How can industry realise environmental sustainability in automotive supply chains?

For many businesses in the automotive industry, the journey to net zero is well underway, but while it’s easy to be distracted by the headline grabbing transition from traditional internal combustion engine (ICE) vehicles to electric, it is important to look beyond the end product and consider the whole supply chain. It’s estimated that around three-quarters of all automotive industry CO2 emissions are generated during a car’s operation but, according to the Carbon Disclosure Project, 18% still comes from the supply chain. To cut emissions in this area, we need to understand what this means to logistics operators and customers. In some cases, it will mean cleaner transport; in others it will mean facilitating the recycling of end-of-life vehicles which will require circular solutions.

DHL, for instance, is working as a group to reduce logistics-related emissions to net zero by 2050, and in addition to significant investments already made during the course of its decarbonisation journey, it has committed to additionally invest €7bn (US$) by 2030 to support its carbon reduction ambitions. As part of achieving these targets, DHL is working with customers to reduce their emissions too.

Road to net zero

At this moment in time, the road to net zero has three steps. The first step is creating transparency through carbon reporting, which requires the ability to measure and calculate a business’ current supply chain emissions. The second step looks at the source of these emissions and uses strategic planning to introduce ambitious and attainable measures to help cut emissions. The final step may be to take advantage of offsetting or insetting within the value chain to compensate for currently unavoidable carbon emissions. This third step should only be used as a final interim solution once emissions have been driven down to near zero, and only until the infrastructure and technology is in place to make true zero emissions a reality.

No manufacturer wants to see new EVs delivered to the end consumer on a diesel truck

 A closer look at reduction: Burn less, burn clean

With carbon measurement in place as a vital first step, the bulk of effort can then be channelled into the second step: reduction. To do this, the first action is optimising the supply chain to minimise the number of miles travelled. Route optimisation helps achieve this by shortening journeys and reducing carbon output. Similarly, increased backloading tackles the wasteful emissions from empty running, while specialised driver training also helps by promoting fuel efficient driving practices.

In the longer term, no supply chain can reach net zero without transitioning away from diesel and gasoline vehicles. For OEMs that have invested in their own alternative fuel vehicles, it’s especially important that the downstream supply chain reflects this. No manufacturer wants to see new EVs delivered to the end consumer on a diesel truck, so sustainable solutions need to be in place at all stages of the supply chain.

Electric vehicles clearly have a vital role to play, especially for smaller loads and shorter routes, but more significantly, for over a year DHL has been making daily deliveries into London using its all-electric 16 tonne truck.  This is no pilot—it’s happening now and cutting emissions on every journey.

As a greener alternative to traditional fuels, operating liquefied natural gas (LNG) in the right manner, with the right profile of operations, presents a more sustainable option to achieve carbon reduction in long-haul distribution. Being one of the most immediately viable solutions to reducing carbon in the customers’ supply chains, DHL has already begun replacing its diesel fleet with the aim of having over 500 gas vehicles operational by 2025. It will also be looking to use biogas that can generate 80% reduction in CO2, making LNG a strong intermediate solution while the industry waits for zero emission technology to mature and become more cost and operationally effective.

The logistics giant is also committed to supporting the development of zero emission technology and creating more options for its customers, which is why it is now partnering with innovative alternative fuel organisations, such as Riversimple, to support the development of hydrogen vehicles as an alternative to gasoline and diesel. Where LNG vehicles could drastically reduce emissions, hydrogen produces zero tailpipe carbon emissions, making this, along with other zero emission technologies, critical to the industry.

While there’s still some way to go in terms of alternative fuels in transport, green energy in warehousing can immediately boost net zero efforts and also reduce costs in the long term. Smart warehousing has the potential to deliver even more carbon savings, and standards in new builds are improving all the time, from onsite renewable power generation through to its application in heat pump technology, enabling the diversion from fossil fuel-based heating.

The circular supply chain

Finally, for an automotive supply chain to achieve net zero, it is also important to look at the entire lifecycle of the vehicle. DHL is working in partnership with customers to develop the infrastructure to support a robust and resilient circular supply chain capable of handling end-of-life vehicle and battery recycling. In doing so, it is reducing the use of new materials and cutting out waste. Rethinking supply chains in this way will require reverse logistics to close the loop on automotive materials, enabling efficient recycling and reducing unnecessary emissions.

Going on the journey together

By addressing all these elements, DHL has been able to produce bespoke net zero supply chain roadmaps for its customers. For example, it worked with one major OEM to devise a carefully considered and customised roadmap to reach near zero and ultimately net zero emissions across its supply chain by 2024. This meant that one major area of the company’s operation was taken care of so the team could focus their carbon reduction efforts elsewhere.

The road to net zero won’t be easy for the automotive industry, and there’s a long way to go, but working in partnership with businesses on the same net zero mission, and investing in the latest technologies to progress this, is the right place to start.

About the author: Murray Goodrick is Vice President of Business Development, Manufacturing Logistics, at DHL Supply Chain