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Taking the green route with multimodal logistics

To meet consumers’ increasing expectations for sustainability, having an end-to-end green strategy is vital.
To meet consumers’ increasing expectations for sustainability, having an end-to-end green strategy is vital.
03 July 2024 •

Sustainable packaging may cost more upfront, but not all consumers are deterred. According to a 2023 study by Bain & Company, 50 percent of consumers are factoring sustainability into their purchasing decisions as one of their top four criteria, and willing to pay an average of 12 percent more for sustainable products.

As important as they are, sustainability discussions have evolved beyond sustainable production and packaging. Instead of focusing solely on the end product consumers receive, businesses need a thorough green strategy from start to end – and green logistics has become part of the equation.

Simply put, green logistics refers to methods aimed at reducing the environmental impact and carbon footprint of logistics activities. While packaging is a part of green logistics, it also encompasses more activities like transport and storage. Tackling transport – which includes delivery vehicles – is especially important since it accounts for more than a third of global carbon emissions.

Every mode of transportation has its own environmental implications. Green logistics emphasizes the use of less carbon-intensive transport options such as electric vehicles (EVs) or alternative fuels like biofuels or hydrogen, as opposed to oil-based fuels.

When it comes to a logistics provider’s multimodal logistics strategy, it only makes sense to integrate and combine greener transport options throughout the logistics process. The aim is to offset and reduce its overall carbon footprint, contributing to the sector’s overarching sustainability goals.

Shifting gears

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EVs are one obvious solution to add to the logistics network in the last mile. The sale of EVs has more than tripled from 2020 to 2022. If its growth and rollout can sustain its current pace, it can remove the need for up to five million barrels of oil per day by 2030. In 2022, DHL Express Singapore introduced 80 new EVs to its commercial fleet, and was the first logistics provider in Singapore to transition to a commercial EV fleet of that scale.

Beyond the road, air and sea freight are also essential components of a transport network, and can always afford to be greener. In the aviation sector, Sustainable Aviation Fuel (SAF), a type of biofuel produced from renewable sources like animal fats and agricultural crops, is currently known as the best option for reducing carbon emissions, being able to reduce ordinary aviation fuels’ lifecycle emissions by up to 80 percent.

In 2023, DHL Express launched GoGreen Plus, which helps businesses reduce carbon emissions associated with their shipments through the use of SAF. Similarly, DHL Global Forwarding has also signed an agreement with global liner shipping company Hapag-Lloyd to use advanced biofuels for the latter’s transport of DHL shipments, which lowers greenhouse gas emissions by more than 80 percent compared to standard fuels.

Around the world, efforts to further green transport networks are already underway. For instance, the European Commission made proposals last year to make freight transport more sustainable by encouraging the switch from road to rail, given that more than half of freight is carried by road in the European Union (EU) and is a major contributor to emissions. At the same time, because road transport has long been the backbone of their economy, they are also offering incentives for using low-emission lorries.

Another prime example can be seen in South America – specifically, the Alcântara Port Terminal (APT) in Brazil. The integrated multimodal logistics solution is in the works and will eventually comprise both a port and a private railway that will connect to the country’s main North-South railway to transport grain and ore. The terminal will also include a facility that produces clean energy that will be deployed to power the port and railway.

Greening the paper trail

But it is not just about greening modes of transport – the behind-the-scenes documentation involved in logistics is just as crucial. Trade documentation is an extremely paper-intensive process requiring up to 50 sheets of paper for just a single shipment.

Multimodal logistics, however, involves a single bill of lading, as opposed to many contracts with different transport operators, providing convenience and saving on excessive paperwork and costs. According to studies by McKinsey, the bill of lading accounts for between 10 and 30 percent of total trade documentation costs.

The need for physical paperwork can be eliminated with digitalization and blockchain systems.
The need for physical paperwork can be eliminated with digitalization and blockchain systems.

The industry-wide push to switch to electronic bills of lading can save $6.5 billion in direct costs, and also reduce up to an estimated 99 percent of document-related emissions, according to a 2021 paper from Nanyang Technological University.

Utilizing blockchain technology, which is still gaining traction in the industry, is useful not only in fostering a paperless environment but also in enabling greater transparency and traceability in the entire supply chain. Because it is decentralized and tamper-proof, it can even serve as a ledger to hold transport operators accountable for their sustainability commitments. This means it is possible to track if they are indeed making good on their promises in their transactions and operations.

Multimodal logistics initially emerged as a way to improve efficiency and streamline costs by combining different modes of transportation, but the imperative now should be to steer it towards a more sustainable direction at every stage of the logistics process. And sometimes, reducing costs to the environment means having to take the green route less traveled.