Sustaining Supply Chains

Supply chain infrastructure by Lars Plougmann via Flickr CC

Have supply chains ever really been sustainable? Are they more or less sustainable now in the post-pandemic, political and economic climate? Probably less.

Perhaps the problem is with the word itself: what happens when supplies are disrupted by war, weather, politics, economic turbulence and/or pandemics? Are the chains tough and flexible enough to withstand those punches?

Supply Chain Digest reviewed the Top Supply Chain Stories by Month 2022, which presented  pictures of oddities, failures, and “chaos.”

In January, for example, SCD reported that thieves are “opening intermodal containers as freight trains slow down or stop as they approach depots in downtown LA. That also leaves a trash mess around the rails from items the thieves don’t want.” Also, the queue of ships waiting to unload at the ports of Los Angeles and Long Beach reached a record high of 105, even as peak season ended weeks before.

And that was just January. In February Russia invaded Ukraine leading to chaos that is still happening.

In June, CSCMP and Kearney released the 2022 State of Logistics report. One of its metrics, US Business Logistics Costs (USBLC) rose sharply on an absolute basis in 2021 to $1.85 trillion. “That was an increase of 22.4% from an economically weak 2020. With a smaller increase in US nominal GDP (10%) than logistics cost rose last year (22.4%), that took the relative cost of logistics as a share of GDP to 8.0%, up significantly from 7.44% in 2020.”

Members of the International Longshore and Warehouse Union (ILWU), which represents West Coast dock workers, begin working without a contract in July after the current one expired at the end of June. Negotiations with the Pacific Maritime Association (PMA), which represents ports and terminals, began in May and a settlement seems well off.  Port automation is said to be a key issue, raising fears that a stalemate will lead to a dock worker strike and … supply chain chaos.

In December, the battery-powered Tesla Semi was launched as a commercially available product, with news that PepsiCo received the first vehicle. “It’s been a long haul for the electric truck,” according to SCD. “The company’s CEO Elon Musk first announced the cargo truck plans in 2017, with stated expectation for a commercial launch in 2019. At the announcement, Musk also said that on a November 25 test drive, a fully-loaded Tesla Semi (81,000 pounds) traveled 500 miles on a single charge.

Maybe we will all have to slow down in the EV age.

So what about this year? Thomas Insights offered these “top trends” in the supply chain for 2023:

  • An increase in Reshoring and Near-Sourcing initiatives: “Factors ranging from high freight costs, labor shortages, and factory shutdowns to component shortages, transportation delays, and geopolitical conflicts, have compelled many organizations to rethink their approach to supply chain management.” 
  • The Rise of crowdsourced delivery: A global research study found that around 90% of retailers expect to use crowdsourced delivery to handle specific orders by 2028. 
  • Better conditions for truckers: As of October 2022, the U.S. was short almost 78,000 truck drivers. “If current trends continue, the driver shortage could exceed 160,000 by 2031, contributing to significant supply chain delays.”
  • High supply chain costs: “In 2022, increases in fuel prices and ongoing global supply chain disruptions have severely impacted retailers’ margins. Between January and June, for example, the price of regular motor gasoline rose by 49% and the price of diesel fuel rose by 55%. Meanwhile, the ongoing war in Ukraine has seen a decline in food supplies and transportation bottlenecks. Because it’s more expensive, and takes a good deal longer, for retailers to acquire, transport, and store their goods, the prices of commodities are also soaring.”
  • Smaller warehouses: “Because smaller warehouses are both in-demand and hard to come by, recently, the rental rates for units less than 120,000 square feet had risen twice as much compared to bigger warehouses. Another option for retailers is to transform existing retail spaces into fulfillment centers. This is the tactic taken by Walmart, which is in the process of converting many of its 4,700 stores to mini-warehouses.”
  • Major skills gaps remain: “For supply chain leaders, a focus on attracting, recruiting, and retaining top talent will be a key focus in 2023, as will reskilling and upskilling the existing workforce.”
  • Technology investments: “The top supply chain technology trends of 2022 included digital twins, autonomous things, sustainability tools, and analytics everywhere. As companies become more comfortable utilizing these technologies, we will see them grow in 2023.”

