Sustainability in Parcel Logistics: Package Data as a Guide
At the confluence of an increasingly digital economy and rising socio-environmental consciousness lies a quandary: How to minimize the impact of explosive parcel volume growth?
Not all packages leave the same carbon footprint. This can be due to a multitude of factors, including (but not limited to) contents, packaging, carrier, or service speed – shipments by air have a far larger footprint, no matter the package characteristics.
Historically, shippers have focused on packaging material and dimensions, while carriers have gradually invested in renewables and fuel consumption improvements. While more than a step in the right direction, these efforts are hardly comprehensive and often require significant capital investment.
An area often overlooked? Use of Express services when Ground time-in-transit is identical – and in many cases, shorter. These redundancies negatively impact bottom line and represent entirely avoidable negative environmental impact. Eliminating these requires little capital investment and can be executed quickly with the proper toolkit.
To visualize this, let’s examine a scenario with a package-level example. Let’s say a business ships from one distribution point in Oakland, CA and guarantees two-day shipping on every order.
Around 40% of orders are shipped to addresses on the West Coast and neighboring states, with the remaining 60% going primarily to the East Coast.
Conventional wisdom may instruct a shipper with this profile to rely solely on a two-day Express service to meet their commitments. Given the scenario, this is unnecessary.
The shipper could utilize Ground for the entire 40% of the West Coast volume and still meet a two-day commitment – in fact, Ground would arrive the next day to much of Northern California while the Express package would arrive in two.
A comprehensively wasteful example of a redundancy in this scenario would be a shipment from Oakland to Salt Lake City, which lies close to the edge of the two-day Ground zone.
While both services deliver on the same day, the two-day package would travel via cargo plane while the Ground package would be hauled to Salt Lake via I-80 E. As you can see in the figures below, there are stark differences in both cost and emissions.
In Figure 2, Ground and Express emissions are compared with the assumption that 100 packages per month have service-level redundancy, average 10 lbs. apiece, and are not subject to dimensional billing methodology.
As illustrated, just 100 redundant 10 lb. packages monthly can contribute nearly 11 extra tons of CO2 over the course of a year. According to the EPA, eliminating this redundancy would be akin to removing two passenger cars from the road over the same period.
As a note, this represents a small number of redundancies. High-volume shippers can account for hundreds (sometimes thousands) of examples per day.
Redundancy Identification and Elimination
ShipCaddie offers simple, proven methods to reduce and eliminate time-in-transit redundancies, whether using the software in a manual or automated capacity.
When shipping manually, check the rate calculators. Just because a service is the cheapest option doesn’t mean it is always the slowest. ShipCaddie makes this easy, with symbols denoting the fastest and cheapest choices.
The best way? ShipCaddie automation. Let’s say you offer free shipping on all orders, in three days or less. Using automation rules, you can set your preferences to select the cheapest service with a three day transit time, regardless of the destination.
Let’s say your shipping location is in Los Angeles, and you ship via FedEx. You have an order come in from a customer in San Diego, and a few minutes later another order lands in the queue from a customer in Philadelphia.
If you are using the aforementioned automation rule, ShipCaddie selects two different services – both guaranteed in three days or less. The shipment from Los Angeles to San Diego will be carried by FedEx Ground, and delivered in only two days. Customer expectations exceeded? You bet.
The shipment to New York will go by FedEx Express Saver, guaranteed in three days. ShipCaddie protects your customer experience from human error while shielding your parcel supply chain from unnecessary costs. Win, Win, Win!
Conflicts of Interest
You may notice that although the carriers are truthful in revealing transit times via the rate shop or online calculators, they are loath to promote the elimination of time-in-transit redundancies as a sustainability measure despite knowledge of the impact.
As is true in any for-profit enterprise, carriers must balance environmental impact with profitability. A volume exodus from Express to Ground would have significant financial consequences, particularly due to the enormous costs and capacity inflexibility associated with freight aircraft operation and ownership.
Looking to the Future
As the digital economy has grown, warehousing has become increasingly regionalized. As a result, Ground growth will likely outpace Express growth over the long term and result in reduced overall emissions growth on a per-piece basis.
In the meantime, it is absolutely possible to reduce your supply chain emissions output while simultaneously boosting your bottom line. In many cases, you could even reduce transit times to your customers in the process. Has improving supply chain sustainability ever been as painless?
Note: Emissions formulas are sourced from the most recent DEFRA and EPA formulations. All metric units have been converted to USCS/Imperial.