Companies trying to make their supply chains more sustainable face unique challenges in different areas of the world. Jens Drewes, president at Kuehne+Nagel Asia-Pacific, told FreightWaves about the complexity of sustainability and logistics in the Asia-Pacific region.
Kuehne+Nagel International AG is a global transport and logistics company based in Schindellegi, Switzerland. It was founded in 1890 in Bremen, Germany
The interview has been edited for clarity and length.
FREIGHTWAVES: What do you do at Kuehne+Nagel?
DREWES: “I work closely with the regional leadership team to drive the vision and strategy for the countries under our mandate. I have held various leadership and executive management positions within the company in Australia, Thailand, China and Singapore. In January 2020, I was appointed president for Kuehne+Nagel Asia-Pacific after the merger of two Asian organizations into one region.”
FREIGHTWAVES: What makes supply chains and logistics in Asia unique?
DREWES: “Asia’s large and geographically diverse nature makes supply chain design and management more complex compared to other regions such as the U.S. and Europe. The intra-Asia trade is a highly dynamic and fragmented market, characterized by transactional business models. This makes it challenging and time consuming for shippers to find and procure the best transport options. This is further complicated by the speed of development and transformation in the region in recent years.
“From what used to be known as the ‘global workbench,’ the Asia-Pacific region today consists of a large and growing middle class, which is and will continue to be a powerhouse for consumption in the future. This has spurred digitalization and innovation in supply chain management at an exponential pace — particularly in China.
“These factors have led us to develop eShipAsia — an online logistics platform enabling intra-Asia shippers to optimize every shipment based on the route, transit time and cost instantly. Through eShipAsia, businesses are connected to 20 countries and can instantly compare sailing schedules and rates between 2,220 port pairs, 7,500 service loops and 54 underlying carriers.”
FREIGHTWAVES: How does Kuehne+Nagel reduce emissions along the supply chain?
DREWES: “The logistics industry is accountable for about 7% of global CO2 emissions. We have been carbon neutral since 2020. We launched the Net Zero Carbon program to address all logistics emissions by 2030.
“We have also signed up to the Science Based Targets initiative. We are offering solutions such as opportunities to switch modes of transport for a lower carbon footprint; our seaexplorer platform also allows customers to choose sea vessels and routes with the lowest carbon footprint.
“We offer alternative fuels as an option for customers. Our low-carbon road transportation solution, eTrucknow, improves supply chain efficiency by planning and route optimization, as well as digitization of paper-based operations. In our flagship facility, the Singapore Logistics Hub, 20% of the energy is powered by solar panels.
“All these efforts, combined with empowering our customers to reduce their carbon footprint through greater visibility, new solutions for optimizing loads or combining different transport modes, as well as carbon offsetting activities, contribute toward achieving carbon neutrality for our suppliers’ and customers’ footprint by the end of 2030.”
FREIGHTWAVES: What are some hurdles to achieving sustainable supply chains in the Asia-Pacific region?
DREWES: “A decade ago, the concept of sustainable supply chain management was still in its immaturity in Asia. Supply chain leaders in Asia were lagging behind their Western counterparts in terms of the technical expertise, knowledge and experience required to enable more sustainable operations. Buy-in from top management was also an issue.
“Fast forward to today — we see an increasing demand for more sustainable logistics solutions in the Asia-Pacific. Consumers are more aware of their actions’ impacts on the environment and prefer sustainable options wherever possible. This puts pressure on the rest of the supply chain to make this possible.
“However, there are still challenges in terms of visibility. Often we hear that our customers don’t have the data on how their logistics activities are impacting the environment and that is a major hurdle.
“Another challenge is costs. Designing new solutions or processes that are more environmentally friendly is expensive and these costs often have to be passed down to consumers. In an already price-competitive industry, this can play a big factor in embarking on sustainable initiatives.
“We have leveraged digital platforms and systems to design innovative, flexible and sustainable logistics solutions. This includes visibility tools and a variety of options to reduce emissions across the supply chain, as well as a strong carbon offsetting program.
“Carbon offsetting is a recognized mechanism that allows companies and individuals to counterbalance carbon emissions of a shipment that cannot be avoided through savings. This will be achieved by committing to a reduction in our collective carbon emissions through projects that protect and renew our planet by taking CO2 out of the atmosphere.”
FREIGHTWAVES: How is the demand for e-commerce in Asia impacting sustainability efforts?
DREWES: “The rising demand for e-commerce means there is a greater need for better service levels, more efficient shipping options, less carbon emissions and new greener and cheaper delivery technologies.
“Kuehne+Nagel entered into an agreement with American Airlines to deploy 11 million liters of sustainable aviation fuel. Kuehne+Nagel customers can now benefit from immediately available sustainable aviation fuel solutions to avoid CO2 emissions of their airfreight globally.”
FREIGHTWAVES: Can you provide an example of what one company is doing to reduce emissions?
DREWES: “Through KN Sincero, a Kuehne+Nagel joint venture dedicated to supply chain services for the automotive industry, we have been developing a strong footprint in China. In light of challenges around inbound-to-manufacturing transportation, KN Sincero developed an integrated solution for Honda to convert domestic long-haul trucking to rail, offering consolidations and value-added services including sorting, scanning, repackaging, GPS track and trace, as well as recyclable container management.
“After six months, the supply chain reliability and efficiency improved significantly. With this road-to-rail model, approximately 16,000 fewer metric tons of CO2 will be emitted on a yearly basis, a reduction of 70% compared to the trucking model.”
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