Environmental, social, and governance (ESG) criteria comprise a uniform standard of quality and excellence. ESG logistics applies those standards to transportation activities.
The goal is to align a company’s operations with those of environmentally conscious customers, investors, and partners. Each of the three ESG initiatives apply across your logistics management practices.
- Environmental criteria focus on how the practices and activities of the company impact nature and the environment.
- Social standards examine how the company deals with suppliers while looking closely at a company’s leadership, internal controls, and operations.
- Governance changes — meaning keeping a better eye on how things are executed — strengthen the ESG triad focused on building more successful and responsible companies.
Combined, these targeted efforts improve functions throughout the company to make it more profitable and increase sustainability, regardless of the current market, social, or economic struggles. Practical and sustainable ESG logistics represent the ultimate goal of ESG initiatives. It is important to keep ESG top of mind despite increased transportation costs.
Rising Fuel Costs And Other Factors Are Adding To Total Transportation Costs
Fuel consumption is one of the biggest obstacles transportation service providers and shipping companies face when adhering to ESG initiatives and goals.
Since mid-2020, cargo volumes have increased, delays and bottlenecks have created backlogs, peak season surges have intensified, and growing demand for e-commerce shipping has put unprecedented stress on transportation service providers. All of this has added to fuel consumption and waste, increasing pollution and negative impacts on local, national, and global environments.
Reducing empty, idle miles, partially full backhauls, delays, dwell time, and scheduling issues are target areas for cutting carbon emissions. Improved visibility and transparency throughout the supply chain and sustainable logistics and management facilitate many more sustainability opportunities. When drivers can make the most of every mile driven, and every truck is filled as much as possible, it reduces fuel waste and usage, which helps align supply chains with ESG initiatives.
ESG Logistics Initiatives Are Integral To Meeting Customer Expectations
Customer needs and demands continually shift over time, but the shift has been more sudden and dramatic in recent years than in years past. Additionally, the increasing interest in sustainability and the desire to work with environmentally minded “green” companies has put many transportation companies in unfamiliar territory.
Material Handling & Logistics found that, “Many companies are looking for ways to buoy their sustainability programs through the pandemic – focused on holding the course with increased help of outside partnerships (62%) until they can afford to reinvest in big innovations. Meanwhile, they are increasingly focused on improving the transparency in environmental reporting (59%), improving sustainability in sourcing (63%), and aligning with external sustainability standards or protocols for their existing programs (59%).”
The value of ESG initiative adherence is not just limited to business owners and managers; benefits can also trickle down to the customer through more sustainable shipping options, better shipping services, and improved customer relationships. The need for supply chain optimization has never been greater.
How Does A TMS Enable Better ESG-Oriented Shipping Execution?
Embracing sustainable logistics and shipping procedures becomes more accessible with a fully integrated TMS platform in place. Maintaining an ESG-oriented shipping process is possible with the following technological advances and management services:
- Tracking data in real time to reduce waste and cut out high-use processes whenever possible.
- Implementing changes based on predictive analytics of key problem areas that show a potential for growth of waste.
- Planning to reduce empty miles, idle time and delays, stop-and-go losses, dead haul miles, and poor final-mile logistics.
- Maximizing space utilization across all modes and methods used for transportation, including the final-mile delivery.
- Improving access to carbon credits and additional assistance through data-backed changes and updates.
- Diversifying the carrier base to hasten responsiveness and avoid unnecessary travel or idle time.
- Using multimodal, intermodal, and omnimodal TMS efficiency gains throughout the supply chain to speed transport and reduce total environment cost.
Align Your Organization’s ESG Initiatives And Goals With the Right TMS Partner
Enhanced logistics, improved visibility, and better transparency allow for more impactful sustainability developments to occur.
Along with improved ESG logistics protocols management, transportation service providers can improve overall profits and optimization. When you can maximize every load and opportunity, aligning supply chains with ESG initiatives becomes easier.
Request a MercuryGate demo to see how the right TMS partner can improve ESG adherence across your entire supply chain network!