If You Can’t Measure It, You Can’t Improve It
This slogan may seem a bit trite by now, but in terms of logistics and global supply chains it is indispensable when it comes to making shipping goods from A to B more sustainable. In the fight for a more sustainable and climate friendly economy, people are now not only skipping school on Fridays, but are also looking for intelligent and innovative technologies and solutions. One place where these ideas and solutions are created, tested, validated and brought to growth is, for example, the Digital Hub Logistics in Hamburg. Logistics and transport are one of the world’s largest sources of greenhouse gas emissions. But what concrete approaches and already marketable tools are there to first measure what one wants to change? A closer look at Searoutes, based in Hamburg and Marseille, can help to understand better how measuring an impact can help reduce it.
Supply Chain Sustainability as a business opportunity
As mentioned, climate change is no longer seen as a far-fetched idea but as a real issue of our time. According to the Smart Freight Centre, the transport sector is the third largest source of GreenHouse Gas (GHG) emissions after the manufacturing and construction industry, comprising 23% of global greenhouse gas (GHG) emissions. Freight transportation made up 36% of transport’s emissions in 2015, and is expected to be at least equivalent to passenger transport by 2050. […] Without intervention, freight transport emissions will more than double by 2050, taking 2015 as a baseline.
It is not surprising that policy makers have increasingly focused on the regulation of this industry. Companies are facing growing pressure from regulators, investors, customers and end consumers. Corporations are being forced to measure and assess the environmental impact of their business model, integrating possible environmental externalities into their existing business model and hence adjusting certain parts of it in order to stay in business. But while this assessment may come at a price, there are also long-term chances coming along with it. A study by BCG shows that, by improving their environmental performances, companies will not only improve the planet’s environmental status for the next generations but also improve their business results through cost reduction, revenue enhancement (e.g. by offering premium services), greater innovation and other benefits.
Moving forward is rewarded
Across industries, different actions can improve the environmental performance of the company’s supply chain, such as product design and packaging, increasing efficiency in the use of operational resources and, among others, optimization of the supply chain network.
Leaders in various sectors have already committed to reducing their CO2 emissions and have set ambitious targets. For example, IKEA set a long-term ambition to reduce their GHG emissions by 70% per shipment by 2030. Increasing the use of renewable fuels or switching from truck to trains to deliver goods from distribution centers to most IKEA stores in Europe.
Another example is set by Unilever who plans an estimated 40-50% reduction in logistics emissions by 2030. Decreasing distance travelled through network redesign, additional use of intermodal solutions using trains to reduce demand for long-distance trucking among others.
More and more opportunities in this space are now available to accelerate a companies’ emissions reduction due to transport. In the freight and shipping industry which accounts for more than 3% of total global carbon emissions alone, innovative solutions are showing up to help companies tackle their transport carbon footprint.
In the innovation ecosystem of Digital Hub Logistics in Hamburg alone, a whole range of solutions have arisen to meet these challenges. Searoutes is one of them. A startup based in the South of France and Hamburg, has developed an all-in-one solution for shippers — companies who need to move goods from point A to point B — to reduce their carbon footprint due to transport. To achieve sustainable transport of goods, shippers need to be offered solutions with the choice to opt for cleaner and more affordable routes. The startup helps them in 3 steps of their procurement process: Tender/ Booking / Reporting.
1. Tender: Know your carriers “CO2 risk profile”
Searoutes uses detailed modeling to estimate emissions of a specific vessel, on a given route between a port pair, at a particular speed. They use schedule data and routing algorithms to reconstitute the fleets’ operations between port pairs, for each carrier and their alliance to return “CO2 risk profile”, per carrier. That risk profile allows shippers to choose a particular carrier during tender. Shippers can now integrate CO2 emissions as buying criteria aside carriers’ rates to start analysing, comparing and optimizing their carbon emissions.
2. Booking: CO2 as a new criteria alongside prices and transit time
When buying freight, Shippers’ main worries remain the cost, the lead times, and availability on the vessel. Searoutes brings another criteria to shippers with CO2. With more granular data such as the actual length of the rotation (the intermediate stops), the size of the vessel and its speed, the startup identifies which services will emit the lowest CO2.
In some cases, shippers observed a 60% CO2 emissions reduction from one service to another, because of the distances, the vessel’s characteristics (age, engine, size) operating on the service and its speed.
3. Report: Know you best and worst performers
Searoutes helps shippers go beyond the monthly or quarterly report pushing them to go a level below look at which shipment incurred abnormally high emissions, and what can be done to remedy it. Searoutes’ data is available via API, and integrates in all systems of the supply chain. SHippers can also send their shipping data to Searoutes to help them analyze the historical shipments and optimize the next ones
The example of Searoutes alone shows how young and agile startups can help established players in the logistics market to proactively tackle the challenge of climate change in their industries. In order to do so, innovation ecosystems in which an exchange of ideas and challenges can be exchanged and challenged are needed. Cooperation between companies will be key to fight global warming – or put differently If you can`t cooperate, you can`t change the way logistics in addressing climate change.
About the authors
Eva Cadilhac, Chief Marketing Officer at Searoutes
As SEAROUTES’ CMO, Eva does more than launching growth hacking strategies. With more than 10 years of brand management and retail industry, she has built strong relationships with customers focusing on their sustainability concerns. In a nerd man’s world she tries to make it straightforward. She’s obsessed with digital innovations and new ways of answering sustainability issues. For further insights and information on Searoutes please contact Eva Cadilhac: email@example.com
Johannes Berg, Managing Director at Digital Hub Logistics Hamburg.
Johannes has extensive experience in managing international projects in the sphere of both, energy and resource management as well as innovation management. He studied international relations and environmental and resource management throughout which he devoted large parts of his research work in emissions management in the aviation industry. If you want to learn more about the Digital Hub Logistics ecosytem please feel free to reach out to Johannes Berg: firstname.lastname@example.org