Increasing the sustainability of business operations has moved from a section of the annual report to a boardroom imperative. Companies are realizing not only the growing regulatory push behind sustainability, but the increasing number of consumers eager to reward green efforts. Sustainable logistics encapsulates the various ways companies are working to reduce the carbon output of their logistics operations.
The logistics and transport sector is responsible for a third of global CO2 emissions, making it the largest-emitting sector in most developed countries, according to ISO. To stay on track with the goal of net zero emissions by 2050, CO2 emissions from transportation will have to fall by 3% per year between now and 2030, according to the International Energy Agency (IEA).
Sustainable logistics encapsulates the various ways companies are working to reduce the carbon output of their logistics operations. Within transportation, this includes things like fleet/route optimization (reducing miles driven, increasing stops per mile/route density), converting to alternative fuel vehicles (especially EVs), and reducing idle time. In the warehouse, this can include increased use of automation and robotics, using more renewable energy, reducing packaging, especially plastics, and making buildings more energy efficient.
Strategic Business Benefits of Sustainable Logistics
The strategic benefits of sustainable logistics are many and go well beyond regulatory compliance. There are cost savings (fuel, personnel, waste reduction), efficiency gains (improved processes, faster deliveries), technological innovation, supply chain resilience, and being more attractive to investors and customers. On a global scale, reducing environmental impact means conserving resources for future use.
Cost Savings and Efficiency
This manifests itself in some significant ways, across different logistics functions:
Warehouses can put in place more energy-efficient lighting, heating, and cooling systems to save on costs. This includes the use of automation to regulate HVAC and reduce electric consumption. Automation can also be applied to storage and retrieval, fulfillment, receiving, and putaway, producing still more energy savings through optimization.
Employing EVs and hybrid vehicles in transportation fleets, as well as using innovative technology to improve route and load optimization, all work to decrease fuel use and expense and cut down on carbon emissions.
Through efficient systems and processes, much can be done to increase sustainability in the warehouse or manufacturing yard. Yard management systems (YMS), augmented by the latest AI technology, can speed up gate access, improve traffic flow to and from loading docks, and provide real-time location data on all yard assets (trucks, trailers, chassis, containers).
Enhanced Brand Image and Competitive Advantage
As noted, many of today’s consumers are more environmentally conscious than ever and prefer to support companies that align with their green values. According to a 2020 McKinsey survey, 60% of respondents said they’d pay more for products with sustainable packaging. More recently, two-thirds of respondents to a 2024 survey – and three-quarters of millennials – said they consider sustainability when making a purchase.
Companies that prioritize sustainability can stand out in the marketplace, attracting not just eco-conscious customers but also partners and investors. and partners. Public commitments to sustainability can also lead to positive media coverage, social sharing, and improved public perception, creating a positive brand image.
Risk Management and Compliance
Staying ahead of regulatory changes ensures companies are not surprised by new environmental laws and standards. This helps them maintain compliance and avoid unexpected operational disruptions, which can result in significant expenses and reputational impact.
Implementing sustainable practices minimizes the risk of fines, sanctions, and legal action related to environmental violations. Companies are protected from financial penalties and legal issues while raising their profile as a responsible and compliant organizations.
Sustainable practices can enhance supply chain resilience against disruptions caused by environmental events or geopolitical issues. This ensures business continuity and lowers your exposure to external shocks and uncertainties.
Innovation and Continuous Improvement
A commitment to sustainability drives companies to explore new, innovative solutions that improve efficiency and reduce environmental impact. This includes investing in research and development, fostering a culture of creativity, and collaborating with partners to implement new technologies and practices.
Adopting technologies like IoT, AI, and blockchain can optimize logistics operations, enhance transparency, and support sustainable practices. They enable real-time tracking, predictive analytics, and secure data sharing, improving decision-making, reducing waste, and driving accountability throughout the supply chain.
Regularly assessing and improving logistics processes ensures ongoing enhancements in efficiency, cost-effectiveness, and sustainability. This happens through periodic reviews, benchmarking, stakeholder feedback, and continuous KPI monitoring to identify areas for improvement.
Supply Chain Resilience
Supply chain sustainability helps companies avoid legal, financial, and reputational risks by addressing issues like CO2 emissions, resource scarcity, and labor abuses. It also makes them more resilient to disruptions and regulatory changes. Companies can reduce their risk profile by diversifying suppliers and adopting environmentally responsible practices.
Sustainable logistics help companies minimize their carbon footprint by adopting eco-friendly transportation options, optimizing routes, and implementing energy-efficient technologies.
Sourcing materials locally and sustainably diversifies supply chains, reducing dependency on single sources. This can be done by incorporating sustainability requirements into supplier contracts and developing sustainability scorecards that track various metrics.
