Posts Tagged ‘Cost Efficiency’
Logistics constitute a vital link in the present day transportation systems. They have improved the cost, efficiency and reliability aspects of our delivery systems comprising the end part of supply chain. However, the negative environmental impact of transport movements leading to high fuel consumption emissions, enhanced noise levels, movement vibrations and accident rates have now reached such high proportions that the sustainability issues have inevitably come to the forefront of discussions all the world over. Logistics, including the reverse distribution logistics, have to be made environment friendly. In this context, ‘Green Logistics’ assumes great significance.
Present day transportation owes much to modern technology which has indeed helped develop a high degree of organization and control over freight movements not only within a country but also across the seven seas. Technology could be called the most effective driver of growth of transportation industry today. It is however paradoxical that logistics providers in their eagerness to serve own narrow and commercial interests have lost sight of the objectives of green logistics. The conflict between industry’s self-interest and the much-avowed green objectives therefore deserves serious debate and action.
The objective of this paper is to discuss the significance of the concept of green logistics, transport industry related green house gas (GHG) emissions, air quality management in urban agglomerations, modal shift issue, use of bio-fuels and sustainability issues in general.
What is Green Logistics?
The concept of ‘greenness’ came to be discussed in relation to the transportation industry during the eighties and nineties, especially after the World Commission on Environment and Development Report, 1987 announced environmental sustainability as a goal for international action. The transportation industry was identified as one of the culprits contributing to environmental degradation. Studies and reports had also suggested that environment ought to be incorporated in the logistics framework or supply chain paradigm. The term ‘green logistics’ has since then become a catchword.
Traditionally, logistics takes care of the forward distribution of products which includes transport, warehousing, packaging, inventory management and information processing starting from the producer to the retailer and end user. Environmental considerations require that, as a corollary, care has also to be taken of ‘reverse logistics’ which involves recycling and disposal of waste and used materials. Reverse flow logistics have, in fact, opened up a new market for the take back (10). In fine, the entire life cycle of a product – production, distribution, consumption and disposal – has to be considered as part of logistics. Since quite a few related operations like inventory, materials handling, packaging etc may be outsourced to other agencies, operational integration assumes great significance in the total supply chain. In other words, the various independent operations linked together on a transactions-to-transactions basis are buffered by inventory. The focus is on maintaining a continuous flow of desired velocity by synchronizing all the activities which form part of the supply chain.
The key benefit of establishing an effective connectivity is the minimization of transport costs incurred by firms. The logistics expenditure is comprised of following elements: (a) In-bound logistics cost (operations), (b) Out-bound logistics cost (marketing and sales), (c) Service cost, and (d) Management profit (12). The hallmark of an effective integration in supply chain is (a) Transit time compression, (b) Reliability of service,, (c) Just in time (JIT) delivery (d) Good information systems support, (e) flexibility in operations (f) Customization and (g) Minimization of ‘back haul’ or empty trucks in return journey. The same criteria apply to reverse logistics which require management of products returned by customers, their recycling or reuse, repair or removal of products and finding alternate channels to sell impaired assets (18). All these have environmental implications.
Transport administration, as part of supply chain is also of great significance. It involves expertise in vehicles and equipment scheduling, load planning, routing of freight, advance shipment notification, consolidation of cargo, tracing the movement of cargo as part of control and an efficient information system. It also involves documentation in terms of bill of lading and shipment manifest and what is quite important, a competitive pricing strategy (2, 4).
In modern times international trade has become a bigger part of world’s economic activity. The role of transportation in the global supply chain is now all the more important. Transporters may use a combination of modes like air, road, rail, water, pipelines and inter-modal. Trucking is normally more expensive than rail or water but it provides the advantage of door-to-door shipment and shorter delivery times. It also eliminates the need for transfer or transshipment between pick-up and delivery points. Shippers therefore often prefer road transport over rail for all short distance movements within the country. When it comes to global trade, water transport becomes the dominant mode, although air transport is also preferred for light-weight and perishable cargo.
