The Paradoxes of Green Logistics

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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.

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GreenLogistics or Green/Logistics?

• Evocative concepts
• Origins in the environmental movement
• 1990s the decade of the environment.
• New market opportunities
• Recycling.
• Transport of waste.
• Possible convergence?

Green
Logistics

• Environmentalefficiency
• Recycling
• Compliance

• Distributional efficiency
• Save time / money

Convergence?
3
Reverse logistics

• 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.
• Two reverse channels
• Recycling / reuse (back to the suppliers).
• Disposal (shipment of non-recyclable waste).

Suppliers
Recycling / Reuse
Supply Chain
Disposal
Customers
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How green is the logistics industry?

• Most important issues
• Reducing packaging and waste.
• Hazardous waste disposal.
• Solid waste disposal.
• Internal costs.
• Least important issues
• Congestion.
• Land use.
• External costs.

Transportation
Land Use
Most important
Least important
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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.

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Logistical Improvements, Manufacturing Sector,
1960-2000
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THE PARADOXES OF LOGISTICS costs

• Hubbing and the land take
• Airports.
• Seaports.
• Distribution facilities.
• Hubbing and local access
• Road and rail connections.
• Channel deepening.
• High costs wholly or partially subsidized.

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THE PARADOXES OF LOGISTICS time/speed

• 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.
• Both favour use of the least energy efficient
  modes
• Trucking.
• Air.

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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.

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LOGISTICS AND WAREHOUSING

• Inventory reduction
• 1980 50 of costs.
• 1990 44 of costs.
• 1999 36 of costs.
• 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.

Delivery units for parts
Moving storage units
Assembly and warehousing
Delivery units for finished goods
Moving storage units
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Logistics Costs, United States, 1980-1999 (in
billions of )
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LOGISTICS AND E-COMMERCE
Supply chain

• 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.

E-Retailer
Warehousing
Customers
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Environmental Vicious Circle of Logistics
Emphasis on trucking and air transportation
Application of logistics
More ton-km transported
Activities less spatially constrained
Energy consumption Pollutant Emissions Congestion
Space consumption Pressure on marginal land
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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.

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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.