On the latest episode of Net-Zero Carbon, Matt McLelland, vice president of sustainability and innovation at Covenant Logistics, joined Tyler Cole, director of carbon intelligence at FreightWaves, to discuss the opportunities and challenges facing logistics providers as shippers increasingly look for strategies to reduce emissions.
Their conversation touched on carbon accounting, supplier audits, predictions for the future and technological shifts that will have outsized impacts on sustainability in freight and logistics.
“I’ve had this suspicion for a while that as an asset carrier in this space, when the world is telling you, ‘Go to carbon net-zero,’ and everybody is driving around with a competitive environment running diesel, there’s not a lot of good options. So your opportunities to differentiate yourself, at least in the near term, are really minimal,” Cole said.
He said his fear has been that asset carriers will get bombarded with supplier audits, SmartWay requirements and other customer requests throughout the year to answer questions about how they’re working to reduce emissions.
Prioritizing supplier sustainability
Nine out of Convoy’s 10 largest customers have environmental, social and governance programs in place, and half of those have net-zero emissions targets, McLelland said.
Most of those customers specify that one of their strategies is to reduce scope 3 emissions, which are emissions that occur in a company’s supply chain but aren’t a part of company-controlled activities.
Freight and supply chains are a large part of scope 3 emissions for most retailers.
While McLelland talked about how suppliers are sharing information and strategies with companies downstream to reduce emissions, Cole said he’s seeing progress on the demand side as well.
He said a lot of firms are coming out with green pledges and shippers are coming together to push demand upstream for sustainable solutions since the COP26 climate change conference in November.
“A lot of that cooperation is what’s really needed to drive adoption and scale and ultimately lower costs in a lot of these examples,” Cole said.
Freight carriers like Convoy have to rely on the technologies that suppliers have available. McLelland said that Convoy isn’t in the business of inventing hydrogen technology to power its trucks.
“We have a big relationship where we have to lean heavily on our suppliers, which is why we are always vetting the latest and greatest of what’s going on,” McLelland said.
Exploring the future of sustainable freight
McLelland explored the potential decarbonization solutions of the future and said that battery electric, hydrogen, liquefied natural gas and compressed natural gas could expand over the next couple of years.
Right now, he said, electric vehicles cost about two and a half times more than diesel trucks upfront, so Convoy has to split that cost with customers.
Cooperation with suppliers, customers and people outside of the logistics and freight industry can create massive change, McLelland said.
The two talked about potential futures in which goods are made via 3D printing and logistics needs could be dramatically reduced.
McLelland said that people with all kinds of backgrounds can bring something to the table. He said he has seen young people with education completely unrelated to logistics come up with unique solutions to problems the industry faces, including improving sustainability.