Sustainable supply chains? It seems those are three words that don’t work very well together at the moment.

Copping out on COP

Climate Alliance photo via Flickr CC

Net zero? When it comes to net zero carbonization that sounds like a game that countries and companies play, much like getting to zero fuel emissions for some auto fleets, but not for others. It’s all about the math and playing with the numbers in a time-honored way to game the system and look good.

That really won’t cut it when it comes to the climate crisis because the corporations with the most to lose – and who are the most responsible for the crisis in the first place – don’t really want to hurt themselves too much while talking the net zero game.

From Triplepundit: “At COP27, companies, NGOs and governments are discussing what it takes to create a just transition, as in a climate action plan that is socially equitable.”

Hmm, that sounds like gobbledygook, or as Greta Thunberg might say (quoted in the Nov. 28 New Yorker article written by Elizabeth Kolbert: “blah blah blah…”

Can technological advances get us to net zero emissions? Maybe, but again, blah blah blah!

Here is part of Thunberg’s quote from the Youth4Climate conference in September:

“This is all we hear from our so-called leaders: words—words that sound great, but so far have led to no action. Of course, we need constructive dialogue, but they’ve now had thirty years of blah, blah, blah, and where has that led us?”

Governments and corporations need to develop and deploy climate technologies critical for the world’s net-zero agenda.

Now.

Beam it down! Solar farms in space!

London, United Kingdom by NASA via Flickr CC

Euronews is reporting that giant solar farms orbiting the planet may someday power Europe. The European Space Agency (ESA) unveiled a plan to harvest the sun’s energy in space and beam it back down to Earth.

It’s an idea that has been around for a while, and the subject of science fiction stories, but now it is closer to science fact. The technology is still in the preliminary testing phase, but the goal is the construction of a 2-kilometer (1.2 mile) long solar space farm, generating as much energy as a nuclear power plant, according to Hannah Brown with the European Broadcasting Union (EBU). The farm would orbit about 36,000 kilometers above the Earth.

“[Such a project] would ensure that Europe becomes a key player– and potentially leader – in the international race towards scalable clean energy solutions for mitigating climate change,” the ESA said in a statement.

Solar power is a great source of clean energy, but it’s held back by some limitations. For example, solar panels can only harness power in the daytime, and even then, much of the sunlight is absorbed by the atmosphere on its journey to the ground. But in space, the sun’s beams are around ten times as intense as they are on Earth.

The ESA has partnered with Airbus to develop ‘wireless power transmission’ to capture this 24-hour source of electricity and beam it down to us. The technology is based on the transmission used by TV and communication satellites every day, Airbus engineer Nicolas Schneider explained: “We are not very far from a 4G antenna, except that what we want is not to radiate in all directions, we want to be very precise like a laser, in fact. It’s a wave that can be directed to this receiving antenna which will then transform this wave into electricity.”

The problem is one of scale. The satellite would be massive, and so difficult to launch and build. But doable.

With mega-billionaires so interested in playing around in space, maybe they should spend a few billion for this and become energy czars.

Let’s do this!

Dueling for compliant fuel

Bunkering by Cycling Man via Flickr

Container shipping operators are scrambling to come into compliance with United Nations decarbonization rules, according to IHS Markit.

In 1973, the International Convention for the Prevention of Pollution from Ships (MARPOL) expanded the powers of the International Maritime Organization (IMO) to regulate the environmental impacts of shipping. A MARPOL update in 2008 called for a reduction of the maximum sulfur content in marine bunker fuel from 3.50% to 0.50% in 2020, unless a supply study would conclude insufficient availability of compliance fuels and a delay to 2025 deemed necessary. But, in October 2016, the IMO came to a broad agreement to implement the global reduction in the sulfur content of marine bunker fuel from January 1, 2020.

IHS Markit estimates that about 55,000 ships of a total fleet of about 110,000 vessels burn heavy fuel oil bunkers and that roughly 30,000 ships account for about 80% of global fuel oil bunker use.

