Among the various sources of Scope 3 emissions that sustainability teams have to contend with, logistics often accounts for a large proportion due to the fossil-fuel powered engines that are used in most trucks, rails and ships .
Optimising the use of these modes of transport can be challenging, especially when reliable on-time delivery can be vital to the successful running of production lines and customer satisfaction. Fortunately various forms of technology can help, for instance by identifying more efficient routes and cost-effective opportunities for lower carbon transport.
That was the case for the Swiss-based construction materials company Holcim. The company, which produces cement, concrete, aggregates and building solutions, has put sustainability at the heart of its business model with a commitment to reach net-zero by 2050.
In 2019, the Science-Based Targets initiative (SBTi) validated Holcim’s targets to reduce its global carbon emissions and in 2021, Holcim became the first in its sector with 2030 and 2050 validated net-zero targets cutting across operations and value chain validated by SBTi. In 2020, Holcim developed a more comprehensive and rigorous approach to measuring the CO2 emissions from its supply chain, including increasing efforts to cut Scope 3 emissions, which account for 20% of the total emissions.
A particular area of focus for Holcim is its downstream logistics, which cover 2bn km per year by road and account for around a quarter of all Scope 3 emissions – around 7m tonnes. Holcim has committed to a reduction target (validated by SBTi) as intensity target per tons transported that better reflects the CO2 efficiency of the transportation activities: by 24% by 2030 and 90% by 2050.
The use of data analysis by its own in-house Transport Analytics Center (TAC), is a key enabler to measure CO2 for every single trip, and most important, to identify and drive CO2 reduction activities, for example replacement of fleet, optimising routes and ultimately shifting more freight across to less carbon intensive modes of transport such as rail and sea. In 2021, the company reported a 9% reduction vs a 2020 baseline of the CO2 intensity from downstream transportation activities.
Holcim’s Transport Analytics Center
Launched in 2017, TAC’s initial objective was to focus on improving the commercial efficiency and safety performance of Holcim’s downstream logistics fleet, which is responsible for delivering products to customers.
In 2020, in line with Holcim’s sustainability strategy, the unit’s remit was expanded to include reducing emissions, which goes hand-in-hand with the other objectives given that driving the most efficient route and avoiding risky behaviours such as speeding and sharp braking also reduce fuel consumption and cost.
Based in India, TAC’s team of 20 includes a mixture of supply chain specialists, data scientists and IT developers. It tackles these objectives by using information collected from IVMS (in vehicle monitoring systems devices) connected to most of the vehicles in the fleet, which remotely transmit data about the routes taken by drivers and their behaviour behind the wheel.
This data is combined with information from across the company’s ERP systems to create a single source of truth that can be consulted to provide a comprehensive look at the emissions created by every single trip moving our materials.
This is shared with transport managers across the company’s 55 international markets via dashboards which they can use to optimise their transportation activities (e.g. plan routes more effectively), as well as with the third-party logistics providers so they can encourage better behaviours from their drivers.
The CO2 Dashboard covers four key areas which are the key levers to reducing emissions:
- Fleet optimisation: Using insights to identify opportunities to replace fossil-fuel powered vehicles with vehicles powered with low-emission fuels
- Dispatch optimisation: Improving payloads, backhauls and finding more efficient routes to minimise the amount of miles the fleet spends on the road
- Eco-driving: Encouraging drivers to adopt safer, more sustainable driving habits
- Network optimisation: Ensuring each customer is served by the most appropriate plant and identifying opportunities to move more shipments over to boat or rail freight
The vast majority of deliveries are carried out by third parties, so some of these factors are directly within Holcim’s control, such as deciding which shipment should be sent from which plant to which customer, while others rely on its ability to engage with its logistics providers to make changes themselves.
One way of reducing emissions from a logistics fleet is to switch from diesel-powered trucks to those using more eco-friendly fuels such as biofuels, hydrogen or electricity. However, this comes at a significant cost and was also challenging for Holcim because of the fact that the vehicles carrying its products are owned by third parties.
By 2030, Holcim is committed to:
- In its own fleet, at least one in three heavy duty trucks it purchases will be a zero-emission truck
- For third party trucks, it will require its trucking service providers to meet the same commitment
Holcim is willing to invest in new vehicles and provide these to logistics companies in order to speed up the transition to eco-fuels – with an upfront cost in return for reduced shipping fees. However, given the scale of its operations, it is not practicable for the company to simply replace all of the trucks that are used to carry its goods. Instead, it needs to identify the areas of its logistics network where spending this money will be most effective in reducing emissions.
