Yet as the political winds shift, there are signs that some administration leaders, ostensibly looking to cut waste and ease regulatory burdens, are pushing for regulatory rollbacks, affecting any number of current policies—and the industries and services to which they apply. Are supply chain sustainability practices about to be caught in those crosshairs? Will there be a pullback? Why should companies continue active programs if government mandates are diluted or rescinded? What’s the incentive to push ahead?
Based on interviews with supply chain operators, service providers like third-party logistics companies (3PLs), brokers and truckers, and firms that provide expert consulting and the supporting technologies for sustainability programs, there is optimism that sustainability programs not only will continue but will flourish. The fundamental reason: They are embedded in operational practices, they deliver business value and support core business goals, and they contribute meaningfully to a better environment for the communities where the jobs are created and where employees live, work, and raise their families.
A STRATEGIC ALIGNMENT
It’s not a zero-sum game.
“What we see organizations focusing on at this moment is strategic alignment,” observes Laura Rainier, senior director, analyst, supply chain sustainability for research firm Gartner. “Taking steps to ensure you are measuring [and reporting] the results of sustainability [initiatives] but also being really clear about how sustainability [practices] contribute to other core business goals.”
That can be reflected in tangible business outcomes, like lower energy use, less waste, and more efficient, optimized supply chains that reduce costs. It also shows up in positive “societal” outcomes like reduced greenhouse gas emissions, less waste going into landfills, and more “circular” supply chains that recover, recycle, and reuse raw materials.
“Is that happening for most organizations? Not necessarily,” she says. “But those who are scaling progress are emphasizing where this is driving value. When you do that, you get buy-in more broadly and easily [across the organization].”
In all the surveys Gartner has done on sustainability, Rainier says, the one key driver of corporate eco-initiatives that consistently rises to the top is serving the customer. “It’s about how [sustainability] contributes to core business priorities and makes the business that much more attractive to the customer,” she notes. Other key drivers include risk mitigation and talent retention and development.
TOUGHER OR EASIER?
Has managing a business to incorporate sustainability goals become easier or more difficult?
“It’s a little bit of both,” says Sara Graf, vice president for sustainability, culture, and communications at less-than-truckload (LTL) carrier Estes Express. “What is getting easier is creating momentum around repeatable processes and the benefits they deliver.” Also internally, “being inclusive and developing more connections within the organization. That really creates buy-in and develops strong support of business partners as the greatest advocates,” she notes.
The hard part, Graf says, is “the expectation [of some outside the trucking industry] that trucking is going to be able to move faster in the decarbonization journey,” which faces both technical feasibility and cost challenges.
The path to more electric truck usage in the heavy-freight business, Graf believes, is constricted by truck manufacturing ability and capacity, high costs, the maturity of systems and technology, charging time and distance capacity, and the ability of the electric grid to support more e-trucks.
As for carbon reporting, Graf says that Estes already is doing Scope 1 and 2 reporting (Scope 1 refers to direct emissions controlled by the company, while Scope 2 refers to indirect emissions from purchased energy), using the carbon accounting firm Watershed as its partner. “They have a wealth of climate scientists on board who have been a real help to us,” she notes.
Estes also partnered with the trucking industry costing platform SMC3and several other LTL carriers to build a carbon calculator for LTL shipments. Designed to help standardize emissions reporting in the LTL industry, the calculator automates carbon data reporting and helps industry stakeholders more effectively track their progress against freight transportation sustainability goals.
The collaboration is part of Estes’ strategy to promote “a leadership pathway that focuses on collaboration with industry partners to advance sustainability initiatives in the LTL industry,” according to the company. Ultimately, as the SMC3 platform and tools are refined and incorporated into the other data collection and measurement tools Estes employs, the carrier expects to be able to provide emissions estimates down to the customer LTL shipment level.
