3PLs: Cut inefficiencies and supply chain will green itself

 Supply chains must acknowledge not only the monetary costs of moving cargo from point A to point B, but also the environmental costs, panelists at a distribution strategy conference in Hong Kong Thursday said.

   Speakers responses varied on the question of who would ultimately pay to green supply chains, but two logistics companies said that going green didn't have to mean losing greenbacks.

   We're all going to pay for it, said Onno Boots, regional managing director for TNT Southeast Asia, at Transport Intelligence's Global Distribution Strategies - Asia Pacific conference. We're all stakeholders in the environment.   Boots then used an example of current overcapacity in Asian air freight markets to underscore how poor efficiency leads to environmental damage.

   Wouldn't it be better if we used each other's air freight capacity Boots said. We'd be more competitive and it would be less damaging to the environment. I mean, it's ridiculous that (jumbo jet freighters) are flying half empty. Singapore Airlines has seven 777 rotations a day between Singapore and Shanghai and we fly to Shanghai as well. There is a lot of optimization that can take place.

   Boots said he talked recently with a major mobile phone manufacturer whose supply chain has the preliminary assembly of its phones taking place in Asia, from where the half-assembled phones are air freighted to Brazil for more assembly processes, then air freighted back to Asia for final assembly. The motivation for such a circuitous route is duty and taxation incentives from the various countries.

   I know it's driven by duty and taxation issues, but that seems ridiculous to me, to ship a full planeload of half-assembled mobile phones to Brazil and then back, he said. That makes no sense from an environmental standpoint.

   Meanwhile, Christopher Logan, chief strategy and marketing officer for Agility, said going green can and should go hand in hand with making supply chains more efficient and less costly.

   There are environmental policies that can result in huge cost reductions, Logan said. 747s flying half empty to the same destination. Using air freight when ocean freight would work if we planned better. There doesn't need to be a tradeoff between environmental benefits and profits if we use information instead of the movement of goods. But I'm concerned that the falling oil prices will make people take their eye off the ball.   Logan said that in order for environmental measures to move forward, developed countries have to realize that the current pattern of supply chains places a heavy carbon burden on developing countries even if the developing countries' emissions are growing faster.

   When you outsource your production to China, you've outsourced your CO2 to China, he said. Years ago, I had a house in Southern California and an apartment in Hong Kong. I could see the air getting cleaner in California while in China it got worse. You just have to do the math.   Earlier in the day, Will Zhang, Capgemini vice president in China, presented the results of his company's latestThird-Party Logistics Study, which found, among other things, that 30 percent of those surveyed believed that implementing a green supply chain should involve no extra cost. Another 36 percent said shippers and 3PLs should share the burden, while 12 percent said the consumer should pay the extra costs and 4 percent said 3PLs alone should.

Source: American Shipper