Sustainability is becoming increasingly important to consumers. There is also more emphasis on companies reporting the impact they have on the environment. In Descartes’ 2023 consumer sentiment study on home delivery sustainability, 41% of respondents indicated they regularly or always make purchasing decisions based upon the product or company’s environmental impact. Freight transportation (i.e., over-the-road, ocean, rail and air) is one of the top causes of greenhouse gas emissions, representing 8% of global greenhouse gas emissions. With an increasing spotlight on the environment, these were added to Descartes 7th Annual Global Transportation Management Benchmark Study.
Descartes divided transportation sustainability efforts into four categories from no action to a daily concern, and the overall response showed that 31% of respondents indicated they did nothing, 19% reported on their transportation carbon footprint, 27% factored it into their strategic plans and 22% made sustainability a component of their daily transportation decisions (see Figure 1). One way to look at the data is that 50% don’t do anything with respect to sustainability in transportation, as only reporting doesn’t mean that any actions were taken; however, 50% are doing something.
Figure 1: Importance of sustainability in transportation
Then the question was looked at through the lens of management’s view of the importance of transportation management and company financial performance to see if companies where management thought transportation was a competitive weapon (see Figure 2) and were better financial performers (see Figure 3) were more engaged in sustainability efforts in transportation. Those companies whose management thought transportation management was a competitive weapon (57%) were much more likely to be taking action compared to only 48% who thought transportation management was not important. For financial performance, the numbers were similar with 58% of the top performers taking action vs. 44% of poorer performers.
Figure 2: Respondents categorized by importance of transportation management to senior management
Figure 3: Respondents categorized by financial performance
These differences in action around sustainability for management who recognize the value of transportation management and top financial performers versus other respondents make sense. In the benchmark study, we see these respondents more interested in strategies and actions that improve transportation management performance—and most transportation management improvement programs have a positive and measurable impact on the environment.
Significant positive environmental impact can come from taking technology-enabled actions to improve transportation efficiency and transform paper-based processes. Logistics efficiency programs reduce CO2 footprint with technology solutions that consolidate shipments to reduce the distance and fuel required to deliver them; select transportation modes to use more efficient shipping options, which results in less fuel consumed; and facilitate backhaul shipment planning to reduce “empty” distance driven, driving greater carrier productivity and minimizing wasted fuel. AI- and network-based transportation capacity matching also help to reduce empty legs for carriers and wasted fuel. In addition, systems for dock appointment scheduling and yard management decrease dock congestion as well as time and fuel used by carriers waiting to have their trucks unloaded or loaded. Capabilities for real-time truck visibility also facilitate better loading and unloading of vehicles to reduce dwell time, idle time and fuel consumed at distribution centers.
The technology opportunities go well beyond individual organizations and supply chains to multi-party collaboration through pool distribution. By aggregating deliveries across multiple retailers to the same locations, such as malls and shopping complexes, transportation providers using pool distribution technologies improve delivery productivity; reduce delivery distance, number of vehicles needed and fuel consumed; and minimize empty miles due to inefficient matching of shipments to carriers. Additionally, digitizing transportation management processes, such as with electronic shipping documentation that replaces paper-based manifests, eliminates paper—in many cases, one to five pages per delivery. If there is a perception that most sustainable transportation efforts result in less efficient supply chains, it needs to be corrected.
In fact, sustainable transportation programs are also an opportunity to capture more business. The home delivery sustainability study showed that consumers are more willing to buy from companies who can demonstrate that their supply chains are more sustainable and 60% want environmentally friendly delivery options. And, compared to the 2022 study, consumer expectations for sustainable delivery options are up significantly. Equally important for B2B companies is the opportunity to gain more business from companies that are looking at their supply chain partners to help reduce Scope 3 Emissions as defined by the United States Environmental Protection Agency and the Corporate Sustainability Reporting Directive (CSRD) initiated in January 2023. This standard requires more large businesses and SMEs that trade in the EU to conduct sustainability reporting to stricter standards from January 2024.
With growing consumer sentiment and increasing regulatory requirements on sustainability, companies need to look at sustainable transportation management as an opportunity to lower costs, make customers happier, grow the business and help the environment. How many chances are there to create such a win, win, win, win situation?