the past four years. “Backhauling makes transport planning more complex, but other than that there’s quite a benefit to be had. The benefits far outweigh the challenges,” explains Wright.

Examples of similar collaborations include Unilever and Asda Wal-Mart. By working together the two companies have saved more than 80,000km a year, while a collaboration between and Sainsbury’s and Nestlé has reduced HGV journeys by 64,200km a year. Elsewhere, Kelloggs, the producer of breakfast cereals, and Kimberley-Clark, which produces Kleenex tissue among other brands, have jointly saved about 430,000 lorry kilometres a year by coordinating their transport. Also, Unilever and Tesco have saved 11,000km a year on just one route between Doncaster and Goole. The two firms are now looking at expanding the partnership.

Morag White, environment manager for logistics at Sainsbury’s, which is a member of the IGD’s sustainable distribution group, explains: “The utopian position may be that you have a Tesco lorry delivering Sainsbury’s products and vice versa. We’re nowhere near that. You can imagine the politics of it! But cost pressures alone will force people to do that.”

White believes it is easier for suppliers to act in this way than for retailers, because their branding is less visible to consumers. However, she adds, meeting under the umbrella of bodies such as the IGD can remove the politics of competition.

The IGD and Heriot-Watt University are in the middle of analysing data from the biggest survey of its type to date. They have gathered transport information at route and vehicle level from 27 retailers and manufacturers to identify future opportunities to reduce empty running even further. The results will be published in November.

Better data

Even with further successful collaborations such as the one between United Biscuits and Nestlé, however, the logistics industry generally accepts that there is no way of completely eliminating empty running.

McKinnon says that although the 27% rate of empty running seems very wasteful, there are many good reasons why it is not lower.

“It’s partly to do with geographical imbalances,” he explains. “If more freight moves in one way than in the opposite direction it can be quite difficult to find enough backloads to balance the flows in both directions.”

One of the problems faced by even the keenest companies is to get information about what loads are available to backhaul. How does a haulier in London taking a truck to Edinburgh find out what other companies have loads waiting to be taken in the opposite direction?

Over the past 10 years, online freight exchanges such as www.haulageexchange.co.uk and www.shiply.com have made a business out of tackling this problem. These websites allow users to list a load they need moved. Haulage and delivery companies then bid for the work in a reverse auction.

Shiply.com was launched in 2008 and already has 385,000 users and 30,000 haulage and delivery firms. It estimates that it has helped to save more than 36,000 tonnes of carbon dioxide emissions by pairing customers and haulage firms in this way. It has now expanded its services across Europe.

McKinnon says that such sites are useful, but that no systematic assessment of their net effect on empty running has been undertaken. “People thought that the creation of these online freight exchanges would solve the problem, but it hasn’t. It’s helped at the margin but it hasn’t dramatically affected the problem,” he says.

Part of the issue in the UK is that distances travelled by lorries are relatively short. The average haul is about 90km, whereas in the US, where backhauling is much more common, the average journey length is four to six times higher.

“Where the distances are quite short, which is the case across much of the UK, companies find it more useful to bring their vehicles back empty. It’s partly due to the size of the country,” says McKinnon.

Tracking vehicles

All the good intentions of companies to reduce empty running can be offset by rising business, however. The FTA’s 8% carbon reduction target refers to CO2 emissions per vehicle kilometre, rather than an absolute reduction. “If the level of activity grows by 1.6% a year, then we’re back to where we started, there’s no absolute reduction,” McKinnon points out.

The answer could lie in developments in telematics technology, which uses GPS tracking devices to monitor vehicle movements and journeys. Many retailers, manufacturers and haulage companies use this for various reasons, to better manage their fleets. It can help improve driving styles, routing and scheduling. The idea is to save customers fuel and money.

One such company, Isotrak, is taking this to the next level with new technology it is rolling out this autumn. Its third-party integration system – known as 3iS – will allow customers to integrate jobs and resources from any fleet that is a member of the system. The GPS tracking equipment accepts data from a wide range of tracking systems, not just those of Isotrak.

“We can give customers visibility, not just of their own vehicles but also vehicles that are outside of their control – a virtual network of all the vehicles that are available to them that are coming into their stores or depots,” explains Greville Coe, sales and marketing director at Isotrak.

Stobart Group and Tesco have been using the technology since 2008. Stobart vehicles are fully integrated with Tesco’s replenishment system, which has enabled Tesco to increase the number of supplier vehicles delivering to stores in place of its own vehicles. As a result, Tesco has now been able to hit its target of eliminating more than 480,000km and 400 tonnes of carbon dioxide from its transport operation.

There is a huge potential for such technology improvements to drive down rates of empty running in the future, Coe believes. Many vehicle manufacturers are now developing their own telematics hardware and in five years’ time, he predicts, most trucks coming off the production lines at vehicle manufacturers will have a system of some sort built in as standard, allowing them to join networks such as 3iS.

“Ultimately, it’s about saving money and giving a better return to their shareholders, but most customers we have now are committed to a green agenda. We’re seeing more and more collaboration in the market,” says Coe.


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