Saturday, 24 December 2011

How logistics can help save the world

If it is true that global warming is the greatest threat facing humanity and that mankind's activity is the sole or major cause, an issue far from proven, then can logistics play a key role in averting catastrophe? Once called materials handling, storage and distribution, logistics is a vast, complex subject exposed to many changeable forces but one theme is clear: the subject has huge potential to cut carbon emissions. In this report we shall look briefly at the impact transport has on environmental issues and what can be done to lessen that impact meaningfully.

Whichever mode of transport is used it carries a pollution tag. Transport may typically cost only 5-6% of total product sales but that does not include the immeasurable social/environmental cost. Shipping, currently not covered by environmental strictures, by one measure is the worst polluter of all transport modes. It's claimed that one very large cargo ship, for example, spews out as much toxins in a year as 50 million cars. Insurance statistics show that people living on shores by busy shipping lanes can expect to live up to 30 months less than inland dwellers owing to air-borne particulates. But there are ways to reduce that impact which will also cut shipping costs.

Ships have two big advantages over other transport modes. They offer the maximum cargo load as a percentage of gross weight and the best cargo density in terms of lbs/ft3. Currently there is also the added financial incentive of cheap freight rates because of the excessive shipping glut caused by new ship builds entering the market. But that boon for cargo consignors is transient, though it may take some years to clear the glut, while in the meantime one may expect to see more spectacular shipping line failures, putting yet more strain on troubled banks.

More importantly in the long run, shipping lines can reduce carbon emissions per ton/mile shipped by building larger vessels, which is happening now with container ships in particular. But there are other materials handling techniques in shipping which could benefit the environment but which remain largely ignored despite being around for at least 40 years and one is the use of slip sheets instead of wooden pallets. Made mainly from plastic, slip sheets cost less than one tenth the cost of timber pallets and take up only a tiny fraction of the space. While it's true that container shipping lines charge by the container, consignors could stuff significantly more goods in palletless containers and so cut the carbon cost per tonne mile shipped. It would also cut the burning of unwanted timber pallets at the cargo destination points. The only extra, marginal cost of adopting slip sheets is the forklift attachments for push-pull platens and, perhaps, pallet inverters.

There is another palletless method particularly applicable to bagged products, which does not involve special forklift attachments. This method uses stretch and shrink wrap to unitise bagged loads which are stacked in a particular pattern to leave two fork voids at the load base.

Shipping technology is also changing by combining new and old technologies. Belfast-based B9 Shipping, for example, are building 3,000 dwt windjammers that also burn methane gas made from municipal waste. Fully automated sail handling will account for 60-70% of motive power while Rolls Royce spark ignition engines will supplement sail power in light or heavy winds to ensure delivery times are met. There are about 10,000 ships of this size plying short sea routes so this proves demand for such vessel sizes. The company, however, is also drawing up plans for 5,000 tonners.

Back on Terra firma, there is much that can still be done to cut transport emissions by reducing miles run per tonne. Three approaches are catching on, even though they have been around for decades. The rise of pallet exchange networks in Britain 20 years ago has done much to improve logistics efficiency and cut emissions and is a concept now being rolled out across Europe. Such networks are based on the hub and spoke principle in which just one, centrally-located hub allows network member hauliers to deliver all their loads for onward sorting and loading to their second and final leg of the journey. Decanted lorries then load up for the return journey. Before the networks, lorries would typically run empty on the return journey. It is a triple win scenario in which the hauliers benefit from this more efficient pallet handling technique, the consignors profit from lower charges on small 1-6 pallet loads and the environment suffers less pollution per load mile. Around 10 million pallet loads now pass through UK pallet exchange networks each year.

A second approach to cutting journey miles is the use of double deck lorries, now being avidly taken on board by big UK retailers, in particular. Such lorries are 40% more productive than single deckers. This principle is also finding favour in the passenger traffic world. In America, for example, the Megabus operation can move a full complement of passengers from Washington to New York at a fuel burn rate of only 2 pints per passenger. Compare that oil burn to each passenger using his own car instead.

Large, fully automated distribution centres can also play a key role in cutting miles travelled. To give but one example, Coca Cola Enterprises in the UK is planning to invest £30 million in a new automated national warehouse at Wakefield which will double storage capacity, allowing it to deliver more products directly to customers rather than via external warehouses. The company hopes to cut 500,000 road miles a year by delivering directly to customers rather than storing product at external warehouses. It would also drastically cut forklift fuel burn at these warehouses.

There is nothing new in using one national distribution centre (NDC) for direct deliveries to customers but care needs to be taken over warehouse capacity and throughput restraints. In the past, large food retailers were embarrassed by taking this approach because too many lorries turned up at the NDC at the same time, causing bottlenecks and chaotic delays. They then had to go back to intermediate warehouses to control the flow of goods to the NDC more intelligently. Warehouse automation, however, has the power to eliminate intermediate layers of warehousing.

While on the subject of warehouses, they are heavy users of energy in ways that are wasteful. According to the United Kingdom Warehousing Association's report, Save Energy, Cut Costs, the UK warehouse sector could cut annual energy costs by £200 million, mainly through improved lighting hardware and techniques, insulation and energy saving doors. But forklifts also have a serious role to play in combating pollution issues. These are the articulated forklifts* that can work in aisles only 1.6 mt wide compared with the 3.5 mt and 2.6 mt needed by conventional counterbalance trucks and reach trucks respectively. These articulated trucks also outperform the other trucks in terms of working height and versatility. Such is their value that in certain circumstances they can allow businesses to close down satellite warehouses and thus save on warehouse energy costs, forklift numbers and mileage. If rented, they have been known to deliver instant truck payback, which goes a long way to explain why so many warehouse operators now design their warehouses around articulated forklifts.

Nature itself is also pointing towards the need for more logistics rethinking. Several times this year Nature's fury in the Far East has humbled global supply chains based on JIT deliveries. There is evidence that manufacturers are abandoning global supply chains for regional ones but it is not Nature alone that is responsible for this shift. Corporations are also concerned about rising costs in the formerly cheap supplier countries, unreliable deliveries, variable quality and even counterfeiting issues. Even so, environmental concerns are likely to take up more board time when companies realise that as much as 70% of a manufacturing company's carbon footprint can come from transport and other costs in its supply chain. If the trend towards smaller regional supply chains closer to their main markets gathers pace then that will favourably impact the environmental scene. What the implications of this shift will be for the prosperity of these emerging countries is difficult to say but it could be a bumpy ride.
*The three UK makers of articulated forklifts are: Translift Bendi, Flexi Narrow Aisle and Aisle-Master