Transporting goods isn’t exactly synonymous with environmental stewardship. But new trends and technology can make logistics and shipping operations more sustainable for ecommerce businesses. As business leaders assess their operations, many have realized they can make their products and shipping processes more eco-friendly while still achieving profitability.
This approach to order fulfillment and supply chains is known as green logistics, and it’s transforming corporate networks around the world. Here’s a detailed look at this concept—its benefits, challenges, and strategies for implementing it in your own business operations.
What is green logistics?
Green logistics involves optimizing logistics operations—like transportation, storage, and distribution—to minimize their environmental footprint.
Historically, the logistics sector has been associated with high fuel consumption and carbon emissions as goods move through complex supply chains—from raw materials heading to a factory to finished goods coming from warehouses.
Pursuing a green, sustainable logistics strategy often requires companies to reimagine their operations and may require an upfront investment, with the goal of reducing long-term operating costs and environmental harm. The big pillars of green logistics include:
- Reducing emissions. Minimizing greenhouse gas emissions from vehicles, warehouses, and other logistics operations. That could mean switching your fleet to electric vehicles or alternative fuels with a lower environmental impact, as well as strategies like route optimization to drive less when possible.
- Minimizing waste. Cutting down on packaging waste, optimizing warehouse space to minimize energy consumption, and implementing recycling programs.
- Prioritizing sustainability. Opting for renewable energy sources, investing in green technology, and partnering with environmentally responsible suppliers.
Phantila Phataraprasit, founder of Sabai Design, a sustainable furniture brand, embraced green logistics from the outset of her business journey.
“Our core as a company is centered on sustainability,” Phantila explains. “So many different parts of our business can be sustainable, whether that’s the products, the creation of them, the shipping of them, the end of life, or life extension considerations.
“For us at Sabai, it’s really looking at all of those different things across the board and trying to make an impact or reduce our impact,” she says.
Green logistics vs. reverse logistics
Reverse logistics refers to operations involving returning goods from customers back to a seller or manufacturer. Reverse logistics practices include handling product returns, making repairs, refurbishing items, recycling, and disposal. In some cases, reverse logistics involves sending items back up the supply chain, like when returned consumer goods go back to a warehouse for resale.
Green logistics, on the other hand, is about taking current company operations and reconfiguring them to reduce emissions, limit waste, and meet sustainability goals established by the business. In some cases, reverse logistics double as green solutions that limit landfill waste or reduce emissions. Ultimately, however, businesses implement reverse logistics and green logistics for different reasons.
Reasons for ecommerce businesses to implement green logistics
- Reduced environmental impact
- Cost savings
- Enhanced brand image
- Improved efficiency
- Compliance with regulations
As a business owner, you can enjoy the benefits of green logistics—and they aren’t exclusively related to saving the planet. When properly executed, a green logistics campaign saves money and time, and creates affinity among consumers with similar sustainability values.
Here are five key reasons companies make these investments:
1. Reduced environmental impact
Green logistics investment can reduce greenhouse gas emissions from transportation by grouping shipments so that fewer vehicles are on the road emitting carbon dioxide. Biodegradable packaging can minimize landfill waste, and utilizing smaller warehouses can conserve resources. All of this adds up to a reduced environmental footprint.
2. Cost savings
You don’t have to make a financial sacrifice to join the fight against climate change. In fact, you can save money by applying green logistics practices. Optimizing routes, improving vehicle efficiency, and reducing waste can lead to significant cost savings in fuel consumption, transportation and labor costs, and packaging materials. Investing in new technologies may cost a lot up front, but it can save you money in the long run.
3. Enhanced brand image
Consumers, particularly younger generations, are increasingly concerned about environmental sustainability. Implementing green logistics practices can enhance your brand’s image and reputation, attract environmentally conscious patrons, and build brand loyalty, offering market advantages over competitors that are slower to adapt.
4. Improved efficiency
Green logistics processes can make deliveries more efficient and grant you more control over how you allocate each resource. For example, optimizing delivery routes with artificial intelligence (AI) tools can reduce carbon emissions and save time, allowing more parcels to reach more customers in a single trip.
5. Compliance with regulations
Transportation and delivery industries face numerous local, state, and federal regulations, many specifically concerned with sustainability and environmental stewardship. On a national level, the Clean Air Act, originally adopted by Congress in 1970, has wide ramifications for the transportation industry. Certain states have even more stringent environmental standards, with California often taking the lead through its California Air Resources Board (CARB). Green logistics methods can help you stay on top of current laws, and help you get ahead of future requirements.
Challenges of green logistics in ecommerce
- High initial costs
- Limits to technology and infrastructure
- Complex supply chains
- Institutional resistance to change
For all the benefits that a green transition offers, it does come with some difficulties. Here are four challenges to note as you embark on your own green logistics journey:
1. High initial costs
Transitioning to green logistics often requires significant upfront investments, including electric vehicles, charging infrastructure, renewable energy sources, and route optimization software.
Green packaging can also be more expensive at the outset. For small and medium-sized ecommerce businesses, for instance, transitioning to containers made of biodegradable materials can be a challenge, as it requires balancing the higher investment with the need to maintain profitability.
