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					LOGISTICS                                                                                            www.vietnamshipper.com

  THERE IS A GROWING CONCERN OF “GREEN” FACTORS IN LOGISTICS                                                                  particulate emissions and the management of                    on competition, best prices, and continued stakeholder
                                                                                                                              processes to overcome climate change”                          value at any cost. The role of Green Logistics is now to
  INDUSTRY GLOBALLY. BY RAISING SOME PARTICULAR QUESTIONS                                                                       In itself the Logistics industry has one of the severest     meet the highest standards of company efficiency whilst
  ON THIS ISSUE: WHAT IS GREEN LOGISTICS? HAVE TRANSPORT AND                                                                  challenges in the role of Green sustainability. The need for   maintaining a footprint that is dedicated to protection
                                                                                                                              faster, more streamlined and optimal logistics services at     of the environment as part of a daily process. Unlike
  LOGISTICS FIRMS BEEN SUCCESSFUL WITH GREEN LOGISTICS? WHAT                                                                  a reasonable price remains a premium requirement, and          the popular myth that only large companies can afford
  IS MEASURING EMISSIONS WITHIN THE SUPPLY CHAIN? HOW IS THE                                                                  the equipment used for these purposes such as aircraft,        to be environmentally friendly, the ability to operate a
                                                                                                                              ships, trucks, forklifts, trains, barges and feeders all       strong green logistics programme is applicable for small,
  LEGISLATION OF ENVIRONMENTAL COMPLIANCE? VIETNAMSHIPPER HAS                                                                 remain key emitters polluting particulates such as CO2,        medium size and global multinationals alike.
  RECEIVED INTERESTING AND COMPREHENSIVE ANSWERS FROM MR.                                                                     NO2 and SO2.

  TONY WINES, CEO OF HONG KONG-BASED TURNKEY CONSULTING LTD.                                                                    Nonetheless there are many logistics organizations           2- HAVE TRANSPORT AND
                                                                                                                              that have developed effective Green strategies which
                                                                                                                              have enhanced their brand profile and created higher
                                                                                                                                                                                             LOGISTICS FIRMS BEEN SUCCESSFUL
                                                                                                                                                                                             WITH GREEN LOGISTICS?

                                                                                                                              levels of competitive advantage. Significant investment
                                                                                                                              in meeting environmental compliance has led to certain           It is interesting to note that the Logistics industry is
                                                                                                                              companies such as Maersk and Schenker gaining a                among one of the faster growing industries to embrace
                                                                                                                              strong reputation for their environmental capabilities.        the concept of Green or Sustainable programmes.
                                                                                                                              This has been achieved through embracing the new               Much of this has to do with the fact that leading global
                                                                                                                              elements of business process such as the incorporation         companies that focus strongly on import or global trade,
                                                                                                                              of Sustainability strategies, and integrating these            have found it necessary to measure the performance of

                                                                                                                              processes into the daily operation. As such, for the           their vendors in areas such as their Green footprint or
                                                                                                                              leading companies, Green Logistics is an everyday part         sustainability strategy. Many companies have started
                                                                                                                              of the business process and is used to reduce inefficient      the enforcement of Eco-rating systems and have the
                                                                                                                              costs and maximize productivity.                               ability to rate and deselect their vendors if they are
                                                                                                                                 The important areas of Green Logistics is being able        found to be insufficiently compliant to the demands of
                                                                                                                              to measure your footprint and create suitable strategies       environmental performance. This is especially true in
                                        1- WHAT IS GREEN LOGISTICS?                                                           to reduce carbon or particulate emissions. This is crucial     Europe and North America, but the trend is filtering
                                        Internationally there is a growing concern regarding the level of global              towards meeting the increasing legislatory expectations        quickly towards Asia.
                                      consumption of natural resources as well as the well documented process                 of governments and Environmental committees globally,            This resulting trend has also affected the role of the
                                          of increasing the needs of material values in a fast growing global                 but also improves the level of health in areas such as         3PL, Freight Forwarder, Shipping Lines and Cargo Airline
                                              population. Thomas Friedman has evaluated the existing generation               ports or roadside pollution, two of the most commonly          carriers. Many of the leading international forwarders
                                                  as the “Grasshopper Era”, moving away from the traditional values           recognized areas where respiratory and heart and lung          have directed their attention on obtaining a globally
                                                    of saving towards the new era of needing material goods                   disease have been commonly diagnosed. Furthermore as           recognized environmental standard such as ISO or the
                                                       immediately at the cheapest possible price.                            competition becomes more intense, the need to provide          Global Reporting Initiative (GRI). Companies such as
                                                           This paradigm shift has created immense challenges                 value add outside of the traditional logistics modules         Kuehne and Nagel and Schenker have obtained the ISO
                                                          to companies working on traditional economic models.                becomes key.                                                   14001 standard to ensure that they are ahead of the
                                                            Dramatic rises in consumerism has led to the development            The model that shows the dynamics of an effective and          competition through investing in a globally recognized
                                                            of climate change through the increase of C02 Emissions           well integrated Environmentally leading Logistics company      standard, which results in their companies being regularly
                                                             globally, as well as the imbalance of natural resource           can be envisaged as follows:                                   audited to ensure that they are continually improving
                                                             through the continued purge of resources such as oil,                                                                           their environmental footprint. This provides high levels of
                                                             gas and natural forests, that has led to vast swathes of                                                                        assurance to companies who wish to work with vendors
                                                             rainforests disappearing as well as the reported warming                                                                        who meet their environmental standards.
                                                            of temperatures leading to the faster melting of glaciers                                                                          Some of the leading recognized standards which are
                                                           leading to the rising of sea levels.                                                                                              being used by the leading logistics corporations:
                                                             As consumption levels continue to sky rocket especially
                                                        post recession, the Transport industry continues to face                                                                                                      Schenker, Kuehne and
                                                      increased demand for its services in line with climate change.                                                                                                  Nagel, Maersk Line, Yang
                                                   As such the need to provide Sustainable logistics strategies has                                                                                                   Ming, OOCL, Hapag Lloyd,
                                                 never been more critical towards minimizing the growing issue of                                                                                                     CMA-CGM, DHL, UPS,
                                             climate change and global natural resource management. Whilst there                                                                                                      Cathay Paci c
                                       is no template standard explanation for the meaning of Green Logistics, the
                                                      key fundamentals of providing a Green supply chain can be
                                                                 described as:                                                  As such it is clear to see that Green Logistics is now                                    Maersk Line annual audit and
                                                                       “The management of the Logistics and supply            a model that incorporates all the important dynamics of                                  rating for their environmental
                                                                      chain process including the incorporation of            Environmental wellbeing with the need to meet better                                     reporting through this process,
                                                                      environmentally sustainable strategies that             standards to society. In turn this dilutes the traditional     thus ensuring that all sustainability reports are checked
                                                                   assist in minimizing the effects of pollution,             Logistics business models of old which concentrated purely     and passed as accurate.

