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Green Consensus

In order to combat climate change, companies must radically change their activities, the Supply Chain (SC) for their activities, the logistics that enable the movement of the SC, the management approach and Human Resources (quantity, quality) according to the “Green Deal” plans of countries. Even people must change their “way of life” accordingly.

Reducing Greenhouse Gas (GHG) emissions, especially from “TZ” and “Logistics”, is essential for combating climate change and this requires truly radical changes.

For consumer goods companies, 80% of their GHG emissions occur in the GVC and GHG emissions should be reduced by 90% by 2050. In addition, the GHG emissions for these companies’ AI (Scope 3) are 11.4 times (28 times in retail and 25 times in apparel) the GHG emissions directly related to the companies themselves (Scope 1).

The share of TC in companies’ total CO2 equivalent emissions is between 29-61% for “raw materials” and 77-90% for “finished” products, with consumer goods accounting for 45% of worldwide emissions (at a cost to the customer of EUR 135-460 for each CO2 tonne equivalent emitted).

Within “Buildings and Constructions”, which account for 37% of final energy consumption CO2 emissions, the share of those related to “Transportation” is 23%. Emissions from logistics (freight) related facilities (buildings, warehouses, terminals, ports) are between 11-30% of the emissions from logistics (freight) and the average GHG intensity in CO2 equivalent is 1.2 Kg in “transshipment” warehouses and 5.4 Kg in “storage and transshipment” warehouses at “ambient” temperature, while it is 11.7 Kg in “temperature controlled storage and transshipment” warehouses. In addition, 47% of the total carbon emissions of the warehouses occur during the “construction” phase and 53% during the “final energy consumption” phase after construction.

According to the article “How turning retail stores into e-commerce centres can avoid massive emissions” prepared by the World Economic Forum (WEF), a 1 million m2 fulfillment center is required to generate 6 billion dollars of e-commerce revenue. During the construction phase of such a building, 1-1.5 tons of carbon emissions per square meter are generated.

According to Oliver Wyman’s “Is E-Commerce Good for Europe? Economic and environmental impact study” report by Oliver Wyman, the use of land or space for logistics, store parking space for conventional retail trade is higher than for e-commerce, and according to logistics commercial real estate experts such as Savills, Prologis and CBRE, an additional 18,000 M2 of warehousing space may be required for every €1 Billion worth of manufacturing investment, 3 times more warehousing space for e-commerce than for regular retail, and approximately 116,000 M2 of warehousing space for every $1 Billion of e-commerce sales growth.

According to Oliver Wyman’s report “Is E-Commerce Good for Europe? Economic and environmental impact study” report, 29% of the 4,052 grams of carbon dioxide equivalent in conventional retail trade is energy consumption in buildings, while 19% of the 879 grams of carbon dioxide equivalent in e-commerce is energy consumption in buildings.

Globally, 8% of total CO2 emissions and 40% of total CO2 emissions from “transportation” are for “freight”, of which 62% is road transport (50% out of town, 12% in town). If the current situation continues, in 2050 “ton-km” for “freight” could increase by 2.6 times and CO2 emissions by 22%, with emissions from “freight” transport rising to 44% and the share of road transport to 67%. For “climate-neutrality”, emissions from “transportation” should be reduced by 90% and emissions from “logistics” by 65% by 2050.

The cost to the US of the work needed for the “Green Deal” in 2020-2029 could be $95 trillion (about $27,000 per person per year). To combat climate change, the EU plans to invest 350 billion euros every year, while the global “Transportation” sector (freight and people) will need to invest a total of around 3 trillion dollars by 2050. The cost of a 30,000 euro passenger car could increase by 2%; the cost of a 40 euro pair of jeans by 2%; the cost of a 20 euro shopping cart of food products by 4%; the cost of a 150,000 euro house by 3%; and the cost of a 400 euro personal electronic device by 1%.

Approximately 28% of CO2 emissions from “freight” transportation worldwide originate from the “Transport and Logistics” sector, of which 18% is for “Scope 1” and 10% for “Scope 2+3”. Although the role and performance of the “transport and logistics” sector is crucial for the 2050 targets, only 15% of the sector is committed to “net zero emissions” for 2050.

In line with the goal of “1.5 degrees and zero emissions”, companies should use transportation vehicles that consume less fossil fuels or run on different energy sources such as electricity, hydrogen, ammonium, solar, or use trucks with “EURO 99” engines; to carry out intermodal transportation with more railways and more railways or inland waterways; covering warehouse roofs with solar panels; using LED light bulbs in warehouses; and improving and developing “transportation” and “logistics” processes to shorten the “distance” and reduce the “time” for “freight transportation” and “logistics” and to take logistics-related facilities, especially warehouses, into account.

Because I think that instead of really “radical” changes to achieve 1.5 degrees, only “solar panels, LED bulbs, railways, intermodal, electric vehicles, EURO 99 engines” will suffice and especially companies and people will be reluctant to “fight against climate” because of the costs (failure to explain the cost-benefit correctly). I hope I will be wrong. If I am not wrong and unfortunately the “Green” Consensus evolves into a “Greenish” Consensus, i.e. “as if”! For the 2050 targets, although applications for the movement of “people” are very prominent, in fact, TZ and logistics for the movement of “cargo” can be much more effective. For example, if radical changes can be made and implemented, the emissions of “freight” transportation can be reduced by 72% compared to 2015. On the other hand, if radical changes are not made or implemented correctly, F&L can make global warming much worse.

Develop a New Warehouse-Centric Supply Chain (SC) Structure

In order to reduce GHG emissions from supply chain and logistics, companies should develop a new “warehouse”-centered TC structure.

For example, TZ and logistics should be structured in a way to shorten the “distance” and reduce the “time” for the delivery of products to the customer; all documentation, including official documents, should be done digitally; transportation packaging such as parcels or bags, which are frequently used in e-commerce, should not be used at all (if possible); returns, which are especially common in e-commerce, should be managed correctly; the number of transshipment points and waiting times at these points should be reduced (zero if possible); traffic congestion in urban distribution should be reduced and more bicycles or people should be used for distribution; CO2 emissions from warehouses should be reduced; 100% visibility should be ensured for full-time, accurate and uninterrupted information sharing involving all stakeholders; and the Sharing Economy should be implemented by creating a physical internet between warehouses and ensuring more shared use of warehouses.

Radical, different and even immediately applicable solutions for Green Dealing should be deployed and used. These solutions could be “on demand storage” offered by DepOrtak and “Last Mile Storage” and “Gray Storage” solutions developed by DepOrtak.

When warehouses reach 85-90% occupancy, they are actually hidden “full”. However, if demands can be managed in real-time and location-based, hundreds of thousands and even millions of m2 of storage space can be created from these empty spaces in a short time with Gray Storage. Thus, storage space supply can be ensured without the need to build new storage areas and CO2 emissions from new construction can be zeroed.

The digital storage network established by DepOrtak supports the creation of the physical internet, enabling the efficient, effective and efficient use of existing storage spaces and the functioning of the sharing economy, contributing to the realization of the goals envisaged for the Green Deal and supporting environmental protection, ecological sustainability and the fight against global warming.

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