Transport Industry and Green House Gas (GHG) emissions
Transport is certainly an energy- intensive industry involving high levels of direct and indirect GHG emissions. According to Carbon Budget and Trends Annual Report, 2007, global carbon emissions rose rapidly during 2007 with industrializing nations like China and India producing more than half of mankind’s output of carbon dioxide CO2 which happens to be the main cause of global warming (11). The Report states that emissions from burning fossil fuels was the major contributor to CO2 increase and India would soon overtake Russia to become the world’s third largest emitter of CO2. It should be noted that 450 parts per million (ppm) of CO2 leads to two degrees Celsius increase in atmospheric temperature with disastrous consequences in terms of global warming. A wake- up call to industry, business and our wily politicians is given by recent figures of atmospheric CO2 concentration in general which rose to 383 ppm in 2007. This was 37% higher than the mean level. China, India, Russia and Japan are considered as the big players in CO2 emissions and in that the vehicular pollution is the main culprit(6). Country wise figures in the accompanying table 1 illustrate the severity (23).
.Table 1 : Showing GHG emissions for select countries
Country CO2 Emissions Growth Rate
(In million tones) (1990-2004)
United States 6,046 25
China 5,007 109
Russia 1,524 23
India 1,342 97
Japan 1,257 17
Germany 808 -18
Canada 637 54
United Kingdom 587 01
Korea 465 93
Italy 450 15
World 28,983 28
Note: Share of developed countries is 15% in world population,
but 50% in CO2 emissions.
It is also felt that since Russia is effectively reducing the emission rate, India may soon rank as third greatest polluter after U.S.A. and China.
Addressing Urban Transport Air Pollution
Transport no doubt plays a crucial role in the proper and efficient functioning of our cities.\, but it is also responsible mainly for air pollution. Vehicle emissions are considered a serious issue in most metro cities of the world including India. The levels of Suspended Particulate Matter (SPM) is much higher than the standard of 90 (as in 1992) set by the World Health Organization (WHO). A comparison of the SPM concentration in selected Indian Cities with that in other Asian cities is given in Table 2.
As can be seen, in 1992 each of the three Indian cities of Delhi, Mumbai and Kolkata had exceeded many times over the WHO limit of 90 SPM and our national capital was the worst offender.
Table 2: Figures of Average Annual SPM Concentration in Cities of Asia- During 1990-1999 (WHO SPM limit 90 as in 1992) _________________________________________________________________________
Bangkok 215 Hong Kong 55 New Delhi 490
Beijing 380 Kolkata 394 Seoul 101
Busan 100 Manila 198 Shanghai 250
Chonguing 250 Mumbai 252
The blame for rising pollution levels can be laid at the door of steeply rising vehicle population in Indian cities as show in Table 3.
Table 3: Total Number of Registered Motor Vehicles in India during 1951-2004
(Figures in thousands)
Year All Two Cars, Jeeps Buses Goods Others
Vehicles Wheelers & Taxis Vehicles
1951 306 27 159 34 82 4
1961 665 88 310 57 168 42
1971 1865 576 682 94 343 170
1981 5391 2618 1160 162 554 897
1991 21374 14200 2954 331 1356 2533
2000 48857 34118 6143 562 2715 5319
2001 54991 38556 7058 634 2948 5795
2002 58924 41581 7613 635 2974 6121
2003 67007 47519 8599 721 3492 6676
2004 72718 51922 9451 768 3749 6829
Source: (19) and Transport Research Wing, Ministry of Road Transport, G.O.I.
Motor vehicles are prone to emit large quantities of Total Organic Gases (TOG) including hydrocarbon (HC), Carbon Mono oxide (CO), Fine Particulate Matter (PM), Nitrogen Oxide (NOx), and Sulphur Oxides (SOx). These air pollutants cause severe health and environmental effects. The fine Particulate Matter (PM) results in aggravating respiratory and cardio vascular diseases and impairing lung function. Besides, the environment may get degraded by way of acid rain, eutrophication, visibility impairment and, of course, climate change. According to a study published in Current Science (5), while the Indian economy grew by 2.5 times during 1975-1995, the vehicle pollution level increased by 7.5 times. This is disturbing indeed. It shows that transport system and air pollution are directly co-related. The emissions from motorized vehicles in practical terms depend on vehicle kilometers, vehicle speeds, life of vehicles and composition of vehicle fleet. The emission rates of different categories of vehicles are shown in Table 4.