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LOGISTICS                                                                                                    www.vietnamshipper.com

     Whilst international standards are a strong method           effectively. Furthermore, logistics firms also gain                 or particulate calculation programme and use the                this ambition companies need to act on this benchmark
  to provide competitive advantage to a company, to               competitive advantage and improved brand image. This                information to determine how to further reduce their            immediately to reduce the particulate levels to a point
  many other organizations the question still remains as          is not limited to just large companies, but those who go            carbon footprint. The very best in class will also be           whereby Climate change can be controlled.
  to how can an environmental programme be effectively            the extra yard to achieve success through certification             certified under standards such as GRI to ensure that               There is growing awareness in the development of the
  executed, and why is it applicable to me? Companies             can achieve the same results.                                       they can build a sound and honest reputation on their           newly designed carbon cap and trade schemes, whereby
  such as Schenker provide a leading roadmap. Their                  It is also interesting to note that in the latest global         Environmental programmes.                                       better performing environmental firms can buy carbon
  sustainability programmes include:                              survey by Eye for Transport, 82% of logistics firms                    Sadly, many companies in the logistics field do not          credits and provided they meet their agreed emission
     • The monitoring of packaging and reduction of               considered Green logistics as an important part of their            measure their carbon footprint. As such there is no             goals, can sell these credits to the poorer performing
  packaging costs by a minimum of 15% through re-                 business and 12% of firms considered it their number                means of benchmarking their method of improvement               firms. In the future it is clear that companies that do
  designed efficiency in packaging                                one priority. It is clear that the dynamics are changing.           in the longer term. It is expected that governmental            not measure or take the role of environment seriously
     • Training of all staff on environmental awareness                                                                               legislation over the forthcoming years will change this         will need to pay for credits to offset their higher levels
  and the effects of saving energy, waste and cost to the         3- MEASURING EMISSIONS WITHIN                                       issue in a positive way. In a recent survey from the            of emission consumption over the well performing
     • Modernization of their transport fleet to meet new
                                                                  THE SUPPLY CHAIN                                                    Aberdeen group only 18% of logistics firms undertook
                                                                                                                                      any form certifiable emissions monitoring. For those that
                                                                                                                                                                                                      companies. In other words the worse you perform, the
                                                                                                                                                                                                      more you need to pay. This could lead to poorer branding
  emission standards in the European market.                         The measurement of emissions remains a vague and                 do use systems such as Intelex or Turngreen Solutions,          and loss of business in tough environments such as
     Companies such as Fedex have also been active in             complicated process, especially as many organizations               two of the newer software brands available, companies           global logistics.
  reducing emissions by also modernizing their fleet of           themselves do not measure the complete picture in                   can measure areas such as:                                         Key global institutions such as IATA and the IMO have
  vehicles and adding hydrocarbon based fuel distillation         terms of evaluating direct (Emissions created by your                  - Waste and Energy consumption                               fully supported this process within the logistics field
  which allows up to 10% more fuel efficiency and up to           own company) versus indirect emissions (Emissions                      - Lighting costs and emissions from lighting                 as a means of assisting to get firms more engaged
  50% less emissions. DHL reported 15% more fuel                  created by third party vendors carrying out work on                    - Travel and fuels costs and emissions from                  in the essential nature of developing Environmental
     Other companies such as Evergreen have focused their         behalf of a contracted company). Ideally it is essential to         distribution                                                    programmes.
  attention on the development of cold ironing, a system          measure both of these elements as a means of creating                  - Particulate matter from fuel and operational                  Governments are taking a stronger stance in this area
  that allows their fleet of vessels to plug into electrical      a benchmark as to an organizations own environmental                processes                                                       as a means of maintaining the focus of reducing the
  sources once berthing in some of the international ports        programme.                                                             Once these figures are available, firms can make             effects of climate change. In China the initial decision to
  such as Long Beach and Los Angeles. By using cold-                 One of the underlying weaknesses within the logistics            calculated choices as to how to reduce their overall            create a carbon tax for polluting industries will likely come
  ironing, Evergreen avoid using their auxiliary engines at       business is the fact that much of the reporting around              footprint and estimate the savings related to their             into effect in 2013. During the interim the incorporation
