The transport storm
The economic crash in 2009 put unprecedented pressure on companies to reduce costs. In logistics, that means reducing energy consumption and labour costs. Because the UK transport sector moves all goods and people in the UK, employs 2.3 million people (DfT Annual accounts, 2009) and produces around 24% of UK CO2 emissions (DfT Strategy for the Transport sector, July 2008) what we do in managing and changing it has huge significance to UK society and economics, and involves complex political and environmental challenges.
As a management consultant specialising in analysing value networks and supply chain planning, I have become involved in work on sustainable transport in the UK and abroad, with blue chip multi-national companies and UK Government, and I wanted to share some insights on the fascinating real-world battle to green our logistics, make it truly sustainable and globally competitive.
The energy and climate crunch
Peak oil is a moderately controversial, yet now generally accepted concept. The year we would reach this peak has been much speculated on, and while the more optimistic groups feel we will not reach the peak until 2030 or beyond, many groups believe we are already there.
You can see from the 2004 US Government chart oil production (excluding OPEC, see below) is predicted to decline. According to Sadad Al Husseini, the former head of Saudi Aramco production and exploration, in a 2007 interview, Oil production had likely already reached its peak in 2006 and assumptions by the IEA and EIA of production increases by OPEC to over 45 MB/day are “quite unrealistic”.
Reductions in production will drive up prices and thus transport costs, potentially dramatically in the future. If you combine this with legislative pressures to manage climate change, such as the Climate Change Act 2008, with its legally binding requirement for a 34% reduction in UK greenhouse gas (GHG) emissions by 2020, and at least an 80% reduction by 2050. Logistics, and the millions of people who work in it, face huge challenges.
Meeting the challenges and problems posed by the relentless rise in energy prices, while increasing profits and driving down emissions will need innovation, and profound change in technology, organisation and culture, not just corporate, but personal. The opportunities will occur in software design and implementation, change and performance management, architecture and building design, engineering, materials science, advanced modelling, industrial psychology and many other fields, as transport isn’t just about buses, trains, trucks and warehouses. It is a complex, modern and well rewarded international sector.
How the industry is responding?
The industry has been working with the Government to plan how the supply chain will work in the future, as we will need to move goods and people transport into transport options (modes) which emit lower levels of GHG’s and this requires dramatic changes in operations, infrastructure and strategy.
To facilitate this, different sectors of business have organised groups to cover work such as creating roadmaps to identify best practise to calculate the emissions from transport, both for passengers, and freight (commercial goods) and this international work is being co-ordinated by several European organisations. The people involved include academics and researchers, and they come from many disciplines, both in sciences such a biology or physics, as well as engineering or industry. Their technical knowledge of operations, energy behaviour and production is crucial to both identifying and reducing emissions, as they ensure the calculation methodology is accurate, that new green technology is considered in planning, and the proposals will work in the real world.
Some examples are Ocado’s zero emission electric van fleet where each van replaces up to 40 car journeys a day (Ocado website, May 2010), and Tesco saving 2,424 tonnes of CO2 per year (3.18 million miles) by using trains more to deliver their products to stores (Tesco/Freight best practise case study, 2009). Examples of such initiatives have started to pop up across the industry, however more needs to be done to meet the CO2 targets.
My own experience
I entered the industry around 25 years ago, coming into a blue chip company via sales, and then worked in marketing and sales planning. I moved to a small specialist supply chain consultancy, and then built my own business. We use advanced technologies, mathematical models including artificial intelligence, and develop the conceptual frameworks and processes to apply them, and implement the changes they identify.
The people I work with run from operational staff, through to the Chief Executives and directors of companies like Eurostar, ASDA, Rexam, CHEP, Cisco and Procter and Gamble, and it provides endless variety and experience. I have been involved in the development and publication of several industry standard books, research papers and reports.
I am currently working on a steering group for the Department of transport, and carbon reductions projects with Efficient Consumer Response (ECR) France and Europe, and on building fleet emissions analysis software for the Energy Saving Trust, as well as extensive client consulting projects.
Through this work, I have travelled around the world, working and living in the USA, South Africa and Europe, with some of the best managers in the world. The industry is open and flexible enough for me to work from home, with a small team, and have an excellent work life balance.