Domestic trucking emitted 420m metric tons of CO₂ in 2020 (7% of total U.S. greenhouse gas emissions). This volume of CO₂ would fill over 2.2bn 53-foot dry vans (5m if compressed to the density of sequestered carbon). These emissions won’t meaningfully decrease until mid-to-long haul trucks are powered by electricity and other alternative fuels. As we work towards this future, we can help flatten the curve today by staying focused on proven and repeatable steps towards decarbonization.

Energy-Related Emissions of‌ CO₂ by Economic Sector
(Billions of Metric Tons)

Transportation became the leading source of CO₂ emissions in the United States in 2017 after emissions in the electric power sector declined substantially. Within the transportation sector, about 25% of emissions are from medium and heavy-duty trucks. Source

What’s Working

Reducing empty miles. At any given time, over 30% of trucks on the road are pulling an empty trailer. This inefficiency is caused by a lack of coordination across the industry — most shippers and carriers take a load-by-load approach to scheduling freight. Digital freight marketplaces are helping shippers and carriers fill these empty backhauls, but they are also stuck thinking week by week and load by load. When a shipper changes their volume commitment or a carrier switches lanes, the filled backhaul often reverts to empty.

As customer demand for products increases, reducing empty miles becomes an even bigger deal, especially for companies who produce consumables. In 2021, 7 of 9 food majors watched their overall carbon emissions increase even as they reduced carbon emissions associated with their internal manufacturing processes. This is due to where emissions come from — for PepsiCo, Scopes 1 & 2 account for only 7% of the company’s footprint. The remaining 93% are Scope 3 emissions that scale up with business growth in the form of more transportation, more packaging, and more outsourced manufacturing. 

At Leaf, we’re able to guarantee empty mile elimination using freight patterns identified with Leaf Adapt, our data analytics platform that coordinates multi-shipper circuits across the transportation grid. Moving freight continuously in circuits is favored by drivers and also has a positive environmental impact as the CO₂ emissions from empty backhauls are removed. Leaf uniquely schedules (and guarantees) these circuits months ahead of time, making the empty mile elimination repeatable, not just a one-off instance for a single trip.

This is carbon avoidance, happening today, that doesn’t require new hardware, infrastructure, or investment, and it offers immediate cost savings for shippers. As an industry, we must continue to work together to reduce the amount of empty trucks on the road and encourage our shippers to champion this impact within their organizations.

Our megaphone. British Petroleum published the first carbon footprint calculator in 2004 and by doing so, framed global warming as an individualized solution to a collective problem. While BP and other companies in hard-to-decarbonize sectors have not been held accountable for years, the narrative is changing thanks to increasing public awareness. Fortune 500 companies are responsible for over 25% of global emissions — their efforts to decarbonize should be proportionate. 

As these companies incorporate sustainability initiatives into their product offerings and operations, and think of how to maintain profitability without an unsustainable level of growth, we can help by continuing to move their products with fewer-to-zero empty miles.

What’s Not Working

Misleading messaging. As companies balance their pursuit of profit with pressure to address environmental impact, good intentions can lead to messaging that lacks substance. When competing for business, many companies make claims of zero waste or carbon neutrality, meanwhile their conference swag overflows from hotel garbage bins on its way to landfills.

Empty sustainability messaging has the potential to distract well-intentioned customers from options in the marketplace that have a positive (or less negative) environmental impact. It’s easy to recognize the unbelievability of sustainability claims from a fast fashion company that offers tens of thousands of new items each year. In nuanced industries like trucking, it can be difficult for customers to understand what solutions have a real impact on reducing carbon emissions within their supply chain. We should use this uncertainty as an opportunity to educate, not to exploit the latest sustainability trend.

While we understand the role of aspirational sustainability messaging, it must also be honest. The climate crisis is complex. We can pursue progress, not perfection, have grace for sincere missteps along the way, and maintain a commitment to evidence-based claims. This is possible without resting on the laurels of a catchy slogan or successful marketing campaign.

Carbon offsetting. A recent report from Bloomberg Green found that 40% of offsets purchased in 2021 are derived from renewable energy projects, one of the most contentious types of carbon offset:  

“Many renewable offsets came into being just as solar and wind power established themselves as the cheapest source of energy in most countries. Selling offsets for small sums as a way to support the economics of renewables doesn’t provide any real benefit if it’s already cheaper than building new coal or gas power plants.” Bloomberg

Legitimate carbon offsets exist, but they’re expensive and in the minority of what’s available in the voluntary carbon market. Before partnering with an organization that offers offsets, it’s imperative to understand both the source of their projects and their methodologies for counting greenhouse gas removal or avoidance.

The first offset was created to encourage an electric utility to think about climate change in the absence of market incentives and government regulation. While the early intentions of carbon offsets made sense, offsetting is often misused by companies as a form of pay-to-play. For a small fee relative to their profits, companies can continue their environmentally-damaging practices without actually reducing their carbon emissions. If a firm chooses to participate in the offset market, only legitimate projects should be considered, and these should account for a single component of a decarbonization strategy.