Table 4: Emission Rates of Different Categories of Vehicles in Typical Indian City in gms/km
Vehicle category CO HC NOx SO2 Pb TSP
Two- wheeler 8.3 5.18 - 0.013 0.004 -
Motor car 24.03 3.57 1.57 0.053 0.012 -
Three-wheeler (autos) 12.25 7.77 - 0.029 0.009 -
Bus 4.38 1.33 8.28 1.441 - 0.275
Truck 3.43 1.33 6.48 1.127 - 0.450
Light commercial vehicle 1.30 o.50 2.50 0.400 - 0.100
Note: (-) indicates negligible quantity
Here one can see that emission rates in terms of CO and HC for personalized modes of transport like motor car and two wheelers are very high suggesting the need for their substitution by public passenger transport modes lie bus or metro rail. The figures of average efficiency of different categories of motor vehicles as expressed in terms of kilometers per litre are as in Table 5.
Vehicle category _Fuel type Kms. per litre__
Bus Diesel 4.30
Two wheeler Petrol 44.40
Three wheeler Petrol 20.00
Motor car Petrol 10.90
An idea of the vehicular emission loads in selected Indian cities can be had from the figures in Table 6.
Table 6: Estimated Vehicular Emission Load in Selected Metropolitan Cities of India
Name of city Vehicular pollution load (tonnes per day)
_________________________________________________________________________ Particulates Sulphur Oxide of Hydrocarbons Carbon Total
Dioxide nitrogen monoxide
Delhi 10.30 8.96 126.46 249.57 651.01 1046.30
Mumbai 5.59 4.03 70.82 108.21 469.92 659.57
Bangalore 2.62 1.76 26.22 78.51 195.36 304.47
Kolkata 3.25 3.65 54.69 43.88 188.24 239.71
Ahmedabad 2.95 2.89 40.00 67.75 179.14 292.71
Pune 2.39 1.28 16.20 73.20 162.24 255.31
Chennai 2.34 2.02 28.21 50.46 143.22 226.25
Hyderabad 1.94 1.56 16.84 56.33 126.17 202.84
Jaipur 1.18 1.25 15.29 20.99 51.28 88.99
Kanpur 1.06 1.08 13.37 22.24 48.42 6.17
Lucknow 1.14 0.95 9.68 22.50 49.22 83.49
Nagpur 0.55 0.41 5.10 16.32 34.99 57.37
Grand Total 35.31 29.84 422.88 809.69 2299.21 3597.20
The air pollution levels in our cities are disturbing indeed. The number of motor vehicles moving on Indian roads today is certainly much more than the figure of 7.2 crore in 2004 (See Table 3). What is more alarming is their concentration in metropolitan cities like Delhi, Mumbai, Kolkata and Chennai. Delhi, for instance, which had 1.4 percent of Indian population accounted for 7 percent of total motor vehicles in the country. Another worrying feature is that while the share of mass transport (buses) is quite below the desired range of 60-85 for two million plus cities, the share of personalized transport (cars and two wheelers) and para- transit (autorikshaws and taxis) is above the optimal range of 10-20 in most cities.
The impact of such a rapid growth of vehicle population in the background of grossly inadequate road space, poor street furniture, illegal encroachment by hawkers, parked vehicles and pavement dwellers can be easily imagined. Most Indian cities today face severe traffic congestion, especially during peak hours when vehicle speeds slow down to 5-10 kms per hour in central business district areas. Vehicular emissions in the form of CO2, HCs and NOx drastically increase the pollution levels.
Mass transport services like buses and suburban rail systems are generally overcrowded. They are irregular and involve long waiting times. This naturally leads to a massive shift to personalized transport and para-transit modes. In India owning a motor car is still considered a status symbol. As a result the neo-rich are fast joining the car-owners club and it is feared that the situation may worsen after the rupees one-lakh nano car arrives on Indian roads. All this may also lead to a soaring up of accident rates to dizzy heights. It is time we listen to the wake up call and save ourselves from turning into a car-oriented society.
