Translate

Friday 25 January 2019

Climate change sends logistics costs soaring

Logistics seriously impacts climate change (28% of US green house gas emissions came from transport in 2016) but relatively little is said on how climate change will adversely affect logistics operations, even though it will be seismic, leading to much higher costs to be passed onto the consumer. Arguably, the most recent example of this is the river Rhine, Europe's most important commercial waterway.

The Rhine gets its water from rain and glaciers but alpine ice flows shrank by 28% between 1973 and 2010 and that decline may be as much as 35% now as the Alps are warming up at an even faster rate. This has led to very low Rhine water levels but the drought last year and shrinking glaciers have brought home the stark reality of accelerating climate change. For example, at one of the shallower points in the Rhine the bustling river traffic ground to a halt for nearly a month late last year, choking off a critical transport artery. The impact depressed German industry, slowing economic growth in the third and fourth quarters. When low water halted shipping last summer, steel maker Thyssen was forced to delay shipments to customers, like car makers Volkswagen because it could not get raw materials to a mill in Duisburg. Such constraints on the Rhine cost BASF about $285 million, pushing the chemical maker to more costly options.

Water depths, which hit 12-year lows at Kaub for most of the second half of 2018, hobbled barges for months, which can each haul 18,000 barrels of oil, because they were prevented loading at full capacity until late December, and such fluctuating water levels are continuing in January to affect cargo activity. Fuel pumps at some petrol stations in Baden-Wurttemberg ran dry last summer because of supply problems. Natural gas prices in Europe jumped 13% in November when utilities boosted output at gas-fired generators as they struggled to get supplies to coal plants. The Rhine, it should be remembered, is a climate change friend because it takes some beating when compared with alternative road and rail options. Barges can carry five times their own weight, making them cheaper to operate and less polluting. Shipping from Rotterdam to Basel costs around 40% less than rail transport.

More negatives than positives

There is no doubt that continuing warming will have some positive sides as well as the negative but all the pointers suggest that the latter will far outweigh the former when it comes to the likely hits that transport infrastructure will have to take. Moreover, cost-saving JIT deliveries may be hit as logistics providers build up safety stocks against climate change supply disruption, possibly leading to more warehouse demand. Coastal roads, railways, ports, tunnels and airports are all vulnerable to sea level rises, which could lead to delays and permanent closures. Being a key element of logistics, transport costs, if infrastructure costs are factored in, are bound to soar. 

In recent years America has been much in the news owing to damaging natural disasters but how did it affect logistics and how vulnerable is the country's transport infrastructure? As regards road networks, high temperatures can cause pavements to soften and expand, creating rutting and potholes in high traffic areas and place stress on bridge points. Such warming would make roadway building and maintenance more costly. Warming up would also concentrate rainfall in more intense storms, leading to heavy flooding to disrupt traffic through damaged infrastructure. About 60,000 miles of coastal roads in America are exposed to coastal flooding from storms and high waves. Drought, especially in the south-western States, could increase the likelihood of wild fires that reduce road visibility and threaten roads and infrastructure, as last year's California wild fires, costing $400 billion, a record, make clear.    

There is also the impact on vehicles themselves. As temperatures rise, many types of vehicles can overheat, and tyres deteriorate more quickly, though milder winters will have some offsetting benefits. High temperatures also cause railway tracks to buckle, leading to more track repairs and speed restrictions to avoid derailments. Add to that the potential of heavy rain storms to disrupt road and rail traffic through washed away soil foundations. A good example here is the June 2008 mid-west closure of the major east-west rail lines for several days. 

Coastal roads and railways are also subject to inundation from rising sea levels combined with storm surges. After hurricane Sandy hit New York and New Jersey subways, the commuter rail system was hit by a 14ft high storm surge, leaving millions of commuters without a subway service for over a week. 

Air transport cannot expect to remain unscathed either. High temperatures could cause them to impose cargo restrictions, flight delays and cancellations, but storms can force entire airports to close. Marine transport is also in the firing line because ships are affected by many factors, like the depth of channels and waterways, as typified by the Rhine. Any water level rises could pose problems for vessels going under bridges. Inland waterways, however, like the Great Lakes, will see falling water levels, so ships could face weight restrictions as channels become too shallow. The solution of dredging would likely be hugely costly. Rainfall changes could also adversely affect shipping in many other ways. For example, marine installations, like ports, dockyards and bridges may have to be raised and fortified to accommodate higher tides and storm surges as sea levels rise. A particularly vulnerable area is America's Gulf Coast which is home to seven of the country's largest ports, importing 56% of America's oil imports in 2011.

Hard decisions needed


There are some solutions to these problems but will they be too little, too late? Roads can be treated to cope with higher temperatures and railway tracks could have cooling substances to prevent buckling. Leading logistics companies like DHL are taking a pro-active role, given that they are committed to zero emissions by 2050 and have set out a series of 2025 targets, including raising carbon efficiency by 50% compared with 2007 and using clean delivery systems such as bicycles and electric vehicles for first and last-mile deliveries. Other companies are looking at drone deliveries. Logistics companies are also encouraging tree planting and their own suppliers to go greener. All-electric cargo ships are already with us and automated sail with auxiliary power is now feasible for short sea journeys. But beyond the responsible activities of logistics companies there are other likely benefits from advancing technology. The advent of 4D printing, for example, expected to be up and running by 2022, would make it cheaper and more climate-friendly to produce products in home markets for home consumption, thus dampening demand for long-haul container shipping, something that should concentrate port operators' minds considering costly port upgrades and expansion. 

All these improvements, however, will take years, and it is impossible to say at the time they are fully implemented if they will stabilize the global warming momentum now building up. On the principle of better safe than sorry, hard decisions should be made now to shorten these targets, especially as the world's growing population and per capita consumption only adds to the problem. 

                                                                  END














No comments:

Post a Comment