In 2019, e-commerce increased by 13% in Sweden, and it had a total turnover of SEK 87 billion. This puts heavy pressure on logistics providers as well as the environment. During this spring, Greencarrier was one of five companies competing in The Fossil Free Freight Challenge 2020, with the mission to reduce the fossil footprint within e-commerce.
Erik Sjöström, Supply Chain Specialist at Greencarrier Freight Services and Åsa Leander, Head of Sustainability and Brand Management at Greencarrier Group, were two of our project participants. In this interview, you can read our discussions about the e-commerce chain, as well as about sustainable logistics solutions that will both save your time, money and the environment at the same time.
Hi Erik and Åsa, tell us more about the innovation challenge arranged by Triple F that Greencarrier competed in, a couple of weeks ago?
Åsa Leander: At Greencarrier, we work a lot each day with finding new and better ways of transporting goods around the globe, but this challenge enabled us to think about future solutions and push ourselves to go outside the box. We finished on a shared 2nd place with our solution that focuses on making short sea solutions within Europe easily available even for smaller quantities of goods. This is an underutilized way of transporting goods, with extremely large potential.
Erik Sjöström: In our project team, we have worked with people from different parts of our organization. Breaking down silos and looking at things from a holistic perspective is without doubt the optimal way of understanding where value is created in the supply chain. Shipping is an ancient way of moving cargo but combining it with modern IT-tools and making it easily accessible truly requires a fair share of innovation and creativity.
There are many discussions about last mile when it comes to e-commerce, but in Greencarrier’s solution, you have chosen to highlight “our part” in the e-commerce chain. Which part is that and why is this important?
Åsa Leander: The things we buy and use every day normally travel a long way before they end up in a warehouse or distribution center. Improving last mile is important, but the incoming logistics chain is sometimes a bit hidden. We are dealing with large amounts of goods that travel for long distances – making improvements in that part of the chain will make a huge difference to the total amount of CO2 emitted.
Erik Sjöström: Inbound transportation is relatively cheap considering the entire supply chain, and hence the incentive for optimizing this part often slides down to the bottom of the priority list. Often cost reductions is the main driver for change and then you naturally go for the lowest hanging fruit with highest potential, typically warehousing and last mile. On the other hand, if reducing emissions is truly on your agenda, then there is big potential to optimize your inbound transports in an easy way without major changes in lead-time and cost.
More than half of the textile imports to Sweden come from the EU, and a large amount of these go by road. Why?
Åsa Leander: We have so many waterways in Europe and a good rail infrastructure, but Road Freight is a really established way of transporting goods and people are used to it.
Erik Sjöström: Road freight is more easily accessible and flexible in many ways, and the incentive for switching has not really been there. With congestion and sustainability in mind this might change, especially if rules and regulations for short sea are simplified. As it is now, the threshold is just too high to make the switch, it is just companies with sustainability as something mandatory that are willing to make the effort.
Are there any other sustainable modes of transport that are underutilized?
Åsa Leander: Definitely! At Greencarrier, we work a lot with rail solutions both in Europe and from China to Europe. There are also ways to make road freight better, by switching to better fuels. Fossil free options are becoming more and more available. We operate our own electrical trucks for distribution on shorter distances in Shanghai but within short, we will for sure see electrification of trucking for longer distances as well.
Erik Sjöström: I think ideas from other industries are interesting to learn from, e.g. in construction there is a saying that one should never walk around empty handed, because there are always items that should be transferred to some other place in the construction yard. If we were to implement the same philosophy when driving our personal cars, there is surely a lot of empty space moving around on our roads.
How can we make it easy for the customers to choose sustainable logistics solutions?
Erik Sjöström: Prio 1 is understanding how your customers are operating and to create awareness about how different logistics solutions impact the environment. Then I would suggest setting the sustainable alternative as the default option, studies have shown that a majority of people tend to stick with the default value, also referred to as nudging.
Åsa Leander: By sharing our knowledge and presenting the right information. If you can compare and show relevant figures to a customer, based on their actual flows – you can make it obvious what the gains are by choosing a more sustainable option.
Can you describe the solution you competed with shortly, and tell us who you think should try it out?
Åsa Leander: We developed a solution aimed towards retail customers. We know that many goods travel from European countries to Sweden, and we wanted to present a solution that would reduce the CO2 emissions compared to road transport by at least 50%. We base this on short sea and consolidation of goods, so that you do not have to ship full containers and can buy only what you need. There is a frequency and reliability in the solution, so that you will get your goods when you need it – extremely important in the retail sector. I think that any company that produce for instance clothing in Southern Europe should really try it out.
Is this solution available today?
Erik Sjöström: Our short sea solutions are available for full containers but not for consolidated cargo since we do not have sufficient regular volume yet. We need one or a few pioneers with medium or large volume to build a weekly traffic that other clients with smaller volumes could piggyback on. Having a stable traffic is key in creating trust and predictability.
Why isn’t this solution used more and does it really work?
Åsa Leander: Probably, this goes back to companies being very comfortable with using traditional road trucking solutions and not seeing the benefits. It is easy to think that this solution will make the logistics less efficient and more complicated, but it is our job to explain how this solution will reduce emissions, why it is so great and help our customers with a smooth transition. Europe has so many issues today with congested roads, shortage of drivers, noise, pollution, emissions and road accidents. By using the waterways and railway system, we can ease the pressure on roads and reduce emissions drastically. The EU has also clearly stated that in order to reach the very high set goal for reduced emissions, moving goods from our roads to the waterways is essential.
Erik Sjöström: Many times reducing emissions is a target for the sustainability department that forwarders and other parties in the transport industry rarely interact with. For logistics buyers, cost and transit time reductions has been the guiding star traditionally, even though we do see some changes in the mindset here. Considering shipping as one of the oldest way of transport that has been around for centuries, I would say we have a good proof of concept. If you are concerned about lead time, consider that many companies are sourcing and selling in Asia with transit times of 40-50 days, and that seems to work just fine. In addition to that, there is already regular traffic for certain types of goods, it just has to spread to other industries and segments. So if you truly want to make a change, try it and save a buck at the same time.
I hope you enjoyed reading this interview. More information about the Fossil Free Freight Challenge 2020 arranged by Triple F, you can find here. And if you are curious about our short sea shipping solutions from seaports all around Europe and want to save some money, read more here, or simply contact us here.