Air Quality Management – Measures
It is obvious that we need to act without delay through effective intervention in the transport sector. Green transport through green logistics should be our goal. Maintenance of air quality standards is possible through setting an ambient air quality monitoring network for vehicular emissions and simultaneously helping motorists to make the transition. The variety of measures that need to be undertaken can be on following lines:
(a) Diesel engines emit carbon particles TSP, heavy hydrocarbons, sulphate and other by-products of combustion, and petrol engines also emit CO, NO and other volatile compounds. However, diesel engines are considered as relatively dirtier and government should discourage their use through suitable policy measures including differential pricing (14).
(b) The government should promote the use of alternative cleaner fuels like liquefied petroleum gas (LPG) and compressed natural gas (CNG). Thankfully, it is already doing this gradually and effectively. The air quality in Delhi and Mumbai has certainly improved after their use in public transport buses and autorikshaws. It should also take care to establish CNG filling stations along all major roads. Another good news, according to a Research Report by Frost and Sullivan ( ), is that car makers in India are soon likely to roll out models that run on alternative fuels like CNG and LNG. They are also developing a converter kit which will transform an existing petrol and diesel vehicle into a CNG/LPG driven vehicle. Such converter kits for three-wheelers are already in the market. After this conversion India will actually need 10,000 CNG pump stations whereas today their number is less than 5000 across 15 cities.
(c) Use of old vehicles should be effectively curbed. Shortage of finance or fear of unemployment should not come in the way of enforcement of government directives. Petitions for judicial intervention should be quickly dealt with. Obsolete models, except those used for vintage car ralleys, ought to be made to retire.
(d) Improvement in fuel quality in terms of lower surphur content in diesel and lower benzene and aromatics in petrol should be enforced. The Department of Road Transport of the Government of India has rightly promulgated Rules in April 1995 regarding use of unleaded petrol and fitting of catalytic converters in new petrol-driven cars. Similarly, the norms for sulphur content in petrol have been fixed at 0.1% and for diesel at 0.25%
(e) Setting up of emission standards for all kinds of motor vehicles is necessary. Happily, the next generation emission norms for two-wheelers and three-wheelers have been made effective from April 2005. If feasible, the government may start conducting emission testing of motor vehicles prior to their registration. It may be stated that the automotive sector of Indian industry is quite sensitive to environmental risks and safeguards.
(f) The local enforcement agencies should launch sustained drives against smoke-belching vehicles which abound in small and medium sized Indian cities. For this purpose they should bring emission testers to roadsides for inspection of vehicles. Forced retirement of older high-polluting vehicles may be resorted to. The government should also bring in pedestrian safety laws and clear footpaths of all encroachments to allow pedestrians their right to walk safely.
(g) Better integration between rail transport systems and other ‘feeder’ bus services and water transport facilities should be brought about by linking them together. Common ticketing and information systems to offer seamless connections between different transport modes can also be thought of. Elevated railways integrating LRT and MRT lines may be constructed to discourage private car ownership. (20)
The question of changing the modal split in favour of railways and waterways also needs to be addressed seriously. It is a well-established fact that road freight vehicle movements give out greater carbon emissions per tonne kilometer than rail or water borne freight. The road arteries in India these days are getting more and more congested affecting climate change. The share of rail transport in freight movements, not in absolute but relative terms, has been declining relative to road transport, because of the accessibility and door-to-door delivery advantage enjoyed by road transport. This however does not augur well from the environment and sustainability viewpoint. There is no doubt that Indian rail freight traffic during the last decade has increased in absolute terms thanks to the Container Corporation of India – a subsidiary of Indian Railways- playing a more customer-friendly role in providing ISO containers both at port terminals and inland container depots (ISDs). However, for logistics providers road transport still continues to be the favoured mode for the reason that their criterion of measuring transportation costs differs from that of the government. The costs of environmental degradation for them are external and do not need internalization for business accounting purposes.
