news Decarbonization & energy Marine Insight
Green Supply Chains, also referred to as Sustainable Supply Chains, have been in the limelight in recent years, with most large organisations having launched ambitious initiatives to make their supply chains green. Traditional supply chains, which include the international transportation leg, as well as inland transportation, storage, packaging, etc, are essential to international trade and have grown in importance, scale, and complexity as globalization has gained prevalence. Each activity and element of the supply chain contributes to emissions. The degree of emissions attributable to each aspect depends on factors such as the mode of transport, source of energy, and efficiency of planning and cargo movement. To take an example, air is the most polluting mode of transport, while water transport is considered the most eco-friendly mode; however given the sheer volumes transported via vessels, the aggregate emissions are extremely high (so much so that if international shipping were to be a country, it would be the world’s sixth largest emitter of GHG, ranking above Germany). Likewise, while some vessels now use clean fuels, a large number of vessels, trucks, and other vehicles involved in transportation still use fossil fuels. Matters are exacerbated by geopolitical factors and military conflicts. Examples of the former include Western corporations moving manufacturing capacity out of China, which while being a sound supply chain and procurement strategy in itself, is rendered suboptimal because the alternate manufacturing centres (such as Vietnam, Thailand, Mexico etc) rely on Chinese factories for raw materials and components required to make the final product. The net effect is that the overall transport distance increases as components are sent from China to various countries, whereafter, the final product is shipped to European and American markets. This in turn increases the amount of emissions. Likewise, the ongoing military hostilities in the Middle East are an instance of the latter, where the elevated threat levels (of attacks on commercial shipping interests) have compelled Carriers to reroute vessels plying the Asia to Europe trade route via the Cape of Good Hope. Whilst relatively safer, the route is also considerably longer than the traditional route traversing the Suez Canal. The longer distance inevitably involves greater bunker consumption, which increases emissions. Weather also plays its part, with low water levels at key maritime gateways/ paths such as the Panama Canal or the Rhine River reducing the effective capacity of vessels, which necessitates the infusion of additional tonnage, leading to higher emissions. Even more concerning is a modal shift, whereunder cargo owners shift from the sea route to the land route (using road connections), which emits more greenhouse gasses. Designing a Green supply chain involves analysing each aspect of the supply chain, with the intent of reducing emissions ascribable thereto, with the ultimate purpose being to minimize the carbon footprint of the holistic supply chain. Companies designing green supply chains essentially measure the carbon footprint/ emissions of each element of the supply chain and activities therein and then consciously attempt to eliminate or reduce these emissions. The ultimate objective is to ensure that the supply chain is carefully designed, with due consideration to the environment and GHG emissions, and to reduce carbon footprint as much as is feasib
How to Build a Green Supply Chain?
Marine Insight
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