We Have Not Yet Talked About CO2 Emissions - April 2021

Bill’s Building Blocks: We Have Not Yet Talked About CO2 Emissions

With Covid-19 causing me to teach remotely via Zoom, I am just not driving as much right
now. The good news is that I am spending less on gas. My wife laughs at me because I
buy gas in a lot size of exactly twenty dollars. When the tank gets below half full, I go to
the gas station and buy $20 of gas paid in cash. I know, cash is so yesterday. When gas
is expensive, I go to the station more often. I consider this as a type of social encounter.
The good news is that with less driving I am generating less CO2 emissions with my car.

The transportation arm of logistics is a major source of CO2 emissions and therefore a
major opportunity to slow climate change. The ranking by mode of transportation shows
that air transport generates the highest level of CO2 emissions per mile traveled, motor
transport generates a midrange of CO2 emissions per mile traveled, and that rail and
ocean transport generate similar lowest levels of CO2 emissions per mile traveled. These
relationships apply to both the movement of freight and to the movement of people.
Traveling shorter distances and switching the mode of transportation have a first order
impact on reducing CO2 emissions. Clearly not everyone can do this.

SOURCE, MAKE, DELIVER…inbound, midbound, outbound flow inventory downstream
to end customers. Each flow has different freight patterns relevant to transportation.
Inbound usually consists of fixed routes but with a wide range of cubic volumes and
weights. Midbound connects fixed factory and distributor locations often by full truckload
and full container load. Outbound and especially last mile delivery must deal with highly
variable routes but with smaller ranges of cubic volume and weight than inbound logistics.

From the perspective of minimizing inbound CO2 emissions, suppliers should be
geographically close to the factory with large cubic volume items shipped by rail or barge.
Midbound logistics should connect the factory with the DC by rail or ocean transport with
the factory and the DC close to the railhead or port to minimize drayage. Outbound
logistics depend on motor transport. This highly simplified explanation shows there is a
tradeoff between reducing CO2 emissions and slower modes of network transportation.

While increasing material costs, supply chain disruptions, logistics bottlenecks, and labor
shortages may be top of mind today, pay close attention to technological advances. For
example, advances in renewable energy sources and batteries hold the promise of
economical electrified vehicles using battery charging stations independent of fossil fuels.

©2021 William T. Walker, CFPIM, CSCP-F, CLTD-F, CIRM has 42 years practitioner experience,
authored Supply Chain Construction and Supply Chain Architecture, and teaches Supply Chain
Engineering at NYU Tandon plus Demand Planning at Rutgers Business School. He is a 40+year
ASCM member and APICS E&R Foundation past president. email: [email protected]