Transcript The Transportation Geography of Logistics

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
Customers
Recycling / Reuse
Supply Chain

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.

Disposal
Two reverse channels
– Recycling / reuse (back to
the suppliers).
– Disposal (shipment of nonrecyclable waste).
How ‘green’ is the logistics industry?
Journal
% environmental
Intl. Journal of
Physical
Distribution
1.7
Logistics Spectrum
1.2
Logistics Focus
4.8
Transportation
Land Use
Most important
Least important

Most important issues
– Reducing packaging and
waste.
– Hazardous waste disposal.
– Solid waste disposal.
– Internal costs.

Least important issues
– Congestion.
– Land use.
– External costs.
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
40
Logistics Costs
Inventory Costs
Cycle Time Requirements
18
16
% of GDP
14
35
30
12
25
10
20
8
15
6
10
4
2
5
0
0
1960s
1970s
1980s
1990s
2000s
Days
20
THE PARADOXES OF LOGISTICS: costs

Hubbing and the land take
– Airports.
– Seaports.
– Distribution facilities.

Feeder
Hub
Environmental Pressure
Hubbing and local access
– Road and rail connections.
– Channel deepening.
– High costs wholly or partially
subsidized.
THE PARADOXES OF LOGISTICS: time/speed
% of Products Shipped for “Just-inTime” Manufacturing

45
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.
40
35
30
25

20
15
Both favour use of the least
energy efficient modes:
– Trucking.
– Air.
10
5
0
1990
1992
1995
2000
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
Assembly and warehousing
Delivery units for finished
goods
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.
Logistics Costs, United States, 1980-1999 (in billions
of $)
1000
900
800
Administrative Costs
Transportation Costs
Inventory Carrying Costs
700
600
500
400
300
200
100
0
1980
1985
1990
1994
1995
1996
1997
1998
1999
LOGISTICS AND E-COMMERCE
Supply chain
E-Retailer
Warehousing
Customers

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.
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.