Green logistics along the supply chain – Potential and challenges

Not only are companies constantly exposed to new challenges in their operating business – they also need to remain agile with regard to increasing sustainability criteria. This enhances the willingness to rethink and adapt supply chain processes: Green logistics aims to integrate environmental sustainability into all phases of logistics activities and thus makes a positive contribution to environmental protection. We discuss what options companies have to implement sustainability goals along their supply chain and what challenges need to be mastered in the process.

Green logistics – much potential along the supply chain

Technical innovations, sustainable projects, CO₂ reduction and compensation: In order to make transports and logistics processes more environmentally friendly in the future, a lot is happening in the industry. From manufacturing and transportation to storage and disposal of products, there are many opportunities along the supply chain to reduce the environmental footprint and act more sustainably and responsibly:

• Purchasing and procurement: Clear guidelines for sustainable procurement can promote social and economic responsibility as well as ethical standards. By focusing on products that can be easily reused, repaired or recycled, companies reduce waste in the long term and support the transformation of supply chains into supply circles.
• Production: The selection of environmentally friendly manufacturing methods and energy-efficient technologies and processes contribute to a sustainable economic model – with the aim of balancing the three aspects of people, environment and profit. In addition, the use of lightweight environmentally friendly packaging and materials reduces the weight of goods, which in turn leads to reduced fuel requirements during transport.
• Transportation management: Choosing energy-efficient vehicles is not the only strategy to reduce resource consumption, CO2 emissions and the ecological footprint. Companies also benefit from collaborating with suppliers who act sustainably. Certification to ISO 9001 or ISO 14001 is a good way of demonstrating compliance with sustainability standards on the supplier side.
• Warehousing Solutions: Inventory quantities and storage times of goods can be modified and, if necessary, reduced according to actual needs, resulting in a reduction of material and resource waste. Detailed information about inventory and storage locations avoids unnecessary transports and warehouse movements.
• Distribution: Empty runs can be minimized by consolidating shipments, and intermodal transport solutions reduce the need for truck runs. In addition to the use of low-emission vehicles and efficient route planning, transparency in the delivery process, for example through fixed time windows, helps to avoid traffic jams and unnecessary fuel consumption.
• Disposal: Companies can implement circular systems for waste management. This includes strategies how recycled raw materials can be used for new products or how waste and biomass can be used to generate energy.

The willingness to rethink supply chain processes is growing. Sustainability is becoming a success factor: Many logistics managers have recognized that they need to integrate ecological and social criteria into their target systems and their decisions if they are to remain competitive in the long term. Hence, they are increasingly focusing on green supply chain management.

The growing importance of environmentally friendly and resource-saving measures is also reflected in official figures: While in 2021, the market volume of global green logistics amounted to $1,038 billion, the value for 2028 is already forecasted to reach $1,482 billion.

The 3-phase model for reducing CO₂ emissions

An important aspect of green logistics is the reduction of CO₂ emissions: Yet how many emissions are actually produced during the transport of goods, and how can logistical processes be optimized? Here`s where the 3-phase model from Hermes International, a business unit of Hermes Germany, comes into play: Companies are supported in reducing and offsetting their emissions of pollutants when transporting goods. The model is based on the three steps of transparency, control and compensation and uses digital calculation tools to determine where potential for savings and optimization exists with regard to CO₂ emissions during transport.

• Read more about Hermes International’s 3-phase model in our blog article Reducing CO₂ Emissions: The 3-phase model for more sustainability.

Digital solutions are generally an important component towards green logistics. According to a recent survey, 62 percent of the logistics companies questioned plan to use digital technologies in order to make processes along the supply chain more sustainable.

Challenges in the transition to green logistics

Transforming transportation logistics and moving to greener practices requires time, resources and initial investments that take time to pay off. This can initially lead to high burdens for many companies. In many processes, a fundamental shift in thinking is required – moving away from the cost factor as the sole focus and toward the new priorities of sustainability and reliability: Familiar processes and ways of working must be restructured and rethought from a changed perspective.

A lack of charging infrastructure for electric vehicles, rapidly changing environmental regulations, a lack of alternative transport routes, and limited capacities of environmentally friendly means of transportation are further challenges that companies need to overcome on their way to green logistics. In addition, global supply chains are highly complex, which can make implementing sustainable practices difficult – especially when different countries and regulations are involved. This is where external expertise can provide relief: Logistics service providers such as Hermes International have an extensive global network with strategic partnerships and can support companies with local know-how – also with regard to greater sustainability.

Conclusion: Green logistics for sustainable value chains

In order to protect the environment and save resources, companies are increasingly responsible for acting and operating sustainably. However, green logistics is not only important from an ecological point of view: companies also benefit from making their logistics more environmentally friendly in terms of economic profits. Circular economy and optimally coordinated processes along the supply chain save resources when exchanging data, information and goods, reduce waste and can lead to lower operating expenses and cost savings. In addition to legal requirements such as the German Supply Chain Act or the new EU directive CSRD, also customers are increasingly attaching importance to cooperation with sustainably operating companies. Hence, the objective is clear: Green logistics should not be a pipe dream of tomorrow, but it must become the new standard. After all, in the long term, this benefits everyone involved – and first and foremost, our environment.