Aligning logistics partnerships and ROI with sustainability

Our annual Automotive Logistics & Supply Chain Europe conferences in Bonn annually feature discussions between logistics experts about the opportunities and challenges in making the logistics industry greener and more profitable. At our last event six months ago, we held a workshop with some of the most influential and innovative leaders in the sector to discuss how partnerships can help drive sustainability forward.

Levent Yuksel, freight operations director at JLR and Anouck Arnaud, director of worldwide transport logistics, Mercedes-Benz Group, stressed the importance of partnerships between logistics providers, suppliers and OEMs to reduce emissions and improve sustainability across the automotive supply chain.

They said there is a clear need for stakeholders to work together to collaboratively bridge the gaps in end-to-end sustainable supply chains with technology as well as optimise loads and help the supply chain network as a whole. Efforts need to be made to bring business cases together and boost the uptake of sustainability initiatives and the subsequent return on investment (ROI).

The first step in achieving this as a sector is through communication, so Yuksel and Arnaud engaged with the leaders of the industry during the workshop in Bonn to brainstorm the ideas and solutions that follow.

Using partnership to tackle sustainability in automotive logistics
Mercedes’ Arnaud said that for OEMs to meet their own individual sustainability goals, there is a requirement to work with the wider supply chain and find alignment.

“We have a goal of being net carbon neutral at Mercedes-Benz by 2039 along all stages of the value chain,” she said, “and this is where we need to work together, hence why we are doing this session.”

JLR’s Yuksel has been working to encourage trust and partnerships in the fight for sustainable logistics. “We have decided to lead by example by partnering with DHL to completely decarbonise our fleet of 227 tractor units,” he said.

The pair heard from delegates at the conference who spoke about the challenges in coming together to collaborate on green logistics. One attendee said: “We all want to decarbonise the supply chain, but what I hear time and time again is that there is a lack of partnership.”

Most of the logistics leaders in attendance agreed that shifting from the traditional partnership that lasted as long as a contract did, to real collaboration and information sharing, is a struggle. Turning a just-in-time industry to a green industry will take a lot of partnership. There is a struggle to get companies, particularly competitors, to the same table – let alone open up and share information, data and challenges with each other. There is no one-size-fits-all solution, but it starts with reaching out and being open to these conversations, according to the delegates.

Gaining an end-to-end view of sustainability in the network
A point of agreement across the board was that an end-to-end view and collective thinking is necessary not just in transport, but in strategic sustainability decisions too.

One example shared was of a charter plane freight operator. The idea suggested to open up opportunities and make it accessible to the broader community, which would maximise the load and fly one plane instead of two. This not only reduced emissions, but also reduced costs, amounting to a strong business use case.

“We need to have the right business cases, and we need to coinvest,” one logistics leader said. “We need to think about what the best terms of the contract are.”

JLR’s Yuksel said: “When we talk about making the ROI work, we need to have the right business case and figure out what the durations of the contracts are. That goes hand in hand with reviewing and understanding how we realise and look into future agreements between OEMs and subcontractors, so that everybody has skin in the game but also a stake in it.”

Another idea was raised about logistics service providers (LSPs) pooling and sharing data together to optimise loads, which could benefit major OEMs and smaller freight firms. In fact, the group agreed that LSPs have a “responsibility to be curious” and try to find new solutions and data-sharing possibilities. What helps in this case is having a long-term and trusting relationship work together confidently.

Yuksel said: “If we pool some data together to optimise loads efficiently and have a change in packaging that’s more resourceful, that’s one area where partnership and sharing data can help.”

Another suggested solution was to look at the tendering process of a contract, and assess whether it might be possible to include CO2 emissions reporting regulations within a contract. This could give a jumpstart to collaboration on sustainability from the very beginning of a business relationship.

Longer-term opportunities to go greener
In Europe, the extent of government support in decarbonising logistics mostly only takes shape in the form of frameworks and standards setting. The group agreed that adding incentives for the industry would be ideal, but might not be realistic in the near-term.

Instead, the industry could start to lobby European governments to redefine existing regulations to allow for more environmental and efficient solutions. One such example that was given was of regulation trailer lengths, which if changed might allow greater loads and less journeys, reducing CO2 emissions.

But both Yuksel and Anouck agreed that the first step that OEMs, suppliers and LSPs alike should be doing is trying to accurately capture and share emissions data.