Compliant fuel means seven and eight-tenths (7.8) pounds per square inch (psi) low Reid Vapor Pressure (RVP) gasoline, federal reformulated gasoline, or ethanol-blended low RVP gasoline as described in section 5 of the IMO rule.

Operators must therefore compete to secure shore-side production of eco fuels such as hydrogen, ammonia, and methanol with other energy-hungry industries. The current global supply of hydrogen, ammonia and methanol would barely cover the needs of the shipping industry, even without competition from other critical sectors such as manufacturing, oil refining, and the production of fertilizers, said the Shipping Gazette.

The shipping industry uses more than 300 million tons of fossil fuels every year, about five percent of global oil production, and there is still no clear pathway toward replacing that volume with renewable fuels.

The Paris-based International Energy Agency (IEA), predicts ammonia will be the dominant alternative fuel for shipping by 2050.

Jonah Sweeney, a European marine fuels analyst at oil price reporting agency Argus, told the IMO that alternative fuels such as ammonia and methanol produced less energy than very low sulfur fuel oil (VLSFO). One ton of VLSFO produces 2.2 times more heat content than one ton of ammonia and 2.1 times more than methanol.

“It is important when looking at alternative fuel options to compare like for like in terms of energy output, otherwise if you take the outright price of methanol, for example, you will have a substantial discount to VLSFO, but you will need about twice as much,” Sweeney said, quoted in the Shipping Gazette.

This is a big problem, because about 93 percent of the global companies that have set net-zero goals are on course to fall short of their carbon emissions targets, according to Triplepundit.

Green Corridors on the deep blue sea

On the shipping lane by Kari Nousianien via Flickr CC

The ports of Gothenburg and Rotterdam pledged to establish a Green Corridor between the two cities, which will put a framework in place for collaboration on alternative fuels and reducing carbon emissions.

The Memorandum of Understanding (MoU) was signed in the presence of the Swedish and Dutch royal families. It is intended that the corridor will become part of the European Green Corridors Network, set up in March 2022 by the Maersk McKinney Moller Centre for Zero-Carbon Shipping.

According to a recent report from McKinsey, zero-emission fuels and vessels will need to be deployed over the next decade to achieve full decarbonization of the shipping sector by 2050. “This ambitious goal could be catalyzed by green corridors.”

The zero-emission goal was established by the International Maritime Organization (IMO), which has mandated emission reductions of 50 percent for all vessels by 2050. (Annex 11 Resolution MEPC.304(72) adopted April 13, 2018, Initial IMO strategy on reduction of GHG emissions from ships, International Maritime Organization, imo.org.) A number of countries—including Japan, the United Kingdom, and the United States—have declared a target for net-zero shipping emissions in the same time frame.

The U.S. Department of State released a “Green Shipping Corridors Framework” fact sheet in April that states: “Green shipping corridors can spur early and rapid adoption of fuels and technologies that, on a lifecycle basis, deliver low- and zero-emissions across the maritime sector, placing the sector on a pathway to full decarbonization. The United States envisions green shipping corridors as maritime routes that showcase low- and zero-emission lifecycle fuels and technologies with the ambition to achieve zero greenhouse gas emissions across all aspects of the corridor in support of sector-wide decarbonization no later than 2050. There are multiple pathways through which a fully decarbonized corridor can be achieved; this green shipping corridors framework therefore provides maritime stakeholders the flexibility to choose the path that best suits their needs.”

It seems that we are in the early stages of actually establishing green corridors in the maritime/port sector, which is why the Rotterdam-Gothenburg agreement is significant. Allard Castelein, Chief Executive of the Port of Rotterdam said: “This Green Corridor initiative is part of our ongoing efforts to bring together parties across the supply chain to help realize more sustainable shipping in support of the Paris Agreement.” And Elvir Dzanic, Chief Executive of the Gothenburg Port Authority added: “We can now present a more distinct path towards the decarbonization of shipping.”

The McKinsey report asserted: “Finding industry-wide solutions is challenging, given the varied and complex nature of the sector. One way to accelerate decarbonization is to implement ‘green corridors’: specific trade routes between major port hubs where zero-emission solutions are supported. A new report, The next wave: Green corridors, produced by the Getting to Zero Coalition in collaboration with the Global Maritime Forum, Mission Possible Partnership, and Energy Transitions Commission, with analytical support from McKinsey, probes the feasibility of two such selected corridors,” the Australia-Japan iron-ore route and the Asia-Europe container route.

