Recently it’s been a time of transformation for the logistics sector.
The Covid-19 pandemic brought the supply chain to almost a standstill in 2020-21, with most forms of travel restricted and quarantines for vessels and cargo. And it’s remained an unpredictable climate for logistics since then, with supply chain disruptions hitting the press on the regular. There’s been Brexit, the Russia-Ukraine war, the Ever Given ship blocking the Suez Canal, extreme weather events like the heatwave and flooding in India and Pakistan this year, and more.
But the industry has responded with innovation and transformation – particularly with ways to make logistics processes more reliable and efficient, and improve transparency for the businesses reliant on them.
At the heart of this transformation has been two trends: digital and sustainable logistics solutions.
Spreadsheets are a thing of the distant past.
There have always been times of pressure in the logistics calendar – holidays like Golden Week, Black Friday, and Christmas cause huge spikes in demand, for instance.
But the uncertainty and unpredictability of those recent events and disruptions in the supply chain has made them much more difficult to manage – identifying vulnerabilities in the logistics sector, from port congestions to bottlenecks and more. That’s likely to continue for the foreseeable, especially given that extreme weather events caused by climate change will become more and more common.
With success being measured by the speed and accuracy of deliveries, logistics companies are doing everything they can to streamline operations and reduce the risks of disruptions – which means becoming agile.
A key issue has been a lack of information and transparency across the supply chain, which makes it difficult for players in the supply chain to react when disruptions occur.
The US Government highlighted this when launching their Freight Logistics Optimization Works (FLOW) programme to support data exchange across the supply chain:
It’s clear that logistics companies need to become more agile – and that’s a big reason behind why digital transformation has become top of the agenda in 2022.
So what does digital transformation look like in logistics?
Well, it means every element of logistics being digitised, including:
And that just scratches the surface.
There’s more to come, and there’s value to be made – research by the World Economic Forum found that digitisation in logistics could provide $1.5 trillion in value by 2025.
As we’ve mentioned, disruption in the supply chain is already being caused by rising temperatures and extreme weather events. It’s evident that climate change will affect logistics immensely, and companies need to adapt now.
On top of that, pressure on businesses to report on and reduce environmental impact is increasing, with new legal regulations on climate disclosure coming into force and more and more investors requiring ESG information too. These are affecting all companies, but for logistics companies your business customers will also be coming to you for needing information for their own Scope 3 emissions reporting and looking for opportunities to cut the emissions from their goods transportation.
For logistics companies, then, that pressure for reporting is coming from all directions.
Plus, at the same time, it’s also becoming obvious that sustainability is good for business too – the WeForum report 'Net-Zero Challenge: The supply chain opportunity' finds that 40% of supply chain emissions could be cut at very low costs, and that given that consumers will typically pay premiums of around 40% for sustainable products and services, there could be very high return on this investment.
So as well as pressure, there’s growing commercial incentive to act. Consumers are demanding sustainable solutions and the companies that can offer them are gaining market share and loyal customers. That means that the retail and ecommerce companies that make up the bulk of the customer base for logistics organisations, are moving to suppliers that can provide truly sustainable solutions – including in logistics.
Companies like Forto, AGX, and Budbee are already seizing the opportunity to implement climate-positive solutions, and seeing positive results for both planet and profitability.
Every company should be working to improve their own environmental impact – measuring and reducing their own carbon emissions and offsetting any unavoidable emissions using high-quality offsets. And there are many potential solutions out there for logistics, from alternative fuels to electric vehicles to last mile deliveries by bike (or drone, even!)
But, reducing emissions in an individual company can only go so far. Many industries also have opportunities to create exponential climate impact through the product or service offered: including logistics.
So, what could this exponential climate impact look like in logistics?
Here’s an example of what these features could look like within a logistics platform:
We’ve written about these opportunities in more detail on our previous blog: How the logistics sector could tackle the climate crisis.
You might notice that there are also clear links between these two trends:
Digitisation and sustainability in logistics: the two go hand-in-hand in transforming the logistics industry for a more efficient, less disrupted, and greener future.
Should you buy carbon credits from an enhanced rock weathering project? If so, which? There are a lot of different carbon offset projects out there working to reduce emissions and remove CO2 from the atmosphere – from direct air capture, to reforestation, to biochar, and many, many more...
We need carbon offsetting. It’s a powerful tool to reduce emissions and remove existing carbon from the atmosphere. But offsetting must be approached right – purchasing credible, high impact offsets and avoiding greenwashing. This is where the Oxford Principles for Net Zero Aligned Carbon Offsetting – known as the Oxford Offsetting Principles for short – come in...
Carbon removal vs emissions avoidance – what's the difference? Carbon offsetting projects fall into two categories, whether the offset has been generated by emissions avoidance (also known as emissions reduction) or by carbon removal. But what's the difference between these two methods? And should you prioritise one of them when purchasing carbon offset credits as a business?