Breaking Through Complexity to Take Action on Global Goods Transportation

Authors

• Eric Olson

  Former Senior Vice President, BSR

Over the past few years, interest in sustainable products has grown tremendously, and with it has come an increased focus on supply chain practices. Recently, major initiatives such as the Sustainability Consortium, Walmart’s Sustainability Index, Unilever’s Sustainable Living Plan, and P&G’s Supplier Sustainability Scorecard have shined a bright light on the need to reduce the environmental impacts associated with the global production and transport of goods.

One of the most challenging aspects of this is managing the impacts of a global transportation and logistics system that moves vast quantities of raw materials, components, and finished products to where they are needed, in the right amounts, and on time.

This was brought to life on my recent visit to the Port of Oakland’s docks to watch how one company is addressing just one of the many environmental impacts in the shipping industry by “cold-ironing.” In this process, a large cargo ship—in this case, the APL Singapore—shuts down its diesel engines and runs an extension cord from the ship to plug in to shore-side electrical power for the 24 hours that she remains in port while cranes unload hundreds of truck-sized containers from Asia and reload the vessel for the trip back East.

APL is the first carrier in California’s Port of Oakland to switch to cold-ironing, which the company predicts will eliminate about 50,000 pounds of nitrogen-oxide emissions and 1,500 pounds of particulate matter every year. These emissions—the 61 tons of diesel particulates produced annually by ships calling port in Oakland—present a major health risk to nearby communities.

My initial (admittedly untutored) reaction was, great, but why weren’t we doing this before? I cannot re-create the eloquent report from APL’s chief engineer, but suffice to say that it involved four years and US$11 million of construction, retrofitting, and standards-alignment so that the infrastructure would be consistent with similar efforts at other global ports. It also involved multiple parties, from the company to the Port of Oakland to the California Air Resources Board.

The story of cold-ironing at the Port of Oakland provides a nice illustration of the opportunities and challenges in the shipping industry’s effort to address its total environmental impact: How should a company go about measuring (let alone managing and reducing) GHG emissions and other sustainability impacts across a system that has few established standards, and in which shipments commonly change hands several times, on vessels and in vehicles containing products and materials owned by many other players?

The good news is that we don’t need to start from scratch.

BSR’s Clean Cargo Working Group (CCWG), a business-to-business collaboration among leading shippers (retailers and manufacturers), ocean carriers, and logistics providers, has been working since 2003 to integrate environmentally and socially responsible business principles into transportation. The ocean carriers in the CCWG are responsible for almost 70 percent of containers shipped worldwide. The global brands, or shippers, include some of the world’s largest retailers and product manufacturers. (See the list of carriers and shippers at www.bsr.org/cleancargo.)

Building a Solid Foundation

BSR established the CCWG in response to the needs of global brands to address growing concerns (and related regulations) about the industry’s effects on community health and climate change. Shippers (brands) needed reliable information about the environmental performance of transportation-service providers, and these same service providers were receiving a growing number of redundant, time-intensive demands for environmental data from brands.

To create a standardized and credible approach to reporting this information, the CCWG has spent eight years gathering the most comprehensive environmental data in the shipping industry—capturing carbon-dioxide, sulfur-oxide, and nitrogen-oxide emissions numbers, as well as other information, from most of the world’s largest transportation carriers.

As a result of this work, the group has made several accomplishments:

• Developed a de facto industry standard for assessing ocean carriers’ environmental performance, providing a sound basis for identifying improvement opportunities
• Created an “intermodal” carbon calculator that allows brands/shippers to measure and manage the total “dock-to-dock” footprint of their products
• Established a business-to-business forum for shippers and carriers to share best practices in operations and technology investments that have improved environmental performance

Clean Cargo 2011 and Beyond: Ready for Prime Time

With this important work behind us, the CCWG has charted a new course, with an aim to increase the number of shippers and carriers using these environmental performance tools. We are also trying to ensure that our work aligns with the growing number of private- and public-sector efforts in the transportation and logistics space. To this end, we recently released our first public report describing how member companies are using CCWG tools to improve performance.

At our May meeting in Seoul (hosted by the CCWG member Hanjin Shipping), we outlined a vision for 2015:

• Establish the CCWG as a reference standard for other initiatives within the ocean sector through active outreach and participation in relevant conferences and industry forums.
• Work more closely with ports, terminals, and other key players in maritime transport.
• Continue to share best practices among carriers, shippers, and other industry players in technology and operations to accelerate improvement.
• Work to influence and align efforts across other transportation modes such as rail, road, and air by participating in relevant industry, civil society, and public sector initiatives

The Network Effect (We’re Here to Help—and We Need You)

If your company is looking for a credible and cost-effective way to reduce the transportation footprint of its products, the CCWG offers the best data and tools available today. Through it, you will gain access to a collaborative forum and relationships that will ensure you stay ahead of the game as the market and policy landscapes evolve.

By the same token, your participation in the CCWG will help ensure that the group continues to shape the agenda, with solutions that are rigorous and credible enough to meet the demands of external stakeholders while creating the value that your internal business partners demand.