The results of this analysis are “encouraging” but there is still a long navigation ahead.

Preserve biodiversity through sustainable forest management

deforested by naqi via Flickr CC

Deforestation is the greatest threat to valuable biodiversity, with around 10 million hectares lost to deforestation each year, mainly for agricultural expansion, according to a new report from the Food and Agriculture Organization of the United Nations (FAO).

The key to thwarting deforestation is sustainable forest management, the report says. “Protecting the animals, plants, fungi, and microorganisms that thrive in forests must become a fundamental goal of sustainable forest management worldwide.”

The world’s forests provide habitats for about 80 percent of amphibian species, 75 percent of bird species and 68 percent of mammal species. In addition, about 60 percent of all vascular plants occur in tropical forests. The importance of sustainable forest management has long been recognized, but more action in a concerted manner is needed.

“The conservation of the world’s biodiversity is utterly dependent on the way in which we interact with and use the world’s forests,” said Tiina Vähänen, Deputy Director of FAO’s Forestry Division, of the report, Mainstreaming Biodiversity in Forestry.  The report was released at the 8th World Forest Week on the sidelines of the 26th Session of FAO’s Committee on Forestry.

The report assesses tools and methods of ensuring the conservation and sustainable use of biodiversity is integrated into forest policy, strategy and management. Through a series of case studies from the Democratic Republic of the Congo, Ethiopia, Finland, Japan, Malaysia, Mexico, Peru, and the United Kingdom it explores lessons learned and identifies good practices.

It recommends actions that governments and development partners can take “to facilitate the mainstreaming of biodiversity in forest management”:

  • Halting and reversing deforestation
  • Combating illegal and unregulated forest activities
  • Recognizing the forest tenure of Indigenous Peoples and local communities
  • Preventing the conversion of natural forests into monospecific forest plantations
  • Ensuring the sustainable management of harvested species
  • Managing and controlling invasive and overabundant species
  • Leveraging global momentum on restoration to enhance biodiversity conservation
  • Adopting a multisectoral perspective
  • Providing economic incentives
  • Facilitating market-based instruments
  • Investing in knowledge and capacity development

“We hope that the wealth of information and recommendations made in this study will inspire action from those involved in forest management and conservation,” said FAO Forestry Officer Kenichi Shono.

The role of forests in maintaining biodiversity is explicitly recognized by the United Nations Strategic Plan for Forests 2017–2030 and in 2019, FAO adopted the Strategy on Mainstreaming Biodiversity across Agricultural Sectors.

Lots of hope, lots of studies: time for action.

Dealing with air pollution controls

Pollution by Tony Webster via Flickr CC

A new eHandbook from Environment+Energy Leader, sponsored by Anguil Environmental Systems, outlines current trends in air pollution controls and what should be considered when choosing emission control technologies.

That is of course if energy companies insist on emitting volatile organic compounds (VOCs) rather than converting their plants to renewable energy sourcing. But oh well, the climate crisis must continue, and fewer pollutants might have to do.

The handbook notes that in trying to understand how best to mitigate VOCs and hazardous air pollutants (HAPs), industrial companies can find “compliance downright baffling.”

“Significant shifts in the industrial landscape and in the economy at large, along with constant regulatory changes, contribute to the confusion.

 “There are many factors impacting the clean air technology industry, including regulation, public policy, and considerations such as environmental justice,” says Clare Schulzki, executive director of the Institute of Clean Air Companies (ICAC), quoted in the ebook. The landscape is changing. EPA, for example, continues to update and release new air emissions rules including regulations requiring additional controls on certain equipment and processes that emit Ethylene Oxide (EtO) to reduce risk to surrounding communities and protect public health from this known carcinogen.

EPA is also developing new methane emission rules that will tighten standards for new and existing equipment primarily in the oil, gas, and mining sectors.