“It’s creating a lot more consistent emission reporting in the LTL space,” Graf notes. She adds that the company has kicked off a pilot program with several customers, creating initial reports on customer-specific LTL shipment emissions and getting feedback that helps refine the process and ensure quality data for accurate emissions reporting.
“The way we look at sustainability is we want it to make sense; we want it to be a win-win-win scenario,” she says. “A win for our customers, doing the right thing by our communities and the environment, and doing what’s right for running the business. There are so many opportunities with sustainability initiatives that lead to a deeper focus on and discovery of efficiencies … that is where we end up with a lot of great wins.”
BEING AUTHENTIC
An authentic sustainability program that demonstrates continuous, dedicated, strategic investment can be an advantage in a competitive market, particularly as shippers demand more concrete action on their carriers’ part to lower carbon emissions and address climate change.
“We are in a highly competitive business with many reliable service providers,” notes Geoff Muessig, executive vice president and chief marketing officer at LTL carrier Pitt Ohio. And while carriers always need to compete on service and price, “we recognize there is a segment of the market that is concerned with carbon emissions. To the extent we can show them how we are reducing our carbon emissions related to the [freight] we move for them, that’s a competitive advantage,” he says, noting that Pitt Ohio’s approach is “crawl, walk, run” when it comes to developing and deploying tools that help clients reach both core business and sustainability goals.
Pitt Ohio has been one of the more forward-leaning truck lines when it comes to sustainability. It has installed renewable energy systems at facilities in Pittsburgh; Trenton, New Jersey; and Cleveland, the newest installation, where the company has 1,500 solar panels and eight wind turbine generators. These “microgrids” also have onsite battery packs for power storage. Six all-electric straight trucks work out of the Cleveland terminal. An agreement with the local utility also enables the facility to sell power back to the grid.
As well, the company has deployed 108 electric forklifts at 14 terminals and just finished pilot testing and deploying an all-electric yard tractor in Indianapolis. Those deliver energy savings and make for an emissions-free dock that’s attractive to drivers and dock workers, who enjoy a cleaner and safer workplace.
Yet the biggest impact area is the trucks it operates. “Ninety-two percent of our emissions come from our trucks,” says Muessig. “As we become more fuel-efficient, we can take cost out of our network, share some of the savings through gainshare with customers, and further reduce our carbon footprint.”
Those results, he says, come primarily from a hard focus on basic LTL blocking and tackling: maximizing load factors, route optimization, reduced idling, eliminating empty miles, and coaching drivers on fuel-efficient braking and acceleration techniques, all of which can contribute to better fuel economy and lower emissions.
There are also benefits from “putting the right size freight on the right truck,” Mussig adds. “Fifty percent of our shipments are one-pallet orders. Thirty-five percent of our fleet is straight trucks. Why would we put one pallet on a tractor-trailer?” he queries.
Pitt Ohio also has collaborated with SMC3 in the development of its carbon calculator tool for LTL shipments, which was launched earlier this year. Muessig says Pitt Ohio pioneered the technology but found customers wanted one standard tool that would provide “apples to apples” comparisons among truck lines. So, the carrier partnered with SMC3 to further commercialize and popularize it for all industry stakeholders.
“As a pioneer in carbon calculation for LTL shipments, we understood the need to allocate carbon emissions to each shipment based on its movement,” explains Justine Russo, Pitt Ohio’s director of sustainability and business development. “We’re excited to collaborate with SMC3 so the industry can advance a common LTL emissions standard. That benefits all stakeholders with consistent, reliable, and improved emissions data.”
DATA DEMAND RISING
On the warehousing side of the logistics ledger, “the push for emissions transparency is reshaping how data gets collected—and who is responsible for it,” says John Hoekstra, senior vice president and global head of sustainability for industrial real estate giant Prologis, which manages 1.3 billion square feet of warehouse space across 20 countries.
Fundamentally, it’s about collecting and managing data on utility consumption (energy, water, and waste) and translating that information into environmental impact for reporting. Data coverage, quality, and consistency are paramount, particularly in Prologis’ case, where it is collecting emissions and energy data across thousands of markets and assets. That requires both strong infrastructure and close coordination with customers and vendors.
