Providers seek competetive advantage through sustainability

With competition and consolidation intense, leading providers are increasingly finding creative ways to differentiate themselves.

As Infor’s Trevor Barrows notes on page 23 of the October Issue of Logistics Magazine (out October 3), the reduction of carbon emissions throughout the supply chain is a burgeoning area of service.

“Our peers in Europe have been working successfully on reducing carbon emissions through audit trails that monitor the baseline energy consumption of their vehicles and factories,” he says.

In Europe, carbon trading continues to gain prominence with 18 country/state members (out of 25) and over 12,000 company installations collaborating in carbon trading through the European Union Emission Trading Scheme (EU ETS).

According to UK prime minister Gordon Brown, by 2010 the global environmental market – clean energy, waste and water – could be worth almost $700 billion – a sector as big as the successful aerospace or pharmaceuticals industries.

While they decline to be named, case studies include a provider who calculated CO2 emission costs per litre and opti­mised its assets by consolidating its supplier LTL lanes to enjoy total savings of 6.5 per cent and an emission reduc­ tion of 23 per cent.

Another achieved a 38.2 per cent CO2 reduction by moving secondary postponement of finished manufactured product including packag­ing, to the country of consumption, and offsetting cost against tax and carbon credits using the EU ETS.

Although Australia failed to ratify the Kyoto Protocol and the Federal Government is yet to provide tax incen­tives or carbon trading on par with the EU, a variety of policies and programs do exist to assist in reducing greenhouse gas emissions, including trading schemes, predominantly at the state level.

Of the ANZ companies that completed the Carbon Disclosure Project question­naire last year, 93 per cent indicated that climate change was of relevance to their business, but the majority (61 per cent), have no trading strategy and do not par­ticipate in any emissions trading activi­ties.

Despite this, 19 per cent do have a strategy in place and are involved in limited trading.

Top ranked provider Queensland Rail is one Australian company pointing to environmentally friendly initiatives as a key driver of its growth.

“Businesses face increasing pressure to be environmentally sound and socially responsible,” says QR Acting CEO Stephen Cantwell.

“Global warming and climate change now make these objectives economically imperative. It’s in this area of environmental sustainability and social responsibility that rail freight transport has the opportunity to outperform road transport competition.”

Transport accounts for 14 per cent of Australia’s Greenhouse Gas emissions. Of this, 90 per cent are attributable to road vehicles while rail is responsible for only 2.2 per cent.

“A 20 per cent increase in the use of rail in lieu of road transport (freight and passenger) over the last five years could have yielded savings in excess of seven million tonnes of CO2 emissions,” Cantwell says.

“QR is committed to researching and implementing new ways of tackling the environmental challenges facing Australia and the world.”

” We have formulated a strong response to the increasing national freight task by highlighting the green credentials of rail transport, especially for long distance and bulk traffics,” he says.

One example is QR’s partnering with customers and its investment in alliances with supply chain partners that will help formulate new strategies. The company is also monitoring and participating in research into alternative fuel sources.

Sustainability will be a key factor in Australia’s business future, especially within the transport and logistics industry. Now is the time for providers to capitalise on the opportunity.

View related story: Australia lags on progressive measures

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