Doug Longobardi, Executive Vice President and e-commerce expert of Asendia USA, examines how we can cut carbon out of the e-commerce supply chain.
The recent Suez Canal crisis has attracted rare public attention on the carbon footprint of the international shipping sector. The sheer size and plight of the Ever Given container ship could well encourage consumers and their governments to finally steer shipping onto a more sustainable course.
And with COP 26, the UN’s Climate Change Conference, taking place in November 2021, legislators will be edging closer to including air and sea shipping emissions in their climate action plans.
For growth-hungry e-commerce companies in North America, it will pay to invest now in greener cross-border supply chain strategies, and to clearly communicate their efforts in ESG reporting. Shipping to overseas customers is a competitive opportunity that cannot be ignored by brands selling online.
CROSS-BORDER E-COMMERCE IS BOOMING
The cross-border e-commerce market is growing at double the rate of domestic e-commerce, according to Accenture, driven by consumers seeking brands or products unavailable in their home country, and more competitive pricing. How can North American e-commerce companies mitigate harmful emissions while still pursuing growth in markets such as China, Europe, and the Middle East?
The good news is that much has already been achieved. North American retailers have worked tirelessly in the last decade to reduce packaging waste, to find the most efficient shipping and delivery routes, to invest in electric vehicles, and to minimize returns. Meanwhile, postal operators and third-party logistics providers (3PLs) are implementing innovative tech solutions to deal with both increased demand and the need to become carbon neutral.
Together, we are getting greener. Here are four ways in which carbon emissions can be reduced from the international e-commerce supply chain:
1. Smarter international shipping strategy
Academic research into global logistics coordination and practices have led to the adoption of ideas such as Slow Steaming. This involves operating container ships below their maximum speed, thereby cutting fuel usage. Research by the Tyndall Center for Climate Change in the UK found that if you slow a fleet down by 17 percent, you can save 25 percent of emissions from that fleet.
Leading logistics companies are now evaluating shipping routes for ways to reduce fuel consumption, idle time, and other wasteful practices that increase carbon dioxide levels. At Asendia, we use data analytics throughout our international shipping routes to track performance and drive improvements over time, allowing greener decisions to be made. Our e-commerce clients are then able to benefit from cost and energy efficiencies, increasing transparency on socially responsible practices. In turn, this supports their own ESG strategy, improving the accuracy of the reporting they share with their customers and stakeholders.
E-commerce supply chain specialists are also addressing labor and waste management in fulfillment warehouses, driving efficiencies that can be passed on to their retail clients.
2. Nearshoring with localized fulfillment hubs
Nearshoring is moving production closer to end consumers, which again greatly reduces emissions as far less maritime, air, and road transportation is required. While this often refers to manufacturing bases, or call center operations, there is also a trend for specialist e-commerce fulfillment warehouses or shared hubs located strategically around the world. Storing products closer to end customers is more energy efficient in the long term. It’s more reliable for customers too, as when demand takes off, the product is ready to go.
Large post and parcel operators like Asendia can offer retail clients shipping through international fulfillment hubs – for instance in France and Singapore – to make this possible. From these hubs, we can tailor localized shipping dependent on the speed of delivery the customer requires. Slower delivery options are predicted to grow in popularity in the coming years, as they are often cheaper and more energy efficient. For maximum flexibility in the e-commerce supply chain, we have just developed a new range of international parcel services known as e-PAQ. With e-PAQ by Asendia, online retailers can offer shoppers a choice of trusted delivery options at checkout, boosting conversions and customer satisfaction.
3. Carbon offsetting as a differentiator
There’s currently no way to totally eliminate carbon emissions from e-commerce shipping, as most of the transportation industry still relies on fossil fuels. However, with carbon offsetting, a more ethical way of doing business becomes possible. Emissions that aren’t addressed by efficiencies can be offset by purchasing carbon credits.
Carbon compensation, otherwise known as carbon offsetting, is an effective emissions reduction strategy. This can be achieved through financing global conservation projects, which remove carbon from the air, or scaling renewable energy systems to help phase out fossil fuels. Carbon credits provide businesses with scientific evidence to demonstrate their carbon action achievements, offering reassurance to clients and acting as a competitive differentiator in a crowded market.
The most common offset is planting trees, but there’s been an incredible amount of creativity and innovation in the offset space over the last three years. For e-commerce brands and their logistics partners, we will see more complex options in the future.
At Asendia, we offset the carbon footprint of shipments from Europe to other continents, excluding the first and last mile. By investing in a host of environmental projects – including seven wind farm sites in India – Asendia’s offsetting scheme provides cleaner energy and supports local economies. Looking forward, we are committed to investing more time and resources to further offset our carbon emissions – something our e-commerce customers greatly appreciate.
4. Technology investment will deliver carbon efficiency
The global pandemic has undoubtedly altered the e-commerce business model. It’s forced faster developments in business and customer communication, logistics automation, collaborations between 2PLs and 3PLs, and robotics.
Today, new technologies such as integrated digital platforms and blockchain are emerging. Geofencing and machine learning techniques can be applied to data so that it strengthens, for instance, the capacity to predict the delivery time, or to inform the next party in the supply chain of when the parcel is expected to arrive at their location.
Multiple efforts are also made to enhance the security of trading documents and accuracy of description of the goods (such as certificates of origin and commercial invoices) in the context of stricter customs rules introduced across the globe. New customs regulations include the Synthetics Trafficking and Overdose Prevention (STOP) Act in the US and Brexit red tape following the late trade agreement signed with the EU. There are also incoming e-commerce VAT rules applied as of July for goods into the European Union.
The use of IoT in the industry, such as digital sensors, will become more prevalent in logistics, enabling a higher degree of transparency, from inventory tracking to RFID tags which measure location, temperature, or humidity. This increased visibility will speed up reaction times and improve decision making. By analyzing demand for goods and delivery services, supply chain companies can streamline their services and plan efficiently for both known peaks in demand and the unexpected.
THE RACE TO NET ZERO
E-commerce companies know they must grow sustainability without compromising the convenience that customers have come to expect. Logistics partners are ideally positioned to advise and report to their clients, and this collaboration should be at the heart of building sustainable e-commerce businesses going forward.
Finding the right supply chain and international postal partners – ideally those that have already made progress towards carbon reduction and offsetting – is therefore a smart move for socially-responsible e-commerce brands. 2021 is billed as the year the world gets serious about reaching net zero. There’s never been a better time for e-commerce retailers to prove their growth trajectory won’t leave a massive carbon footprint, just when the world is crying out for change.