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Shape up or ship out

Today’s consumers are well aware of environmental issues and the impact of carbon footprints. So how can retailers rejig their supply chains to ensure their eco practices are up to scratch?

Most major retailers are now committed to reducing their carbon footprint and are putting their supply chains under increasing scrutiny. But overseas sourcing, the use of large distribution centres and store delivery by lorry are a fact of life for most firms, leaving many wondering what else they can do to clean up their act.

A recent report published by the Commission for Integrated Transport (CfIT) – the think tank set up by the government to advise on transport matters – estimates that it may be possible to reduce CO2 emissions from domestic freight as a whole by as much as 28% by 2015.

Better use of vehicle fleets, alternative fuels, eco-friendly warehousing and switching modes of transport can all play their part in reducing the overall impact of delivering product to stores. But, according to the survey, road transport is responsible for 92% of freight emissions and it is in this area that most efforts are being made.

The report’s author, Professor Alan McKinnon of Heriot-Watt University in Edinburgh, says that one opportunity is to increase the use of back-hauling, where lorries transport products on the return leg of their journey from the distribution centre to the stores. At the moment, more than a quarter of all lorries on the road are empty after delivering a load.

“Once a lorry has made its delivery to the store it could return to the warehouse via a supplier, although in the case of fashion retailers so much product is sourced overseas that this may involve carrying packaged products from another sector,” he says.

Paul Richardson, managing director of DHL’s department stores and fashion division, says new technology can help this process, allowing companies to see where there are loads that need to be picked up. “Electronic bulletin boards, transport exchanges and similar platforms allow dedicated fleets to make the best use of spare capacity, especially for return trips to the distribution centre,” he says.

There are many improvements that can help a business’s bottom line. Back-hauling can produce revenue and the CfIT report estimates that installing a computerised vehicle routing and scheduling package can reduce the miles travelled by an average 7.5%, resulting in fuel savings.

Changes to the vehicles used can also have a beneficial impact. For example, Marks & Spencer has ordered 140 aerodynamic, teardrop-shaped trailers for its fleet of articulated lorries, which it claims will reduce CO2 emissions by 20% compared with standard vehicles delivering the same amount of product.

The trailers have a raised section in the centre that creates an aerodynamic effect, resulting in a 10% saving in fuel consumption and the ability to carry 16% more load than standard models. The trailers’ manufacturer, Don-Bur, is in discussions with a number of companies interested in the design, including Peacocks.

Peacocks group operations director Neil Burns says that the company already uses traditionally shaped Don-Bur double-decker trailers to carry product in bulk from Peacocks’ main distribution centres in South Wales to depots in Luton, Yorkshire, Scotland and Northern Ireland. The products are then placed on smaller vehicles for final delivery to the stores.

“If you move as much as you can on larger vehicles and at night when congestion is low, you use less fuel. We are also using a significant amount of night-time deliveries to our stores in London and the south-east and are looking to expand that to our operations around the country. That reduces our environmental impact and also saves us money,” he says.

Arcadia Group has also made efforts to reduce its environmental impact in conjunction with logistics provider DHL. The company says it uses only modern, cleaner engines and all the vehicles are fitted with aerodynamic equipment. The company monitors its fuel efficiency and is also introducing new tracking technology to manage vehicle movements more closely.
Delivering the goods

There are 5,000 deliveries made to 2,300 Arcadia stores each week and products for all the businesses, which include Topshop, Burton and Wallis, are brought together at its distribution centres in Leeds, Solihull and Milton Keynes. “This means the minimum number of vehicles is sent into a town, with the driver delivering to all Arcadia stores and concessions on one vehicle,” says a spokesman for the company.

Many believe that a major way to reduce emissions in the future will be through urban consolidation centres, where products for several retailers are taken to a central point and delivered on one vehicle. DHL runs centres serving retailers in Heathrow Airport and central Bristol, where it is trialling the use of electric vehicles for the final delivery.

Clipper Logistics runs a similar facility at Sheffield’s Meadowhall shopping centre and provides an off-site stock room in north London for West End retailers. Business development director Tim Robinson says: “It has benefits in terms of reducing mileage, but it also reduces our clients’ costs.”

Another future possibility is more use of alternative fuels, with some companies already using new types of vehicle. TNT Fashion Group, for example, uses hybrid electric/diesel vehicles that help to reduce in-town emissions. TNT Fashion Group development director Philip Bracken says: “These vehicles mean you can use the electric battery power for urban deliveries, then switch to diesel when you are on the motorway.”

Biofuels, such as recycled cooking oil, could also help to reduce emissions. These are used in conjunction with ordinary diesel, with biofuels comprising up to half of the total fuel used. However, using such fuels can affect vehicle manufacturers’ warranties. The CfIT report expresses fears that if use became widespread it may be necessary to use substances such as palm oil, which is often grown on deforested land in Malaysia, Indonesia and Brazil.

The use of rail transport in the supply chain is often thought to be too slow and inefficient for most purposes, but it can make sense for larger movements. New Look has started using trains to transport more than half of its incoming shipping containers from Southampton to its distribution centre in Newcastle-under-Lyme in Staffordshire. Meanwhile, Tesco runs its own regular train between Daventry in Northants and Livingston in Scotland, carrying a range of products including clothes.

But despite the efforts of UK retailers, one of their biggest environmental impacts comes from the inbound supply chain from overseas. Ensuring that containers are filled to capacity is one way of reducing this. DHL runs a number of consolidation centres overseas where products from several customers are brought together, and it estimates that filling a container with an extra 10% of stock can reduce the associated CO2 emissions by more than 8%.

An even more powerful method to tackle retailers’ carbon footprints is to reduce reliance on air freight for transporting goods. Paul Cunningham, managing director at supply chain solutions company Holistica, says this can be achieved by managing the supply chain more effectively.

“Most people use air freight because product is not available on time,” he says. “If you manage everything well from point of origin through to delivery, you are more likely to get things right first time. If you have an efficient supply chain, you burn less carbon.”

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