It is here that policymakers should use their ingenuity in evolving such fiscal, regulatory and organizational measures which will bring about a modal shift from road to rail and water transport. Unfortunately, there is no evidence yet of serious thinking on the part of policymakers to bring about such environmentally desirable modal shift from road to rail and water. The reason is not far to seek. The decision about mode choice by shippers of freight involves many complex issues. It depends upon a variety of factors influencing performance of rail freight movements and the costs in terms of money and time that is to be borne ultimately. It is therefore necessary to identify the barriers that prevent the desired modal shift and evolve suitable measures to achieve the objective. It is the logistics managers who can really enlighten us on the eco-friendly way of influencing mode choice.( )
Switch to Bio-fuels
Due to soaring prices in the world oil market during the last few decades, need arose to break free from oil and use alternative energy sources like bio-fuels which would cut oil demand, provide energy security and prevent climate changes. Simultaneously, efforts were begun to promote research and development in clean alternative energy options like wind, water, solar and hydrogen resources. However, a switch to bio-fuels- specifically ethanol – was looked upon as the easier way to achieve the objective (7)
The question often being asked is whether reliance on bio-fuels would prove a good strategy. Researches undertaken by International Food Policy Research Institute (IFPRI) reveal a different story (17). During the period 2000-2007 there was a boom in ethanol production. Brazil and USA controlled the market producing 90% of ethanol. European Union (EU) also followed suit. Large tracts of land were diverted towards production of palm and soya-bean to produce bio-diesel and towards corn and sugarcane to produce ethanol. This led to a surge in commodity prices throughout the period. According to IFPRI, if this trend continues, by 2020 prices of corn are estimated to rise from present 26% to 72%, of sugar from 12% to 277% and of oilseeds from 18% to 44%. This scenario is bound to have a serious impact on the poor strata of society with diet quality getting reduced and malnutrition spreading to large parts of Asia and Africa.
In this situation, rich countries may continue to emit majority of green house gases (GHGs) and the poor countries will bear the burden of climate change in terms of hotter climate, lesser rain, and deforestation, and also low incomes, malnutrition and greater dependence on agriculture and natural resources for living.
It is feared that the risks in switching to agro-based fuels are real. The switch may trigger further deforestation and destruction of the ecosystem. Warnings are therefore being given that agro-fuel policies should not be pursued further without a proper risk analysis. (1). According to a UNIDO document, “the key concern here is the competition between land use for bio-energy production and food and animal food production.” The fuel versus food issue is really enigmatic. The document further states that “the coupling of energy market with food market can increase food prices and hence worsen the access to affordable food for many” (25). This warning can be ignored only at our peril.
It should be clearly understood that increased prices may result in increased incomes for farmers and give them their food security, but the overall effect would depend upon the distribution of increased incomes. In the opinion of the Food and Agriculture Organization (2006) the food versus fuel issue needs detailed analysis of the possible outcomes of bio-fuels policy. The Stanford University’s Wood’s Institute for Environment claims that reliance on bio-fuels as part of America’s new energy plan is not a good strategy. It is a fact that USA’s Ethanol-from-Corn Program has led to a rise in prices of food crops due to farmland diversion. (23) This can happen anywhere and in India too. Lands can be diverted for production of soya-bean and sugarcane. The decision to switch from fossil fuels to crop-based fuels has therefore to be taken with extreme caution. Scientists state that agro-fuels production from oilseeds and corn has the potential to damage our climate catastrophically.
Researches are being carried out to produce liquid bio-fuels for transport as such. Here the ‘first generation fuels refer to bio-energies made from sugar, starch, vegetable oils or animal fats using conventional technologies. ‘Second generation’ fuels refer to those from lingo-cellulose biomass feedback using advanced technologies. In India, we have resorted to gasification of solid bio-mass through setting up small scale plants mainly in rural areas which produce heat and energy. We should upgrade the technology so as to feed the gases into pipelines or alternatively compress them for use in transport vehicles. In this respect Brazil has a success story to report. The production of sugarcane ethanol has reduced that country’s dependence on fossil fuels and also ‘cleaned’ the industry. ( )
In fine, as long as the thrust is on producing ‘clean’ energy and on scaling down petroleum consumption, bio-fuels can be considered as welcome. But we must carefully assess the fall outs of switching to bio-fuels. President Obama’s New Energy Plan for USA supports greater use of ethanol produced from maize. This has led to increase in food prices, especially of wheat. If we in the same way produce sugar ethanol in India, it may deplete our water levels and degrade soil quality. Bio-fuels may not prove to be so ‘green’ after all. (23) The sustainability of bio-fuels does not seem to be as strong as it appeared earlier.
