What Is Green Logistics?
The grass really is greener with Circuit for Teams. Optimized routes can help you save fuel, time, and money.
Green logistics, or eco-logistics, are policies in the logistics industry aimed at reducing environmental impact and increasing sustainability.
Traditionally, logistics is all about operations, supply chain, and economy — with little to no focus on environmental impact.
Green logistics attempts to shift this mindset by reducing emissions, waste, and energy consumption.
With climate change becoming an ever-growing concern, green logistics and eco-friendly business initiatives have become more and more popular.
The global green logistics market size was valued at over $1 trillion in 2021, and is expected to reach more than $1.4 trillion by 2028.
Below, I’ll explain what you need to know about green logistics, including why it’s important for businesses, its benefits and challenges, and how you can make your logistics greener.
Why is green logistics important for businesses?
Some of the biggest names in the world — Apple, Amazon, and Coca-Cola — have all pledged to be carbon neutral by a specific year.
Google has been carbon neutral since 2007, becoming the first major company to match 100 percent of its annual electricity use with renewable energy.
The trend is clear. Businesses are going green. But why?
Here are some reasons green logistics are in demand:
Customers are becoming more environmentally conscious
A whopping 85 percent of people say they’ve shifted their purchase behaviors toward being more sustainable.
This is especially true among millennials. One-third of millennials will choose a sustainable alternative when it’s available.
If your business wants to stay competitive and appeal to these customers, you need to show you’re making an effort toward sustainability.
If you’re not adopting green logistics strategies now, then you’re already behind.
Prioritizing sustainable logistics practices is becoming an industry standard.
Digital record-keeping helps reduce paper use
From raw material sourcing to last-mile delivery, the supply chain has many different processes.
The more you can digitize these processes, the less paper waste your company will create.
Digital data is also easier to analyze for patterns, problems, and inefficiencies. It’s harder to lose and easier to collaborate and share with your team.
You can make adjustments that are good for the planet and your business
To reduce your environmental impact, it’s essential to understand the amount of carbon you’re producing and look for ways to reduce it.
You can measure your business’s carbon footprint. A carbon footprint is simply a measurement of the total carbon dioxide (CO2) emitted from activities related to your business or organization.
Many of the largest companies in the world have pledged to become carbon neutral by a certain date because they understand how important it is to our planet’s long-term health.
In the last 50 years, CO2 emissions have increased by almost 90 percent. Your business can be a part of the solution.
You can save money in the long term
Green practices in supply chain management can help reduce energy consumption, which can save businesses money.
Supply chain management is the process of managing the flow of services and goods.
Think of all the links in the chain when it comes to making, selling, and delivering a product — that’s all part of supply chain management.
A design is made. Raw material needs to be sourced. The product goes into production and distribution. Each step costs time, effort, and money.
This is especially apparent when it comes to transportation costs.
In one year, a long-haul truck can idle for almost 1,800 hours and waste 1,500 gallons of diesel.
Fuel consumption comes at a steep price. In October 2022, a gallon of diesel cost about $5.21.
That’s about $7,815 of wasted gas for one truck in a year!
One green solution is route optimization software like Circuit for Teams, which can help reduce carbon emissions by cutting idling time and decreasing the mileage and time spent making the same number of deliveries.
Challenges of green logistics
You care about environmental issues and want to reduce your business’s greenhouse gas emissions, carbon footprint, and packaging waste.
You’ve read through the benefits, and making your logistics operations greener sounds great.
So, where’s the catch? Here are some challenges that can come with adopting green supply chain strategies:
Investing in new infrastructure and equipment
Let’s face it. Buying environmentally friendly vehicles, switching to green logistics solutions, and transitioning from fossil fuels are all expensive.
If you have a logistics company with a functional team of gas vehicles, for example, the idea of replacing those with electric vehicles can be daunting.
While electric vehicles (EVs) might be cheaper to own in the long term, the initial costs are higher.
The Ford e-Transit starts at $46,295, while the Ford Transit (the non-EV gas model) starts at $43,455. Learn more with our guide to cargo vans for small businesses.
The e-Transit page says the EV has a lower cost of ownership than the gas model — a possible tax incentive and 40 percent lower maintenance costs than the average 2020 gas-powered Transit over eight years.
If you go EV, you’ll have considerations like where to charge the EVs and whether you need to invest in charging infrastructure.
And that’s before we even talk about switching to renewable energy sources, investing in environmental management systems (EMS), doing a carbon footprint analysis — and the list can go on and on.
Finding a way to keep stakeholders happy while striving to be less of a contributor of environmental impact is a hard balance to strike.
If you’re working with tight profit margins, investing in green infrastructure may not be the best option, but you can still consider taking smaller, less expensive steps to help green your logistics practices.
For example, you could use less packaging or start recycling.
Continuing to meet customer demands
Online shopping has increased delivery volume at an accelerated rate — from 2014 to 2019, eCommerce sales tripled globally.
But keeping up with the demand comes at a cost. There are more delivery vehicles on the road than ever before.
And it can be challenging to meet customer demand without compromising your fleet management.
Customers are spoiled with on-demand delivery. They expect shipping to be fast and free.
The logistics practices behind that shipping are invisible to them, and they don’t always understand the environmental impact their shopping choices make.
For example, a 24-hour delivery service promise from an eCommerce company might prevent the distribution center from consolidating loads and using green logistics.
The focus is on speed, not sustainability.
