How the Logistics Industry is Helping the Environment
By Kushal Nahata, CEO & Co-founder, FarEye
Ever since the industrial revolution, there has been significant changes in the environment due to human activities. Environmental degradation due to pollution and other human activities pose a serious threat to mankind. There is a need for all industries to embrace the goal of sustainable development and commitment towards environmental protection. Government regulations and growing awareness among the people has made it imperative for businesses to come up with business strategies that incorporate sustainability goals in their agenda.
Logistics is one of the most important part in the business value chain across all industries. The transportation of goods via different vehicles is a source of carbon emission and adversely affects the environment. There is a growing need for players in this segment to integrate ‘green’ methods in their operations.
Key developments in logistics helping the environment
There have been significant developments in the logistics sector that have helped enterprises reduce the damages to the environment. The adoption of digital logistics has been a game-changer in this field. The use of advanced analytics and machine learning algorithms are making logistics operations much more environment friendly. The key functionalities helping the cause are:
- Capacity utilization
There is a huge problem of LTL (Less Than Truck Load) in the logistics industry which increases cost and adds more carbon to the atmosphere. Digital logistics helps in utilizing the full capacity of not only trucks but also other vehicles in the fleet. This is achieved by the use of sophisticated algorithms. Higher capacity utilization leads to less number of trips and subsequently lead to lower emission of greenhouse gases and pollutants.
The adoption of software-based auto-routing instead of traditional spreadsheet based approach is unlocking new efficiencies in the value chain. Algorithm-based auto routing provides best routes for goods transport thereby reducing the distance traversed by the fleet. It also reduces the time spent in traffic jams. This helps in reducing the fuel consumption and the emission of CO2 and other gases by a significant margin.
- Electronic documentation
The traditional documentation process during shipping, receiving and transit requires a lot of paper which has a direct link to deforestation. Digital logistics makes the entire documentation process automated and electronic, thereby significantly contributing to reduce deforestation by foregoing the usage of massive amounts of paper.
Trends in logistics that are going to boost sustainable development
The logistics industry is set to be in the cusp of technological revolution. New breakthroughs in technologies and their rapid adoption would help industries reduce their carbon footprint and be more environmentally responsible. The key trends are:
- Electrified logistics fleet
Logistics service providers are experimenting with the use of electric vehicles in their fleet. Some players are using e-bikes for inner-city deliveries. The application of electric vehicles has been concentrated in the last mile segment as of now. The shift from hydrocarbon vehicles to electric vehicles will significantly lower the environmental impact of logistics operations.
The usage of UAVs (Unmanned Aerial Vehicle) in logistics is in nascent state. However, companies like Amazon, DHL, Google are experimenting in this field. Amazon has even started delivery via drones in its ‘Prime Air’ service. Drones are more efficient as they need to cover much lesser distance than on-road fleets and are battery operated. The usage of drones in the future would lower the overall environmental impact of firms in the logistics sector.
IoT (Internet of Things) is an ecosystem of connected devices that communicate in real time. Cloud-based RFID chips, GPS trackers, advanced vehicle telematics, sensors constitute IoT. It makes communication possible between infrastructure and vehicle, vehicle and vehicle, infrastructure and infrastructure. The seamless flow of information would help in optimizing the entire network and scheduling; reducing distance traversed and idle engine time thereby reducing greenhouse gas emission. Smart sensors placed in vehicles would help in continuously monitoring the fuel emission and help keep negative impact on the environment in check.
The Middle East region is the strategic hub for international trade and commerce between the east and the west. According to Statista, the revenue generated by the Logistics sector in the Middle East is $40.2 billion as of 2016. The logistics industry is set to grow in both value and volume in the future. The growth in this sector also provides challenges in devising strategies to counter the environmental impact of the same. Digital logistics and the application of other emerging technologies like big data analytics, IoT, drone et al. will be necessary to devise a sustainable growth in this sector. As per A. T. Kearney analysis, the number of vehicles on the road is expected to double from 16 million in 2016 to 30 million by 2025. The application of IoT in the infrastructure and transportation sector could potentially lower $117 million in fuel costs to about half by 2025 resulting in massive decrease in the greenhouse gas emission and make the logistics industry much more environment friendly.
The logistics industry is playing its part in reducing damage to the environment caused due to human activities and with the speedy adoption of smarter technologies, the future is going to get better.