August 19, 2011
by jcswanston
Back in February, I went along to a great session at NESTA all about Collaborative Consumption, an issue that is closely linked to sustainability – I guess you could say that it is all about sharing assets/ resources which reduces waste and thus cost (and by extension carbon). The underpining concepts of collaborative consumption are just as relevant in freight/ shipping/ logistics as they are for consumers. Empty capacity rates in logistics are significant – up around the 30 – 40% (which I mentioned in my last post) – an interesting example of this is the following diagram taken from Merge Global.
Freight and shipping utilisation rates
While there are certainly external factors that influence this (such as what could potentially be transported on a backhaul), it does not really help the profitability of a freight company. The current economic climate is not particularly helpful as Maersk points out. There are certainly structural inefficiencies which will never allow for perfect utilisiation rates of transport. With an oversupply of freight assets, low profitability and minimal rates of economic growth in major economies, there are some tough times ahead for the industry.
While our focus to date has predominantly been on road freight, it seems that there opportunities for collaborative solutions which are missed. In passenger transport, my favourite example is taxis and airports (particularly Heathrow) where there are millions of empty taxi and minicab journeys each year.
Freight seems to exhibit many similar characteristics, without some of the behaviour change issues that affect making passenger transport more efficient (such as the issue of sharing). Recently, we’ve been working on a location that has many different businesses (eg. a business park or business improvement district or other transport hub) and there has fundamentally been no collaboration between each of the organisations in freight deliveries or collections. What that means is that when courier drops off a package, it often happens as the same time as another courier shows up to pick up a package; or, that there are multiple milk deliveries on a Monday morning from different places. Aside from the basic cost implications, it creates unneeded congestion in an area that has very limted road access. As we look at traffic/ freight patterns in the context of the Olympics, there is of course the option to restrict deliveries to particular times, but this won’t make things more efficient.
Given the impact of cost, congestion and carbon, the only real option (other than not having things delivered or collected) is to look at a more collaborative approach to working with other organisations that share similar needs. There are a number of works/ studies that look at the potential impact of more sustainable transport on cost and carbon, such as one I mentioned over a year ago from the National Geographic. In a report we are doing for a client at present, we are using some of the statistics from the London Freight Plan regarding the impact of carbon and congestion (for this client, cost is not actually the issue). The London Freight Plan suggests that efficiencies in freight could result in 0.61 million tonnes of carbon savings, and that the financial cost of congestion is between £2-£4 billion per annum which is clearly considerable. Previous work that we’ve done, including that with the University of Manchester and Tesco has given us into some of the barriers to behaviour change for people to travel in more sustainable ways, and it will be very interesting to see which of those barriers is also present for freight…