Options include:
- Making hyper-local deliveries from nearby stores or warehouses (check out our post on micro-fulfillment centers and how they can help with last-mile delivery)
- Dispatching deliveries with EV vehicles first
- Using route planning and optimization software like Circuit for Teams to make deliveries faster and more efficient (learn how your business can save time and money with a route planner)
You could also incentivize customers to make sustainable choices, like bundling orders. Suggest commonly purchased items to add at checkout, offer discounts on pre-bundled products or “build your own” sets, or offer free shipping for orders over a certain amount.
Green tips for logistics processes
What are some of the ways the logistics industry is going green?
We know the goal is to reduce their carbon footprint, increase energy efficiency, and be more sustainable.
But what are the actual changes to logistics systems that make these goals a reality?
Here are some tips to help your logistics processes go green:
Optimize delivery routes
One of the easiest, low-cost ways to make your supply chain greener is to optimize delivery routes.
Route optimization involves using software to determine the most efficient way for a driver to reach several destinations.
Circuit for Teams is a route optimization software that helps prevent failed deliveries, reduce delivery costs, and eliminate a lot of that wasted time.
Circuit for Teams can also help your logistics management system become more streamlined by offering customers updated delivery times, sending automated customer updates, and collecting proof of delivery.
More importantly, though, it helps save gas.
Transportation is the largest contributor of greenhouse gas emissions and accounts for 27 percent of total US greenhouse gas emissions.
Invest in green transport vehicles
While there are initial costs in purchasing electric vehicles (EVs) and setting up the infrastructure to charge, maintain, and service them, they can be more cost-effective in the long term.
There are no oil changes, lower operating costs, and less downtime from maintenance because EVs run on electricity.
EV emissions are about 43 percent lower than diesel-powered vehicles.
Plus, many states offer incentives to businesses that switch from gas-powered vehicles to electric.
Streamline warehousing
Warehouses can be kryptonite for energy efficiency.
In fact, 40 percent of all energy consumption in the US — and a similar proportion of greenhouse gas emissions — comes from buildings.
And warehouses are very big buildings. In fact, they use an average of 6.1 kilowatt-hours (kWh) of electricity per square foot every year.
And that’s just non-refrigerated warehouses.
That number only increases for warehouses that store food or medication that need refrigeration.
If your goal is to reduce energy consumption, there are many options.
Think about your warehouse itself.
Is the layout efficient, or are you wasting energy sending forklifts on long, meandering paths to fetch pallets?
One option might be changing your layout and warehouse slotting (rearranging, sorting, and organizing your inventory) to help save time and energy.
Assess supplier locations and ethics
It also pays to look at your suppliers’ locations and how they’re sourcing materials.
Are your suppliers close to your distribution centers, or do they have to ship from across the country?
The farther your suppliers, the more fuel is used for shipping and the more greenhouse gasses are emitted.
Consider finding closer suppliers or vetting your suppliers to better understand their environmental impact and sustainability practices.
Ethical sourcing is also important.
Ethical sourcing is the practice of making sure goods are sourced in an ethical and responsible manner.
This includes considerations like your suppliers’ labor practices, the production process’s environmental impact, and your social responsibility.
Do your suppliers use sustainable practices? Are they taking steps to reduce their environmental impact?
If not, it might be time to look for more sustainable suppliers.
Switch to green packaging
Around 60 percent to 70 percent of US consumers said they’d be willing to pay more for sustainable packaging.
That means you might be able to pass on the cost of green packaging to your customers.
Even if you don’t do that, switching to green packaging can still help you save money by reducing packaging materials.
The world creates 300 million tons of plastic waste every year.
If you can be a part of reducing that, it’s worth it.
Green packaging includes things like reusable and recyclable materials, biodegradable and compostable materials, and packaging made from recycled or renewable materials.
These types of packaging can help reduce greenhouse gas emissions, conserve natural resources, and reduce waste.
Improve reverse logistics processes
Reverse logistics is the process of returning products from customers to businesses.
It’s an important part of the supply chain but can also be a big energy (and financial) drain.
Customers return 15 percent to 40 percent of what they buy online.
To improve your reverse logistics processes and reduce energy consumption, look for ways to streamline the process and reduce waste.
Consider using reusable packaging for returns or arranging pickups and drop-offs at designated locations.
One way to do this is to avoid the return in the first place.
Reduce instances of broken goods with quality control processes, proper packaging, or even robot picking and automated systems.
(Check out our post on logistics industry trends.)
Create clear quality control processes to assess returned products and determine whether they can be resold or recycled.
Finally, use analytics to track and measure return rates so you can spot trends and make data-driven decisions to reduce waste.
Look for ways to improve recycling efforts
Recycling is a great way to reduce energy consumption and waste.
Look for ways to optimize your recycling efforts, like setting up clearly marked bins and establishing a waste-sorting process.
Educate your staff about the importance of recycling and make sure everyone understands what can and can’t be recycled.
Cut the paper record-keeping by going digital.
You can also partner with local recycling centers or waste management companies that specialize in recycling to make sure your materials are properly handled and discarded.
Going green will be expected by consumers in the future
Green logistics are the future.
If your business wants to stay competitive, you need to make sure you’re taking steps to reduce your environmental impact and be as sustainable as possible.
Adopting sustainable strategies can help you cut costs, keep your customers happy, and reduce environmental impact.
One way to start your journey is with route optimization software like Circuit for Teams.
Circuit for Teams makes it easy to manage multi-stop routes for all your drivers, collect proof of delivery, and send customers automatic updates so they know where their packages are in real time.
It also helps you optimize routes, reduce idling (and the CO2 that comes with it), save fuel, and shrink your carbon footprint.