It’s easier for airlines to buy cheap offsets and claim carbon neutrality than for airlines to do the hard (and expensive) work of decarbonizing their core business. This is the difficulty with offsets — they have yet to fundamentally change behavior. Creating a global standard for what offsets can be counted against a company’s compliance targets is one way to start improving the effectiveness of the voluntary carbon market.

What’s Next

We should continue working with manufacturers in hard-to-decarbonize sectors and move their freight in the most carbon-efficient way. This will evolve as new alternative power units are developed and reach cost parity with diesel engines. 

Today, Leaf is working to reduce empty miles by coordinating multi-shipper circuits. In the future, Leaf’s proprietary dataset could support charging networks and electric fleets as manufacturers bring mid-to-long-haul electric trucks to market. This future is closer than you might think — last year, Tesla’s truck completed a 500-mile haul while weighing 81,000 pounds.

Meaningful climate action tends to follow legislation. While we’re logistics nerds, not lobbyists, what can we be doing as an industry to support the electrification of U.S. road freight? The Inflation Reduction Act (IRA) includes a tax credit of up to $40,000 for new medium and heavy-duty electric trucks. The Rocky Mountain Institute outlines additional provisions:

“The IRA includes a new $1 billion Clean Heavy Duty Vehicles rebate program for state, municipalities, Indian tribes, and school associations to convert fleets to zero-emissions heavy-duty vehicles and other funding for disadvantaged communities that could be used to electrify local depots. The IRA also includes expansions and extensions of utility-scale renewable tax credits, which lower utility costs and improve the fuel cost advantage electric trucks have over diesel vehicles by making vehicle charging cleaner and more affordable.” RMI

We acknowledge the tension in our industry when talking about climate change — carbon emissions are largely a function of production and consumption, and enabling consumption is how we make money. As an industry, we can both acknowledge this tension and pursue meaningful, repeatable, and variable carbon reduction when transporting freight.

We welcome your partnership and look forward to working together on this journey to a more sustainable trucking industry. 

The post Sustainability in Trucking: What’s Working, What’s Not, and What’s Next appeared first on Leaf Logistics.

We were proud to sponsor this year’s Young Professionals Video Contest & Scholarship. CSCMP young professional and student members submitted videos across several topics that included: unlocking the global supply chain, sustainability, and technology in supply chain. There were impressive submissions by many young professionals, showing that the future of our industry is in good hands. Leaf CEO Anshu Prasad presented the winner at the Young Professionals reception – congratulations to Paige Ruhlman, Supply Chain Program Manager at Cisco, for her submission about unlocking the global supply chain. 

We also took part in the EDGE session series to present “How Ball Took a Portfolio Approach to Freight and Increased Service”. Leaf’s Head of Strategic Operations & Account Management, Margie Hamlin, and Leaf Advisor Mark Shaughnessey presented about how Ball, a major aluminum packaging and aerospace company, found success in working with Leaf to dramatically increase their performance while also realizing savings. At the same time, Ball was able to achieve meaningful scope 3 carbon emissions reductions associated with their transportation. 

Leaf participated in the Supply Chain Exchange Exhibition, where we had a chance to meet with conference attendees to share the work we’re doing to coordinate the transportation industry, and to learn about other advancements in supply chain. We enjoyed the opportunity to connect with so many forward-thinking professionals in our industry, and look forward to CSCMP EDGE 2023!

The post Connecting with Supply Chain Innovators at CSCMP EDGE 2022 appeared first on Leaf Logistics.

From the original article published January 12, 2022 on the IBM Smarter Business Review blog:

At the 2021 United Nations (UN) Climate Change conference, UN Secretary-General Antonio Guterres stated, “It’s time to say: enough. Enough of brutalizing biodiversity. Enough of killing ourselves with carbon.” While many companies have long understood the effect of carbon emissions on global warming, the increasing frequency of natural disasters, rising sea levels and biodiversity collapse are having a real impact on their businesses. Moreover, as end consumers demand sustainable products, a minimal carbon footprint has become an increasingly important factor in purchasing decisions.

Barriers to carbon neutrality and net-zero targets

Logistics professionals recognize the urgency for change but face enormous barriers in reaching carbon neutrality and net-zero targets. For companies that use carbon offsets to meet the targets, there is increasing scrutiny regarding the role of offsets and concerns over quality and cost of those offsets. Other barriers include costly electric vehicles to replace diesel-powered engines, inadequate infrastructure supporting electric vehicles and longer lead times and higher costs associated with lower-emissions modes such as rail. These challenges were exacerbated when COVID-19 drastically increased the demand for e-commerce because while customers want sustainable products, they also want them right away and at reasonable prices. To further complicate the problem, driver shortages in the U.S. continue to plague the industry with an annual driver turnover of more than 90%.