2. Limits to technology and infrastructure
Green logistics infrastructure, like electric vehicle charging stations and renewable energy networks, is still under development in many areas, and investment in green technologies tends to fluctuate with political and financial trends.
3. Complex supply chains
Controlling emissions and implementing sustainable practices across your supply chain is no easy feat. Products typically pass through multiple intermediaries and transportation modes, from a supplier to store, or warehouse to consumer. To succeed, you must prioritize strong collaboration with suppliers and logistics partners.
Moreover, if you expand to new products and geographies, you’ll need to find new sustainable suppliers, warehouses, and shipping partners. “The biggest challenge for us has been that figuring out the most cost-effective and lowest-impact way of shipping our products is a constantly moving target,” says Phantila.
“As our company grows, as our shipping geographies change, as our product line shifts, the answer to that question changes. As a team, we have to always be looking for new opportunities, technologies, and solutions to reducing our footprint.”
4. Institutional resistance to change
The many changes green logistics require can make it tough to get stakeholders on board.
You may find that workers and business partners resist change not because they don’t care about sustainability, but because they’re entrenched in their established processes. You may need to develop workflows and provide training to make green transitions as smooth and painless as possible.
Strategies for implementing green logistics
- Optimize transportation and deliveries
- Look for ways to reduce waste
- Use circular supply chains
- Shift to sustainable packaging
- Improve warehouse operations
- Choose eco-conscious partners
- Train your team
Are you ready to embrace green logistics but aren’t sure where to start? Here are six tactics to pursue:
Optimize transportation and deliveries
You have many options for optimizing transportation and deliveries. You can combine smaller orders into larger shipments to reduce trips, or leverage route planning software to minimize distances and fuel consumption. One version of this is called load pooling, where logistics managers consolidate multiple shipments from different suppliers or customers into a single, larger shipment.
You can also switch to electric, hybrid, or alternative fuel vehicles, or even use bikes for hyperlocal deliveries. Each of these can put a big dent in your emissions and fuel consumption.
“Look into shipping consolidation practices that reduce your carbon footprint as well as costs,” Phantilla says. “I think customers understand if products take five to seven business days to arrive, especially if you explain the impact to them.”
Look for ways to reduce waste
One way to cut down your environmental footprint is to reduce waste. Sabai Design uses modular construction in its furniture, so if a chair leg breaks in transit, they can ship just the leg instead of an entirely new chair.
“We built the company with a repair program in mind,” Phantila explains, “which makes it so much easier for us to reduce waste when it comes to sending replacement parts or repairing products damaged in transit. Replacing an entire piece of furniture due to damage is extremely wasteful, and costly.”
This optimization cuts down on fuel usage, shipping materials, and landfill usage.
Use circular supply chains
A circular supply chain is one that reuses materials as much as possible, rather than discarding them in a landfill after one use. By selecting easily reusable materials like metal and glass, you can break down the components of your products and recycle individual materials after the end of life stage. Even plastic can be reused and repurposed, especially plastic that is designed to be durable like acrylonitrile butadiene styrene (ABS).
Shift to sustainable packaging
Replace single-use plastics like bubble wrap and plastic fillers with recycled, compostable, or biodegradable packaging materials. If you’re encouraging reuse, make packaging materials both sturdy and useful—a tiny tote bag that fits only one item or a reusable container that falls apart after a few uses may not be much greener than single-use plastic.
Better yet, reduce your total amount of packaging materials altogether by optimizing your product sizes so there’s minimal packaging or void fill that needs to be packed with peanuts, bubble wrap, or other materials.
Improve warehouse operations
Warehouses can be energy drains, which makes them a great target for improvements. Implement energy-efficient lighting, heating, and cooling systems in your storage facilities. Create warehouse floor plans that ease order fulfillment and minimize travel distances within the building, and reuse or recycle the packaging waste produced by the warehouse.
Choose eco-conscious partners
Partner with suppliers that prioritize sustainable operations. Look for vendors and partners that make strong sustainability commitments and have a background in green logistics practices. For instance, the International Supply Chain Education Alliance (ICSEA) offers a Certified Sustainable Supply Chain Professional program.
Train your team
Educate your team members about the importance of sustainability. Explain the role they play in reducing the environmental impact of your logistics. Consider offering incentives for employees to adopt sustainable practices. For example, you could offer gift cards to departments that can cut their packaging usage by half.
Green logistics FAQ
What is meant by green logistics?
Green logistics refers to the practice of minimizing the environmental impact of supply chain operations through sustainable practices, including reducing emissions, optimizing transportation, and using eco-friendly materials.
What is the background of green logistics?
Green logistics emerged from the growing awareness of environmental issues and the need to balance economic efficiency with sustainability in supply chain operations. Today, it’s driven by regulatory demands and a growing consumer demand for eco-friendly practices.
What is the difference between green logistics and traditional logistics?
The key difference between green logistics and traditional logistics is that green logistics prioritizes minimizing environmental impact through sustainable practices, while traditional logistics focuses primarily on efficiency and cost-effectiveness without specifically emphasizing sustainability.