Shipping with a conscience: The path to sustainable e-commerce
Shipping plays a major role in the e-commerce supply chain, and the current consumer-driven push for fast delivery of online purchases spells disaster for the environment. How can consumers become more aware of the impact of their shopping?
Today’s consumer is becoming increasingly eco-conscious when choosing what to buy – and what not to buy. Few consumers, however, are aware of the environmental footprint of how they buy. Shipping plays a major role in the e-commerce supply chain, so when purchasing something online, consumers are – mostly unknowingly – contributing to the emissions released by ships into the marine environment. A combination of consumer awareness and lower-emissions shipping solutions are needed to reduce the overall impact of e-commerce on greenhouse gas emissions.
“The most impactful and immediate way to reduce greenhouse gas emissions from online shopping is for us all to do less of it,” explains Diane Gilpin, founder and CEO of Smart Green Shipping, a collaborative industry initiative focused on developing technically, commercially, and environmentally superior systems solutions for shipping. “Ultimately consumers drive markets. If we, as consumers, stop buying stuff then the shipping element of the supply chain has to respond by reducing capacity and that cuts emissions. Simultaneously that consumer shift encourages the shipping sector to be much more responsive to explore the myriad of new emission-reduction solutions being offered to the sector.”
But decreasing consumption has other economic impacts, and changes in consumption patterns won’t happen overnight, so more realistic solutions are needed to tackle the carbon emissions associated with inbound and last-mile logistics operations. Josué Velázquez Martínez, a research scientist at the MIT Center for Transportation and Logistics and director of MIT’s Sustainability Logistics Initiative, says there are multiple efforts that companies are working on to reduce emissions from shipping, specifically in the last-mile segment.
“For instance, we are seeing investments in more efficient vehicles (e.g. electric trucks) or geospatial-driven systems based on GPS that improve dynamic routing. However, all of these efforts seem marginal when compared with the strong effect of fast shipping that e-commerce companies are currently pushing,” says Velázquez Martínez.
There are other, more futuristic solutions as well. For example, Smart Green Shipping is developing 100% zero emissions sailing hybrid merchant ships that get 50% of their power from wind. There are also digital systems that improve operational efficiency as well as zero-emission fuels. Gilpin notes, however, that all of these solutions struggle to get the funding to get to market because there isn’t a clear demand for them. In the absence of stringent-enough emissions targets, that has to come from consumers.
Creating demand through awareness
Luckily, there is a new awareness being created around sustainability and the environmental footprint of purchases, says Dan Pontarlier, a consultant in sustainability and marketing for the tourism, hospitality, and fashion industries.
“During the last decades, we started to head towards a ‘glocal’ way of consumerism: globalisation was already a fact and the possibility to buy local products online from every part of the world was starting to be a reality. Now, consumers are starting to see all the implications in the different levels of the value chain that their actions (or purchases) have. But there is still a long way to go,” Pontarlier says.
Velázquez Martínez says there are two approaches shipping companies can take now while consumers are working their way into a better understanding of the impact their purchase have on the environment.
“From one side, improving the fuel efficiency performance via looking for alternate energy sources (e.g. hydrogen), or design more efficient and bigger vessels. On the other side, the challenge is to cope with the customers’ demand quickly, which is the main drawback of ocean transportation (lead times are way higher than for instance air or road). Therefore, another approach is to improve demand planning, such that a better accuracy of the needs of the customer allows for vessels to anticipate and consolidate more demand.”
Like Velázquez Martínez, Gilpin believes the best opportunities at the moment for container shipping to combat emissions come from digital management of load optimisation while waiting for zero-emission fuels to come online.
“The container segment is especially hard to decarbonise in the short term, but it is also the most influential,” Gilpin says. “There needs to be heavy investment in alternative zero-emission fuels for the long term and, in the short term, to address the whole fleet’s emissions, in-sector offsetting should be initiated. This means investing in tankers and bulkers that can use wind-assist today to make commercially viable emission reductions, then the total GHGs attributable to shipping will be reduced.”
Here, more robust regulation can help. The EU MRV, for example, is a good attempt to drive companies to estimate and disclose their emissions. But there is still much to be done.
“I am totally in favour of measuring, reporting and verifying fuel consumption, GHG emissions, but I worry that the results can be manipulated and presented in unhelpful ways that can mislead consumers. We’ve seen it happen in other sectors,” Gilpin cautions.
The importance of transparency
At the end of the day, however, we return to square one – the consumer demand for speedy delivery of their orders. Here, too, are opportunities for companies to pave the way for change.
“The main driver to reduce emissions is on the hands of the customer,” Velázquez Martínez reiterates. “If a customer opts for normal or slow shipping (instead of fast shipping), companies can improve consolidation and reduce the amount of trucks and/or trips required to deliver the products. We have conducted some analysis on this matter and the reductions are significant. For a regular urbanised area, delaying delivery by just one day may improve last-mile emissions by 40%, as evidenced by our recent research.”
Velázquez Martínez and his colleagues have concluded that consumer awareness depends on improving transparency about emissions among companies engaged in e-commerce. To do this, companies should estimate their emissions, which may require efforts to comply with standards, and then use logistics models to estimate with a high level of accuracy the emissions reductions if customers opt for a ‘greener’ method of delivery. Once these measures are taken, companies must provide this information to consumers in an easy to understand way, ideally during the moment of the purchase, as shown by the researchers’ work on the Green Button.
Companies are also starting to create some boundaries for deliveries, restricting them to certain countries or regions, or to compensate their emissions through actions as reforestation, explains Pontarlier.
As positive as these efforts might be, Gilpin says that more must be done to educate consumers about how their choices online impact the environment.
“The low ‘CO2 per shoe’ figure helps us, as consumers, feel OK about our purchases, but it’s not sustainable. Education is the only way to change this. Increasingly we’re making informed decisions about flying, eating meat, buying fewer new outfits and once consumers understand the environmental impact of 24-hour delivery choices, then they can make smarter decisions,” Gilpin concludes.