Our solution helps address the challenges

IBM believes that sustainable enterprises are purpose-led and should be anchored in the quadruple bottom line: people, planet, profit and positive impact. As part of our sustainable supply chain transformation offering, we collaborate with Leaf Logistics, a company focused on transforming transportation logistics through digital solutions. According to Anshu Prasad, CEO of Leaf, “We connect all transportation market participants across the industry, giving them unprecedented network connectivity to create resilient transportation plans. We work with IBM to give retail companies a way to demonstrate positive sustainability initiatives that also reduce supply-chain costs.”

Prasad added that more than 30% of the trucks on the road drive empty due to lack of network coordination. Leaf is dramatically reducing that number using transportation and client data to dynamically allocate transportation capacity and minimize empty miles. This provides retailers with more reliable planning that reduces overall costs, helps drivers to realize a better life and dramatically reduces CO₂ emissions.

According to Leaf:

— 30% of truck carbon emissions are not associated with material utility for value-added goods delivery 

— Independent drivers spend 30% of travel time without a paid load 

— Companies spend 30% of their logistics budgets on non-value-added services  

With support from solutions like Leaf, companies can steer toward more sustainable outcomes by reducing empty miles, reducing logistics spend for beneficial cargo owners (BCOs) and fostering a better life for drivers. For retail customers, this creates a world-changing impact. In partnership with IBM and Leaf, retail companies are able to demonstrate positive environmental and social impacts across the supply chain. This allows businesses to get their brands closer to realizing sustainable product delivery for end consumers, while also reducing supply chain costs.

Solution focus

1. Reducing emissions associated with logistics 

Many retailers rely upon third party logistics providers for shipping. Emissions associated with such shipping activities are considered Scope 3 emissions of the retailer.”  Scope 3 emissions are defined as emissions as the result of activities from assets not owned or controlled by the reporting organization, but that the organization indirectly impacts in its value chain. They are often hard to capture and quantify.

The ability to collect Scope 3 emissions data is hindered by lack of primary source data, cumbersome data collection and challenges associated with estimating emissions. The Greenhouse Gas Protocol, an organization that provides standards, guidance, tools and training for business and government to measure and manage climate-warming emissions, establishes 15 categories for Scope 3 emissions data. It also provides methods to estimate emissions for each category. Managing this process has been a challenge to emissions reporting for many retailers.

Our solution helps retailers quantify Scope 3 emissions through collected data related to transportation routes, types and content. This is part of IBM Consulting’s larger offering for supply chain carbon-footprint reporting. The Leaf Adapt optimization engine enables companies to select partnerships and routes that significantly reduce Scope 3 emissions. By reducing spend on empty miles and suboptimal loads, retailers can lower expenses and invest more in renewable fuel-powered transportation solutions.

2. Promoting driver wellness  

The safety and wellness of truckers are often overlooked in discussions regarding sustainable logistics. Empty miles mean no payment for their work. Driver well-being has been further strained by the pandemic, with limited freedom of movement. In 2021, the International Chamber of Shipping wrote an open letter to the UN stating that all transport sectors face a worker shortage and that more truck drivers are expected to quit because of the poor treatment faced during the pandemic. This puts the supply chain under greater threat,

Using the Leaf solution, filling empty miles will lead to better pay and a better quality of life for truckers. By facilitating network coordination that uncovers hidden capacity, BCOs can source drivers from the existing pool of carriers and these carriers can generate more revenue. IBM and Leaf are able to quantify and demonstrate the positive driver community impact for retailers that use this revolutionary solution.

3. Increasing transportation reliability and availability

Customer expectations for home-delivery timing and reliability have increased significantly since the beginning of 2020. At the same time, middle-mile delivery timing and reliability have not increased significantly. This supply chain gap requires the industry to abandon previous selling models to make e-commerce profitable.

Leaf provides shipment visibility and artificial intelligence-enabled analytics that accelerate the ability of retailers to predict and plan middle-mile deliveries. This results in higher reliability in last-mile delivery without significant fulfillment center inventory costs and strained working capital.

In addition, today’s cargo insurance is limited to delivery services — not the actual loads — mainly because of limited cargo content visibility between BCOs, carriers and insurance providers. Leaf data enables visibility into actual cargo and this visibility helps retailers price and insure cargo. This is especially important for high-end products.  

The journey to sustainable logistics and supply chain operations

IBM Consulting helps companies embed sustainability as a core competency and value in their supply chains. We believe that a shared sense of purpose, community prosperity and corporate success fosters sustainable supply chains to bridge the gap between identifying the need for sustainability and taking action for global change.

IBM Consulting can help build resilient, sustainable supply chains that prepare your business for the future of work, create greater transparency and improve employee and customer experiences.

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We recently sat down with software provider SupplyPike to discuss the ways that shippers can prepare their businesses to withstand the volatility of the transportation industry. Hear from SupplyPike experts about how retailers can understand their data to make actionable business decisions as they navigate today’s supply chain. Leaf Logistics offers additional insights about what it means to build a resilient transportation plan and how that benefits shippers like you. 

Watch the recorded Being Proactive in Uncertainty conversation here.

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