The eBook identifies five pollution control trends:

Trend #1. The carbon footprint of air pollution controls starts to matter. ESG (Environmental, Social and Governance) considerations are driving companies away from gas-fired emission combustion systems to fume abatement technologies that utilize electrically heated sources. For example, one technology, oxidation, converts pollutants into water vapor, carbon dioxide, and thermal energy. When designed properly these systems can have fewer greenhouse gas emissions than a gas-fired burner.

Trend #2. Concentrator systems gain in popularity. Emission concentrators are specialized systems that process large quantities of polluted air with low pollutant concentrations. This allows companies to use smaller oxidizers in self-sustaining modes. Apparently, this approach is more efficient and cost-effective.

Trend #3. Industries such as battery manufacturing, semiconductors, and renewable natural gas are soaring. For many companies in these industries, this means more factories, increased output and/or new processes.

Trend #4. Supply chain disruptions affect every industry. “If you’re contending with the inability to receive the materials you need in order to manufacture your products, you’re not alone. Nearly every industry is facing similar challenges – including your pollution control technology provider.” This means there might be longer than expected wait times for those smaller oxidizers and other neat technologies. So, plan way ahead.

Trend #5. US industry adheres to US standards even in emerging markets. Manufacturing is increasing in emerging markets. “Large companies are building more plants in Southeast Asia, for example. And many large corporations are committed to adhering to US standards regardless of local regulations.”

The handbook also lists “considerations” for companies to address when choosing emission control technologies, such as the compounds that comprise a company’s emissions, meeting regulatory requirements, sorting capital costs vs. operating costs, and sources of funding.

So again, the basic message is to plan way ahead and keep abreast of new pollution control technologies.

And don’t forget the long-term value inherent in renewable energy technologies. Just saying.

Eco-Friendly sourcing and risks

Forest Farming by Sustainability via Flickr CC

An article in Information Today talks about “reigning in” the risks of sustainable sourcing. Written by contributing reporter Samuel Greengard, the report says that building more eco-friendly and sustainable supply chains “is rapidly becoming a top priority for businesses. A clear strategy and the right technology that delivers visibility can reduce risks and improve results.”

That’s great but what has taken so long for businesses to realize this? The climate crisis is well upon us — it should have been a top priority many years ago. One of the great lessons, and confluences, of the pandemic and the climate crisis, is that supply chains of all types must change their thinking dramatically about how they do business.

Back to the article. Greengard writes:

“Product shortages and supply chain disruptions have emerged as a frustrating reality for organizations across a wide swath of industries. Due to a convergence of factors — including the pandemic, the war in Ukraine, and a shortage of raw materials — procuring essential materials and components is increasingly difficult.

“Yet, things suddenly get a whole lot more complicated as soon as sustainable sourcing enters the picture. As businesses strive to meet aggressive climate goals and display results on Environmental, Social and Governance (ESG) reports, the headaches and risks multiply. An inability to obtain materials, products and services can threaten basic operations.”

Supply chains and procurement are risky enterprises and adding green principles and sustainable sourcing to the mix adds even more risk. It’s the cost of doing business, so “reigning in risk” seems like the wrong approach. Actually, it can’t be done in a significant way because risk in the modern era is a pandora’s box.

“The end goal is to establish strategies, policies and processes that fully support sustainable sourcing.”

A nice and obvious thought but extremely difficult to implement as the climate crisis becomes more, well, critical. Better to do the right things, risks or no.

,,,

Note: Things are changing job-wise for yours truly so watch this space for developments with this blog and other endeavors.

Climate change and inequality

Climate Change by Riccardo Maria Mantero via Flickr CC

For Earth Day OXFAM’s Elizabeth Endara listed six facts about climate change and inequality. That seems the nub of the climate change crisis—it affects populations and natural habitats unequally.

OXFAM cites six things about inequality and the climate crisis:

1. The biggest villain in this climate emergency is the fossil fuel industry, “but in the US, fossil fuel companies are receiving $15 billion annually in federal subsidies paid for by taxpayers.”

2. “The people who contribute the least to climate change are the ones who face the worst impacts.” An example: due to the effects of climate change an estimated 13 million people across Ethiopia, Kenya, and Somalia have been displaced in search of water and pasture, just in the first quarter of 2022, despite having done little to cause the climate crisis.

