The Paradoxes of Green Logistics

1. 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.

2. Green+Logistics 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

4. 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

5. 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.

6. Logistical Improvements, Manufacturing Sector, 1960-2000

7. Hub Feeder Environmental Pressure 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.

8. 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.

9. 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.

10. 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

11. Logistics Costs, United States, 1980-1999 (in billions of $)

12. 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

13. 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

14. 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.

15. 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.