1. Almuth Ernsting, Deepak Rughani, Dr. Andrew Boswell (2007): “Agro Fuels Threaten to Accelerate Global Warming”, UNFCCC, Bali Version, www.biofuelwatch.org.uk 2. Bowersox, Closs, & Cooper (2008), Supply Chain Logistics Management, McGraw Hill, 2nd edition 3. Central Pollution Control Board: National Ambient Air Quality Statistics of India, different years 4. Chopra Sunil and Peter Meindl (2007) : Supply Chain Management- Strategy, Planning and operation, Prentice Hall of India 5. Current Science (1999): “Urban Air Pollution- Commentary”, Vol.77, No.3, August 10, 1999. 6. Financial Express, November 3, 2008, Emerging Ventures India 7. John Browne (1997): “Bio fuels – A Solution for Climate Change- Our Changing Earth Climate”, A Presentation in the Council of foreign Relations, New York, Nov.13, 1997. 8. John Pucher, Nisha Korattyswaropan, Neha Mittal, Ninu Ittyerah (2005): “Urban Transport Crisis in India”, Transport Policy 12, Elsevier, pp. 185-198. 9. Prodosh Mitra (2009): “Biofuels are not so green- Counter view”, Times of India, February 17, 2009 10. Rodrigue Jean-Paul, Brian Slack, Claude Comtois (2001): “Green Logistics (The Paradoxes of)”, in The Handbook of Logistics and Supply Chain Management, Brewer et al (eds.), Pergamon/Elsevier publishers, London Greening Business Survey 2008 11. Financial Express, September 22 & 29, 2009: “Global Carbon Emissions Rise Despite Abatement Steps” – Carbon Budget and Trends Report, 2007 12. G. Raghuram and N. Rangaraj (2005): Logistics and Supply Chain Management- Cases and Concepts, Macmillan, Delhi 13. Hindustan Times, December 19, 2007: “India is on an eco drive”. 14. House of Representatives, Phillipines Policy Advisory No.2004-03 (2004): Addressing Urban Transport Pollution. 15. Indian Express, November 16, 2007:International Energy Agency (IEA) Report on World Energy Outlook 16. Jain, A.K. (2009): ” Retrofitting Cities and Built Form to Meet the Challenges of Climate Change and Carbon Emission”, Akruti Journal of Infrastructure, Vol. II, No. 2, pp. 101-121 17. Joachin von Braun (2008): “Food Prices, Biofuels, and Climate Change”, International Food Policy Research Institute (IFPRI) 18. Sahay B.S. (Ed.) (2004): Energy Issues in Supply Chain Management, Akruti Journal of Infrastructure, Vol. II, No. 2, pp. 122-1 19. Sanjay K. Singh (2005): “Review of Urban Transportation in India”, Journal of Public Transportation, Vol. 8, No. 1, pp. 79-97 20. Warwick J. McKibbin (2009): “Climate Change Policy for India”, 21. Sibal and Sachdeva (2001), “Urban Transport Scenario in India and Its Linkage with Energy and Environment”, Urban Transport Journal, Vol.2, No.1, pp.34-55 22. Sudarsanam Padam & Sanjay K. Singh (2002), “Urbanization and Urban Transport in India- The Sketch for a Policy, Central Institute of Road Transport, Pune 23. Times of India, November 28, 2007, “Global Warming- Earth on Fire”- Subodh Varma 24. Tiwari Geeta (2007), “Urban Transport in Indian Cities”, Urban Age, Newspaper Essay, L.S.E. 25. UNIDO (2007): Bio Energy Strategy- Sustainable Industrial Conversion and Productive Use of Bio Energy – Report