3. “Black and Indigenous people face the worst impacts of climate change, which causes heat waves, storms, and other disasters.”

4. “Climate change disproportionally impacts women—whether it’s walking further to collect water, being last to eat during droughts, or assuming most of the household care responsibilities in the wake of extreme weather.”

5. “The richest one percent of the world’s population are responsible for more than twice as much carbon pollution as the three billion people who made up the poorest half of humanity in the last 25 years.”

6. The US has many laws in place—such as the National Environmental Policy Act and the Clean Air Act—that could be protecting communities from fossil fuel pollution and climate change; but unfortunately, politics and big polluters often get in the way.

These points point to what appears an unsolvable problem: there will never be a comprehensive and stable solution for all peoples and nations. How can there be?

Status of Green Business?

Climate change by quote catalog via Flickr CC. Credit www.quotecatalog.com 

In a few words, green business is improving, but not nearly fast or widespread enough.

The State of Green Business 2022, by Joel Makower and the editors and analysts at GreenBiz Group, is out and the prognosis remains highly uncertain.

As Makower says, “We find ourselves in uncharted and unfamiliar territory. Again. The worlds we collectively inhabit — corporate sustainability, sustainable finance, the circular economy, climate tech — are all reaching inflection points, growing and changing faster than many could have imagined. Along the way, they’re roiling industries, companies, jobs, and career paths — mostly for the better but also in a be-careful-what-you-wish-for kind of way.”

It sounds a bit like gobbledygook, but there it is. Simply put, there are too many balls in the air. As Makower notes, the Covid pandemic era now coincides with the rise of most aspects of sustainable business: companies’ commitments to achieving net-zero greenhouse gas emissions; the increase of green bonds and sustainability-linked loans; the inexorable growth of renewable energy, alongside its declining price; the mainstreaming of electric vehicles; the rise of concern about biodiversity loss and its economic impact, and more.

Perhaps the past two years of pandemic life have focused organizational attention on how to deal with multiple crises and issues in business health and the environment. “Despite our self-imposed isolation, the klieg lights focused on companies’ environmental and social commitments and performance have grown increasingly brighter and hotter, in lockstep with the rise of concern about the scale, scope and pace of change. With the signs of a changing climate becoming ever more apparent — and costly — the business world is finally recognizing that sustainability is not merely a nice-to-do activity,” Makower says.

But the bottom line is that while the pace of change has increased, it’s far from what’s needed to address the challenges ahead.

Here are some points to consider from the report:

– This is an exciting and perilous time for companies, their stakeholders, and the world in general. The impacts of a changing climate are clear as storms, droughts, wildfires, heatwaves and other weather phenomena become more frequent and extreme.

– It’s not just the climate crisis. The increasing loss of biodiversity, and all of the economic activity it enables, is a major growing concern.

– In addition, the increasing economic inequality in the world seems an insoluble problem. Unconscionable numbers of people still lack adequate food, shelter, water, electricity and sanitation, while those with financial means are, as a rule, doing better and better.

– The rise of “net-zero” commitments by companies and countries was one of the major themes of 2021, along with the pushback from activists, regulators and investors that many of these claims weren’t backed by credible action or plans. “It’s not necessarily that companies aren’t serious about reaching these goals, say critics. It’s that they’re not serious about the speed at which they need to reach them.”

– The finance component of sustainable business is proving to be powerful.The world’s largest financial institutions are committing trillions of dollars to fund the transition to a net-zero world, though many of them also continue to back fossil fuel companies and projects. Still, the trajectory away from coal, oil and natural gas is clear — though, once again, the pace of change may be way too slow.

“All of this together — the perils and the promise — suggest that business — and, indeed, humankind — is undergoing an epochal transition. Those who view tomorrow’s world as a continuation of today’s are increasingly having those assumptions challenged. As we face these existential threats, there is an opportunity to renew and regenerate the structures upon which we rely for our health, wealth and security. Nearly everything, it seems, must be reinvented if we are to prosper into the future, indefinitely and for all.”

Can business get it done? It has too.