“In our case, that means giving customers detailed reports on building performance and available renewable energy,” Hoekstra notes. “In some cases, we are even advising them on how their Scope 2 emissions are tied to the power they purchase to operate the leased space.” For many customers, “it’s the first time pulling this kind of data together, so we always encourage them to follow universal emission reporting standards like the Greenhouse Gas Protocol.”
Another key takeaway from Prologis’ experiences with emissions reporting is the importance of starting early and being flexible, Hoekstra says. “The sustainability reporting landscape is dynamic; tools and standards that worked five years ago may not be sufficient today.” The overall goal of Prologis and its sustainability investments: “running a smarter, more efficient, and more resilient business—for the benefit of our customers,” he says.
Hoekstra doesn’t see any letup in companies pursuing sustainability goals. “Policy shifts can certainly influence the pace and nature of sustainability regulations,” he notes. “However, the broader trend toward transparency, resilience, and decarbonization is well underway. And it is being driven as much by the private sector and global capital markets as by regulators,” he says.
It’s a business-value decision supporting and complementing a larger business strategy. “Measuring this data establishes a baseline for improvement,” he stresses. “Lower emissions lead to lower energy costs, creating a direct link between environmental impact and financial performance.”
NO MAGIC WAND
Supply chains are inherently complex, with many moving parts and participants influencing the flow of goods from origin to destination—and how much energy they use and the amount of emissions they generate. No one size fits all. “They all come with their own dynamics,” says Bill Combs, vice president of sustainability for diversified transportation services company Penske.
For a company that leases and maintains trucks, operates fleets on behalf of customers, and provides a whole array of complementary logistics services, Combs believes one important key to a successful and enduring sustainability program is “understanding where the client is headed with the business and what they want to accomplish, from both a business-value and emissions-reduction perspective.
“There is no magic wand that will reduce emissions across the board,” he quips. “When we think about decarbonization of supply chains, it is removing carbon emissions over time.”
Combs urges those who are new to the game to think of it as “levels of engagement. Setting a strategy and deciding what and how to measure, the goals to be achieved, and what the expected end-state should be are key. Deeply incorporating your 3PL in the process is paramount.” Among all the supply chain activities that a sustainability program must consider, “freight movement is the most difficult nut to crack when you think about reducing emissions,” he says.
Yet there are opportunities, through load and route optimization; better packaging design and use; deploying the newest, highly fuel-efficient trucks; exploring electrification, particularly in short-haul applications like local delivery and drayage; and employing alternative fuels, like renewable diesel. “We are very much advocates for renewable diesel,” Combs says. “The hard part is getting enough supply at a cost that is feasible for the business to run it.
“Everything we do from a sustainability standpoint should make business sense,” Combs emphasizes. “We want to do what is right for the business. That outcome does not necessarily have to be mutually exclusive to sustainability,” he adds. “Financial or efficiency benefits are equally attainable and complementary to the overall goal of being a good steward of the environment.”
A ROLLBACK COMING?
The Trump administration has signaled its intent to roll back or even eliminate some Biden-era sustainability policies and programs. That could affect the availability of federal grants or other incentives that promote sustainability or make carbon-emissions-related initiatives more economically feasible.
“When grants are available, we will try to take advantage of them,” says Pitt Ohio’s Muessig. Yet he sees signs that with the current administration, “there will be fewer grants available for sustainability initiatives in the next few years.” That may affect the ROI (return on investment) on some capital-intensive projects and may cause others to see extended timelines, he believes.
“But the focus on taking carbon out of our network will continue,” he says. “It just makes good business sense. Sustainability is a virtuous think in transport; the more you improve your fleet mpg, the more [dollars] you drop to the bottom line—and take carbon emissions out of the environment. We will continue to focus on decarbonization efforts that help the business and make us a more attractive partner for our customers.”