To identify the best opportunities for this, transport managers across Holcim can consult TAC’s Transport Dashboard which allows them to see in-depth data concerning the routes they manage, including absolute tonnes of CO2 released and tonnes released per tonne transported.
This allows them to identify which trucks would provide the most effective reduction in emissions if replaced and allocate their investments accordingly.
Another method of reducing emissions is to reduce the overall time that each truck spends on the road. This can be achieved through a number of methods, including:
- Selecting the best point of supply and determining the most efficient route from plant to customer
- Increasing payload and average volume per shipment
- Reducing the number of empty return journeys – for instance by using the same trucks that deliver to customers to haul coal and gypsum, raw materials used in manufacturing Holcim’s products, back to the plants on their return journey
With many variables at play, including order volumes, delivery times and truck capacity, crunching the numbers to identify these opportunities is far from straightforward. However, Holcim’s transport managers have access to TAC’s Cost Optimisation Dashboard, which brings together all the necessary information to minimise the overall time spent on the road and reduce empty journeys – allowing them to reduce both costs and emissions.
The devices fitted to Holcim’s logistics fleet provide very detailed information about the way each truck is driven, including throttle and braking inputs and speed. This allows TAC to create a thorough impression of each driver’s behaviour on the road.
While these were initially implemented to increase safety by encouraging smooth and careful driving to reduce accidents, given these behaviours also reduce fuel consumption, the data can also be used to tackle emissions.
TAC’s systems aggregate this information to produce daily ratings for each driver’s performance, with those avoiding excessive braking, unnecessarily high revs and speeding receiving the best rating.
How this information is used depends on the specific market in question:
- In some markets, Holcim is not allowed to know the specific driver because of data privacy regulations. In these cases the information is provided back to the logistics company employing the driver who will be able to identify them based on the data. Responsibility for improving this behaviour will therefore fall on the provider, who will be asked to ensure their drivers are behaving appropriately or risk losing business from Holcim.
- In other markets, Holcim can deal directly with the drivers themselves. Where concerns are identified the transport manager can reach out to drivers and discuss their behaviour and encourage them not to do it Where this occurs on more than three occasions despite multiple training sessions, the driver will be terminated and not allowed to drive for Holcim again.
To ensure drivers are aware of the importance of eco-driving and understand how to drive safely and sustainably, Holcim also funds training via third party providers.
While the above tools allow transport managers to monitor and tackle emissions on a micro-level, TAC’s network optimisation tool provides a higher-level look at the logistics network as a whole.
Logistics professionals can visualise on a map the particular plant and the location of customers that it serves and thereby determine if it would be more efficient for them to receive shipments from a different location.
The tool also identifies opportunities for different modes of transport to be incorporated. While reducing the number of truck journeys and ensuring the trucks themselves are used as efficiently as possible can make a significant inroad into the total level of emissions, one of the most effective methods is to move shipments off the road altogether.
Rail and waterways options allow shipments to be aggregated together in greater quantities and ultimately moved more efficiently, reducing emissions further. Since these rely on the existence of rail infrastructure or water routes, it’s not possible to replace road freight altogether, but where this is viable it can have a significant impact.
Results and next steps
The data collected from TAC’s in-vehicle devices, combined with the information drawn from across Holcim’s business, provides a comprehensive picture of the performance of its downstream logistics fleet that can serve as one source of truth for the whole company to draw upon.
By using this information to build and populate its activity-specific dashboards, the team has created a series of tools that transport managers can make use of to understand the emissions levels within their own local network and the levers they can pull to reduce these.
The team plans to drive emissions reduction further by partnering with key suppliers and by working internally with the key functions (Logistics, Procurement and Sustainability teams) to develop actionable plans for each market where we operate. TAC plays a key role in monitoring the progress in a consistent and transparent manner.
Top tip – Getting the baseline right is critical
The team behind TAC’s successful rollout said that a key success factor when it comes to reducing emissions is taking the time to verify that the baseline is correctly calculated before setting targets and diving into reduction plans. Otherwise targets may be unrealistic and any future progress will be hard to quantify.