The Paradoxes of Green Logistics
Jean-Paul Rodrigue, Dept. of Economics & Geography Hofstra University, Hempstead, New York, USA. Brian Slack, Dept. of Geography, Concordia University, Montreal, Quebec, Canada.
Claude Comtois, Dept. of Geography, Universite de Montreal, Montreal, Quebec, Canada.
Green+Logistics or Green/Logistics?
Green
Logistics
Evocative concepts Origins in the environmental movement
1990s the decade of the environment.
New market opportunities
Recycling. Transport of waste.
Environmental efficiency Recycling Compliance
Distributional Possible convergence? efficiency Save time / money
Convergence?
Reverse logistics
Suppliers
Management of reduction and disposal Reverse distribution
Collection of damaged or unsold products. Recycling of used products. The manufacturer takes responsibility for delivery as well as take-back.
Recycling / Reuse
Supply Chain
Two reverse channels
Recycling / reuse (back to the suppliers). Disposal (shipment of nonrecyclable waste).
Disposal
Customers
How green is the logistics industry?
Journal Intl. Journal of Physical Distribution Logistics Spectrum Logistics Focus % environmental 1.7
Most important issues
Reducing packaging and waste. Hazardous waste disposal. Solid waste disposal. Internal costs.
1.2 4.8
Least important issues
Congestion. Land use. External costs.
Transportation
Land Use
Most important
Least important
THE PARADOXES OF LOGISTICS: costs
Driving down distribution costs
Benefits are realised by the users. 1990-2000 (manufacturing sector, % GDP):
Distribution costs declined by around 13%. Inventory costs declined by around 5%.
Environmental costs are externalized
The environment or society at large pay the indirect costs. The logistics industry has largely escaped governmental attempts to charge for externalities.
Numerous subsidies. Trucking is less regulated.
Some estimates put costs as twice the revenue generated by vehicle taxation.
Logistical Improvements, Manufacturing Sector, 1960-2000
20 18 16 14 12 10 8 6 4 2 0 1960s 1970s 1980s 1990s 2000s Logistics Costs Inventory Costs Cycle Time Requirements 40 35 30 25 20 15 10 5 0
% of GDP
Days
THE PARADOXES OF LOGISTICS: costs
Hubbing and the land take
Airports. Seaports. Distribution facilities.
Hubbing and local access
Road and rail connections. Channel deepening. High costs wholly or partially subsidized.
Feeder
Hub
Environmental Pressure
THE PARADOXES OF LOGISTICS: time/speed
% of Products Shipped for Just-inTime Manufacturing
45 40 35 30 25 20 15 10 5 0 1990 1992 1995 2000
Logistics has given rise to two fundamental features of the contemporary economy:
Just-in-Time (JIT). Door-to-Door (DTD). Cycle time requirements down by 25% between 1990 and 2000.
Both favour use of the least energy efficient modes:
Trucking. Air.
THE PARADOXES OF LOGISTICS: reliability
Service reliability is at the heart of logistics
Delivery time. Delivery on-time. Breakage.
Modal reliability
Logistics systems use the modes perceived to be the most reliable:
Trucks and planes.
The most energy-efficient modes are perceived to be the least reliable:
Rail and ships.
LOGISTICS AND WAREHOUSING
Delivery units for parts
Inventory reduction:
1980: 50% of costs. 1990: 44% of costs. 1999: 36% of costs.
Moving storage units
While the manufacturers may achieve economies:
Inventories are in transit. More links are added to the production chain, with more traffic movements added overall. A form of externality.
Assembly and warehousing Delivery units for finished goods
Moving storage units
Logistics Costs, United States, 1980-1999 (in billions of $)
1000 900 800 700 600 500 400 300 200 100 0 1980 1985 1990 1994 1995 1996 1997 1998 1999
Administrative Costs Transportation Costs Inventory Carrying Costs
LOGISTICS AND E-COMMERCE
Supply chain
E-commerce and supply chain management
Traditional marketing involves consumers going to shopping centres for their purchases. New systems require large distribution centres on the edge of cities from which small parcels are delivered to customers. The system uses the most polluting modes. Disaggregation of retailing can be expected to lead to more tons/km. Higher use of packaging, with concomitant increase in waste generation.
E-Retailer
Warehousing
Customers
Environmental Vicious Circle of Logistics
Application of logistics
Emphasis on trucking and air transportation
More ton-km transported
Activities less spatially constrained
Energy consumption Pollutant Emissions Congestion
Space consumption Pressure on marginal land
How will logistics become greener?
Top down government intervention
The industry claims that one of the fastest growing cost of warehousing is compliance with governmental regulations. Labor and health regulations (training). Environmental regulations, mainly concerning dangerous substances and fuels. Congestion pricing, road pricing (US) fair pricing (EU). Recent trends show an attempt by governments to internalize cots.
Diesel fuel: Sulfur to be reduced from 500 ppm to 15 ppm.
Outcomes uncertain
Policies may impact differentially on the modes. Contradictory policies between tiers.
How will logistics become greener?
Bottom-up, industry action
Technology will improve the situation (to a limit). Fleet management, vehicle efficiencies. Attitudes will change; greenness can become a marketing tool.
Composite solutions
Environmental management and audit systems (EMAS). Will the logistics industry adopt ISO 14000?
Paradoxical situation
Problems occur at all spatial scales, from the local through to the global, so a political response is inevitable. There are hopeful signs of greener attitudes in the industry.