  port side, and thus reduce by up to 90% on emissions            environment has been proven to be inaccurate. As such a             operation.                                                      of mandatory carbon reporting is being considered.
  and particulates once berthed. This is a healthier and          discernable amount of “Greenwashing” has been evident                                                                                  In India, radical changes in policy have resulted in the
  cheaper method to run their vessels once berthed.               in recent years, which has shown some inaccuracies over             4 – THE LEGISLATION OF                                          first ever carbon tax programme coming into effect, which
     In the area of retail and manufacturing, the development
  of Green Solutions is becoming a critical element of
                                                                  the actual amount of emissions released by companies
                                                                  claiming to be green but without certifications to prove
                                                                                                                                      ENVIRONMENTAL COMPLIANCE                                        is aimed at the most heavily polluting industries such as
                                                                                                                                                                                                      the coal industry. The thought of increasing the tax to the
  the business. Large organizations such as Walmart               they follow accurate protocols. This eventually proves                 One of the questions frequently asked by companies           transport industry cannot be discounted over time.
  and Marks and Spencer have led the charge for the               detrimental to the reporting structure.                             in the field of logistics is, what is the future legislatory       It can be expected that cap and trade and carbon
  development of global environmental programmes and                 Once again it comes down to the companies who                    roadmap for Green Logistics? The difficulty is that there       taxation will remain the growing trends in the very near
  supplier Eco-Rating schemes, with Wal-Mart’s 360 plan           have shown themselves to be market leaders in Green                 remains no official global standard. Even in countries such     future. Companies will need to ensure that they have
  the most widely recognized. Through this it is expected         logistics to also be the ones creating the best emissions           as the USA, there are stricter guidelines on environment        suitable monitoring and reporting tools to meet these
  that every one of their suppliers will be given a rating, and   monitoring tools. They undertake these tasks by using               in certain states (California) versus areas such as Texas       exacting requirements. As governments pursue the
  only those that consistently perform within the audited         the following guidelines:                                           or New Jersey. As such it appears that the guidelines are       need to establish legally binding environmental targets
  guidelines will continue to be able to be selected. Naturally      1. Measuring carbon emissions through the use of                 driven by industry as opposed to mandatory government           which can be spread globally as part of the cap and
  being de-selected can have serious repercussions to             carbon calculators and effective software tools that                intervention.                                                   trade and carbon tax process, it is clear that the logistics
  their business.                                                 have been tied in to global standards such as Defra or                 One of the most important agreements is the consensus        industry must act now. The wait and see approach will
     Companies like Dell have saved up to $20m per year           the Greenhouse Gas protocol (GHG). These processes                  from the G40 nations to work on reducing emissions by           eventually cost the apathetic firm more money, resource
  on their recycling of old computers to remold and use           ensure that the calculation on areas such as waste,                 80% by 2050. This may be a long way off, but to achieve         and potential loss of earnings versus the pioneers who
  on the development of new models, a process that has            energy, water, CO2 emissions are met at international                                                                               continue to drive brand differentiation and cost saving
  been a huge success in improving their environmental            recognized standards.                                                                                                               measures through effectively meeting and exceeding the
  footprint and also save money to the firm.                         2. Working with local government standards to                                                                                    legislatory expectations.
     Pepsi in 2009 announced a saving of $44m by changing         calculate the correct CO2 emissions at country level. In                                                                               Logistics companies remain in an excellent position
  from corrugated iron to reusable plastic containers to          Hong Kong for instance, much of the measurement of air                                                                              to develop valuable competitive advantage through
  deliver their goods.                                            quality is done using the locally accepted “Hedley Index”                                                                           the opportunity to develop on a green supply chain
     It can be seen that the companies that embrace               standard.                                                                                                                           platform. Failure to take this fundamental opportunity
  Green programmes benefit not just from environmental               3. Internationally the best                                                                                                      could prove to be very costly
  improvement, but by generating very significant cost            companies       will  use                                                                                                           in the future. ■
  savings if they implement programmes and strategies             a form of carbon                                                                                                                             By Tony Wines
                                                                                                                                                                     The Mechanism of Cap and Trade

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