A data-driven guide to transportation sustainability

Sustainability is much more than a buzzword. It’s a movement focusing on economic, social, environmental, cultural and security issues with the goal of building long-term healthy and prosperous communities. The International Energy Agency estimates that clean energy spending has risen 12% annually since 2020. It’s clear that sustainability programs within companies are gaining momentum.

Transportation’s role in sustainability

Greenhouse Gas (GHG) emissions have skyrocketed over the past 50 years. That adds up to 90% since 1970, per the U.S. Environmental Protection Agency (EPA), but increases have fluctuated in recent years, even plunging in during the pandemic in 2020. Transport accounts for one-fifth of global CO₂ emissions, with road freight making up about one-third of that total. Focusing on the environmental sector, let’s look at how we can reduce GHG emissions.

There's a heightened awareness and renewed focus on transportation sustainability coming out of the COVID-19 pandemic — for good reasons. However, sustainability efforts don't always enter into our day-to-day decision-making in the supply chain. That’s not to say that sustainability plays no role in decision-making. Progress has been made, but consistent and significant change across companies and industries continues to elude us.

Supply chain challenges and resources to help

Our inability to identify and efficiently measure transport GHG emissions hinders the supply chain industry. As management guru Peter Drucker said, “If you can’t measure it, you can’t manage it.”

Resources that enable a data-driven transportation sustainability approach to reducing GHG emissions are available. Still, companies don’t know where to find that information, how to compile it or how to use it. For this reason, more service providers who understand the space to help companies measure and manage their GHG emissions are entering the market.

Sustainability is a complex topic and deserves much more time than we can devote here. To start, however, let’s focus on a few resources you can leverage to better measure and manage GHG emissions in your U.S. road freight programs. Other resources are available from the United Nations and European Union for international shipping and shipping within the EU. Given the available data, it becomes a matter of putting together the right metrics.

Step one: a data-driven approach to calculate GHG emissions

The first step to improving GHG emissions in your transportation sustainability program is to create a current baseline. Then, you can track changes over time.

The EPA provides a few tools to help with these calculations.

The EPA’s Local Greenhouse Gas Inventory Tool

The Local Greenhouse Gas Inventory Tool | U.S. EPA, helps communities across the United States evaluate their greenhouse gas emissions by applying emission factors housed within the tool. If the fuel type and distance traveled are known, you can calculate the fuel emissions for CO₂, CH4, N2O and heat content.

SmartWay

SmartWay is an industry benchmarking service that shippers and logistics firms use to improve their emissions performance by selecting SmartWay carriers to move their freight. The EPA evaluates the efficiency and air quality performance data annually and publishes the Performance Ranking — dividing the data into five ranked performance ranges for each mode and category. Check out this example.

Using this data, you can calculate your CO₂ emissions. See the two examples of how this calculation would work for truckload multi-stop shipments using the Local Greenhouse Gas Inventory Tool. You can calculate other modes using different measures. Here’s an example of Methodology A. You can also calculate this mode using unknown route details. Here’s an example of Methodology B.

Using Smartway data, you can benchmark and baseline your carriers and track their performance over time. You can also aggregate carrier baselines to reach your overall GHG emissions baseline.

Step two: areas of application to apply decision-making

Now that you have your baselines and understand your performance, the next step is to incorporate this data into your decision-making to decrease GHG emissions. Below are some areas in which you can impact transportation sustainability efforts:

• Transportation network optimization (including fleet) — Perform an optimization analysis to reduce miles traveled. This will help remove trucks from the road while you minimize costs and maintain service levels. With your baseline calculation, you can also determine the impact of using alternate vehicle types and fuels. You can now estimate how the identified changes will impact your carbon emissions.
• Transportation operations — Assess transportation operations, identify improvement areas and develop a prioritized roadmap to achieve sustainability goals. Factor the impact of GHG emissions into your decision-making process as you:
  • Change modes employed.
  • Improve planning capabilities and load factors.
  • More efficiently manage returns.
  • Improve visibility.
  • Enable better decision-making with more advanced systems.
• Transportation sourcing — Using the Smartway data, a shipper can develop baseline emissions by carrier and compare them against bid-award emissions. You can incorporate emissions reduction into the carrier award decisions. Simply run a sensitivity analysis that balances cost and service against differing levels of emission reductions.

Sustainability takes teamwork

Regardless of where you are on your transportation sustainability journey, you should know how to view, measure and manage progress, and the impact will continue to evolve and change. We are all in this together, and our individual and organizational journeys are linked. We'll make small strides alone, but we'll have a massive impact with collaboration.

Ask for help if needed, as it’s a complex issue when you factor in variables like geography and mode. Expertise does exist to help you on your journey. Let’s go save the planet together!

Contact us and let’s discuss how NTT DATA will bolster your sustainability goals and find new efficiencies in your network at the same time. Our top supply chain talent, enabled by proven, leading-edge digital assets — tools, methods and content — deliver actionable insights and measurable outcomes to some of today’s largest and most complex supply chains.