A 2024 report from Accenture and EcoVadis found that “delivering on corporate sustainability goals and commitments” was a priority among procurement executives at 71% of organizations surveyed, up 13% from 2021. Yet supplier visibility remains poor: Only 50% of companies have visibility into more than half of their Tier 1 suppliers, and just a quarter have 50% or better visibility into Tier 2 suppliers.
Benefits for Consumers and the Environment
Companies that prioritize sustainable logistics offer significant benefits to consumers. This translates into increased trust and loyalty toward brands committed to environmental responsibility. Consumers are more likely to support and remain loyal to companies that demonstrate a genuine commitment to sustainability, leading to stronger brand-customer relationships.
Furthermore, companies that embrace sustainability play a vital role in raising awareness and educating consumers about the importance of environmental stewardship. This education fosters a more informed, conscientious consumer base that values and supports eco-friendly practices.
Of course, in the aggregate, there are substantial environmental benefits. A reduction in greenhouse gas emissions helps mitigate climate change and improve air quality. The adoption of energy-efficient technologies and optimized transportation can significantly decrease their carbon footprint.
Sustainable logistics practices also promote natural resource conservation. Reducing fuel consumption and minimizing packaging waste helps preserve valuable materials and ensures their availability for future generations.
There is a decrease in pollution and waste. Sustainable waste management practices help minimize the negative impact of operations on ecosystems and communities. It not only protects biodiversity but also enhances overall environmental health.
By adopting sustainable logistics, companies provide a multitude of benefits for consumers and the environment. This approach fosters trust and loyalty, raises awareness, and reduces environmental impacts.
Practical Ways for Companies to Achieve Sustainable Logistics
All of this is meaningless if companies can find practical ways to incorporate sustainability into their logistics practices. Here’s a brief rundown by functional area:
Sustainable Warehousing Practices
This can include the use of energy-efficient lighting and HVAC systems. The summit in this regard is a LEED certification (Leadership in Energy and Environmental Design) from the U.S. Green Building Council, but there is much that can be done without that.
Sensors and motion detectors for lighting can be used to control and reduce energy consumption, as can submeters on machinery and equipment. Electric forklifts and the reuse of pallets and other materials are other steps that can be taken.
The adoption of robotics and automation has been on the rise in recent years. These systems range from massive automated storage and retrieval systems (AS/RS) that bring items to workers for packing, to co-bots that work alongside human associates to assist in sorting and picking. In one of many examples, DHL uses 5,000 robotic pickers across its global network of warehouses, increasing the number of items picked per hour by 180%.
Sustainable Transportation Practices
Technology has enabled much progress in driving more sustainable transportation systems for businesses. Modern route optimization tools use advanced AI algorithms to determine the most efficient combination of carrier, mode and route, saving on fuel and time, and CO2 emissions. Fleet managers are also increasing the use of alternative fuel vehicles in addition to EVs as part of their sustainability push.
Multimodal transportation is also on the rise, driving greater efficiency through smart combinations of ocean, air, truck, and rail. There are major investments in multimodal infrastructure, including a $73 million rail project at the Port of Los Angeles’ Pier 400. The port authority says the expansion will “improve cargo flow, reduce emissions, and improve roadway safety at the nation’s busiest port.” It will create additional rail capacity for all terminal operators, and increase intermodal cargo capacity.
Sustainable Yard Management
Sustainable yard operations are receiving lots of attention, thanks to advances in technology designed to address them, as well as growing EV usage.
Autonomous yard trucks can be directed remotely to move trailers around a yard, for instance, from a parking location to a loading bay. And at terminal yards, EV-powered yard trucks are starting to replace diesel units for grocery giant Albertsons.
AI-based systems are being leveraged to track vehicle flow into and out of yards, as well as dock scheduling. In conjunction with existing software (YMS, WMS), they manage vehicle tracking for compliance purposes, including automated collection and submission of traffic reports. These systems can also automate gate access control, speeding up clearance of arriving trucks and reducing emissions from extended idle times.
Sustainable Logistics Has Many Secondary Benefits Beyond Compliance
Sustainable logistics also offers several strategic advantages. Companies see efficiency-driven cost savings, an improved brand image, and a more resilient supply chain. They also benefit from stronger customer loyalty and trust, demonstrating that sustainability is a vital component of business strategy.
AI-driven solutions from EAIGLE help companies improve logistics efficiency, security, and sustainability in an integrated fashion. Its Automated Vehicle Access Control (AVAC™) takes in feeds from security cameras to provide comprehensive vehicle information for gate validation. This helps verify truck traffic and reporting for compliance purposes, including in stricture environments such as California.
Also using data feeds from yard cameras, YardSight™ from EAIGLE leverages AI to identify loading dock and parking availability in real time. This allows truck drivers to quickly navigate to the correct location. To find out how EAIGLE can help position you as a logistics sustainability leader, request a demo today.