Emissions, workers, and communities: broadening supply chain visibility

With so many players involved in the supply chain, collaboration is critical to achieving sustainability goals.

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More large corporations than ever are pursuing aggressive sustainability goals, but the biggest opportunities are in the supply chain, where collaboration with like-minded partners is essential.

Developed economies have made great strides in building sustainable energy infrastructure like wind farms, solar power plants, and smart grids. Countries like the United States have made so much progress transforming how electricity is created that now, according to the Environmental Protection Agency, power generation is not even the largest contributor to greenhouse gas (GHG) emissions: transportation is.

Transportation accounted for 29% of all greenhouse gas emissions in the U.S. in 2017, and 23% of that was from medium- and heavy-duty trucks, the largest category after light-duty personal vehicles. 

Reducing trucking’s impact on climate change, air quality, and the environment is far more complex than converting a coal-fired power plant to natural gas or erecting a wind farm. Trucking carriers are enmeshed in a marketplace for transportation capacity and a global supply chain requiring them to operate with many partners large and small, from vast, 1 million square-foot distribution centers to individual retail stores and restaurants.

A fragmented industry and divergent customer priorities—including cost, service, visibility, and transit time—make it difficult to emphasize sustainability as a strategic priority at most transportation companies.

Small trucking carriers have trouble optimizing their networks even when they have economic incentives to do so, according to Jennifer Wong, head of sustainability at Convoy, the Seattle-based digital freight network. In the first half of last year, small carriers running their whole schedules through Convoy drove empty for 35% of their total miles, wasting drivers’ time and increasing operating costs as a percentage of revenue.

Convoy developed Automated Reloads as a way to help carriers in its network run more efficiently. Convoy’s algorithms build multi-load loops for its carriers based on criteria they enter, allowing carriers to maximize revenue-generating miles and avoid running empty. Wong said that Automated Reloads has yielded a 45% reduction in empty miles for participating carriers, which translates to a 45% reduction in unnecessary GHG emissions.

While Automated Reloads helps carriers eliminate waste and make more money, it’s also become an important program for shippers trying to make their supply chains more sustainable.

“A lot of companies are starting to realize how transportation can be a huge lever for sustainability,” Wong said. “A lot of progress has been make in Scope 1—direct emissions—and Scope 2 emissions —indirect emissions from purchased energy because  they have the oversight and ownership to make those changes. Businesses are now looking to reduceScope 3 emissions, which includes the indirect emissions throughout the value chain, both upstream and downstream. Scope 3 is larger than Scope 1 and Scope 2 combined, but it’s largely unaddressed because of a lack of visibility.”

Because so many players are involved in the supply chain, collaboration with like-minded companies is critical to achieving Scope 3 sustainability goals. Sustainability, Wong said, has always been core to Convoy’s business, culture, and values, and part of the company’s mission: “transporting the world with endless capacity and zero waste.”

“Customers are now asking to partner with  Convoy to make more proactive decisions to reach their sustainability goals,” Wong said. “As we’re starting to be more intentional about sustainability, showing up as a great corporate citizen, and making an impact on both the environment and local communities, we’re also more focused on how we can further partner with our customers to help them reach their sustainability goals.”

But sustainability means more than simply reducing greenhouse gases: it refers to the ability of a system to operate at an equilibrium indefinitely. That’s why new frameworks like Environment, Social, and Governance (ESG) have emerged in the financial world as a way to identify companies who take a long-term view of their resources and stakeholders.

Sustainable social impact can mean, among other things, compensating and treating workers fairly, and supporting the communities in which a company operates. 

“Although this is starting to finally change in the era of the coronavirus, truck drivers have one of the most underappreciated jobs in the country,” Wong explained. “Companies who care about the workers in their supply chains look to us because we connect them with carriers that have diversity ownership, are 15% safer than the industry average, and make more money because of the efficiencies they can achieve with us.”

Convoy Go, a drop trailer program that gives small carriers access to desirable drop-and-hook freight, enhances driver productivity and allows them to conserve their hours of service and run more revenue-generating miles.

Wong also said that Convoy has created programs with food and beverage companies so that if a shipment is rejected for instance due to including the wrong items, it can be automatically rerouted to a nearby Feeding America food bank instead of thrown away. Feeding America is the United States’ largest hunger-relief organization, operating a network of 200 warehouse-like food banks that link up to more than 60,000 local soup kitchens and food pantries across the country.

“If we receive a proactive disposition, we can automatically route the driver to the Feeding America location closest to the facility,” Wong said. “They do a full inspection before taking in the food. The automated donations ease the burden of reverse logistics, save the shipper time, and make a positive impact on the local community instead of contributing to landfill waste.”

This article is published jointly with our partners at Convoy. To view more Future of Freight content, click here.

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