BY JULIE GEDEON
DHL Global Forwarding is the first company within the air, ocean and road freight industry to introduce automatic carbon footprint reporting as part of its track and trace system. DHL customers worldwide began receiving data on the carbon footprint of every one of their shipments as of Oct. 1, 2013.
The data will help many companies meet new environmental reporting obligations. Under the European Standard EN 16258, all freight and passenger services in Europe use a common methodology for calculating and declaring their energy consumption and greenhouse gas emissions related to any transport operation within Europe. France went a step farther on Oct. 1 by requiring carbon reporting for any transport within France, and to or from France, to or from any other country. “You can see how this would immediately affect not only companies in France, but any enterprise doing business with that country,” says Alejandro Palacios, regional head of Business Strategy and Performance Management at DHL Global Forwarding Americas.
Domestic and foreign companies wanting to bid on public contracts in Germany must first have a certified environmental program. “So you can imagine how much business a company could lose without that certification,” says Mr. Palacios. “These new regulations are having an impact on companies worldwide.” While its main purpose is to assist customers, the carbon reporting feature will also help DHL achieve its ambitious sustain ability goals. “DHL was the first logistics company to set a formal target for reducing its carbon emissions by 30 per cent by 2020,” says Mr. Palacios. “We achieved our intermediate target of 10 per cent ahead of the 2010 deadline by reducing internal/office and energy use emissions, but we’re now taking a great leap of faith as we attempt to address the 95.5 per cent of emissions produced by our third-party suppliers of air, ocean, rail and road transport.”
A range of available carbon footprint tools will help customers to consider alternative ways of shipping their products so deliveries still arrive at their destinations within the same timeframe and at the same costs, but with a lower CO2 impact. Extensive data collected by DHL since 2011 on various transportation modes and routes can determine each shipment’s CO2 emissions based on a shipment’s weight, volume, dimensions, route distance and the specific mode(s) of transport (right down to the type of aircraft or truck engine) used. Once a shipment’s CO2 imprint is established, DHL can use its Carbon Dashboard to help customers simulate and visualize alternatives for its delivery with less of an environmental impact. “This could include taking a different route, or using multimodal transportation – combining air transport with ocean, rail and/or truck – to reduce the flight impact which always has the highest emissions,” says Mr. Palacios.
Devising alternatives often involves out-of-the box thinking based on a thorough understanding of each customer’s business model. It requires considering all possible options while acknowledging key business constraints, such as the need for temperature controls for many food stuffs, or security assurances for hi-tech equipment.
“Using this approach, we determined that one of our customers in New Zealand would improve efficiency and achieve a lower CO2 imprint if it shipped to Europe from two large warehouses rather than having everything originate from one location, then subdivided and finally sent overseas,” says Mr. Palacios. “It may seem counter-intuitive to have two warehouse operations instead of one, but our analysis clearly showed the advantages.”
With all the key data variables now gathered, the actual calculations are the easy part. The challenge has been to encourage shippers to take a more serious look at their carbon footprint. “European regulations are now making this a higher priority for many companies, but cost and time considerations have been the primary drivers in the difficult economy we’ve had these past few years,” says Mr. Palacios. “So we’ve focused on cost-neutral alternatives and in some cases have even reduced shipping costs while lowering a shipment’s carbon imprint.” In some cases, the solution is as simple as managing inventory so that products can arrive in time in fewer but larger shipments.
As companies face increasing governmental and/or consumer demand to report transport emissions and green their supply chains, they are proactively starting to seek more sustainable options. “We’re now getting calls based on presentations we made several years ago and with our customers saying, okay, now we’re ready to really talk about this,” says Mr. Palacios. “The analysis tools we’re presenting are paving the way for educated discussions and a closer partnership with each of our customers.”