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Facing Global Climate Crisis, 5 Logistics Questions to Ask

Companies shipping products, whether temperature-controlled or not, must start evaluating alternative energy sources sooner rather than later. Could this offer a competitive advantage?

Willingness to diversify fuel use can become a competitive advantage for a business.
Willingness to diversify fuel use can become a competitive advantage for a business.

As the news from climate scientists becomes more dire, cites, states and countries worldwide will continue to accelerate energy policy changes. The public has grown more active with every passing month and activists are making their voices heard in ever more disruptive ways.

If you’re shipping products—temperature-controlled or not—then you can’t afford to ignore what the coming political, energy and infrastructure changes mean to your supply chain.

Eugenio Filippi is the Head of Manufacturing at Takeda Pharmaceuticals Company Limited in Vienna. He addressed attendees at the 2019 Cold Chain Global Forum in Boston about the looming crisis and the opportunity, with a strong disclaimer that the views he expressed are his own and not representative of his employer. 

Filippi said that pharmaceutical companies and their supply chain partners will need to start exploring alternative transportation, and push third party logistics providers (3PLs) and other shippers to start addressing the fact that moving trillions of tons of goods around the planet without reducing emissions might soon become unsustainable.

Eugenio Filippi addressed attendees at the 2019 Cold Chain Global Forum in Boston.Eugenio Filippi addressed attendees at the 2019 Cold Chain Global Forum in Boston.

He added that regulators around the world have begun to clamp down on traditional “dirty” sources of energy.

In the slow-to-change pharmaceutical world, it’s critical to start evaluating now. “What if Amsterdam says they’re only letting electric vehicles in? Or they’ll let you deliver your product, but you have to pay an enormous fine because of your carbon footprint?” asked Filippi.

If a given government decides an arbitrary date—mere months in advance—by which you must make a certain change, it would be incredibly difficult to ensure continued supply to patients without a plan. He added, “How long does it take pharma to make a change from when we start thinking about it?”

Will we stay ahead of the curve when sweeping changes are made?

Filippi has worked for a number of years managing the cold chain of human plasma products, and has faced “repeated issues with the local residents, simply due to the fact that our neighbors do not like smelly and noisy trucks.”

Now that he’s in a manufacturing role, he said, “As a customer, my question is whether our logistics will be able to stay ahead of the curve and find better ways to move frozen goods, over the weekend or in the middle of a residential area at night, for instance, since we work 24/7.”

He explained that there are numerous reasons to change beyond personal interest in reducing fossil fuel consumption.

For some, it’s a reputation goal: a drive to be seen as an innovative company or wish to have status as a community leader with great working relationships with the local authorities. This may result in saving time and money at the end of the day.

Meanwhile, some companies are working to meet their own EHS metrics to decrease CO2 emissions, or become carbon neutral by a certain year.

Are we paying attention to transportation changes already happening?

[Editor’s note: From a personal standpoint, the difficult part of this topic is that there’s no clear magic bullet, no single technology that’s emerged as a “greenest” option. All have pros and cons. Electric vehicles may rely on natural gas and coal to charge.

It’s indescribable how transformative (fossil fuel-derived) plastics have been to the healthcare industry. While plastic continues to give us so much and save many lives, we have to look at what transportation technologies might be sustainable while we look at sustainable packaging modifications.] 

Filippi was quick to point out that he’s not personally advocating for one technology over the other, but that many cities and companies are testing out or implementing alternative transportation solutions, including: 

  • VW (which also owns Audi, Bentley, Bugatti, Lamborghini, and Porsche) predicts that by 2030, four of 10 cars it sells will be electric. “What is our 3PL doing about that if VW is racing toward this goal?” he asked.
  • The U.S. is building high-speed charging station networks. As of July, Electrify America had 251 stations installed with plans to add 235 more by the end of the 2019.
  • In Sweden, three years ago in Jan. 2017, a 2 km stretch of electrified highway was built. He explained, “It’s a test track, where you can drive an electric truck instead of diesel. This is part of new hybrid technology for vehicles.”
  • In May 2019 in Germany, they opened the first electric highway for trucks. “Trucks are guzzling ever more diesel. This is a test run of 6.2 miles,” Filippi said. Similar tests are being performed near California’s ports of Los Angeles and Long Beach. “The German government spent $77 million to develop trucks that can use the system. Siemens said that a truck owner could save $22,370 on fuel over 100,000 km (62,137 miles).”

 See sidebar below on alternative systems and fuels...

Are we taking protests seriously?

 It doesn’t matter if you believe in the protestors’ missions or methods. The fact is that they are getting louder and more disruptive, and businesses have to consider how this will impact transportation on the ground as well as policy.

Pollution, and particularly our carbon footprint, is slowly but surely becoming bad for business. Extinction Rebellion was formed in the UK in 2018 and has held multiple civil disobedience protests in London calling on the UK government to reduce carbon emissions to zero by 2025.

The UK recently considered whether deeper cuts are needed, and meeting net-zero emissions before 2050 would require sweeping changes beyond those already under way in energy, buildings and transport.

Is there a competitive advantage to going green?

Willingness to diversify fuel use can become a competitive advantage for a business, differentiating your brand because you hopped on early.

Filippi said, “Going green is no longer a gimmick, and there is money to be made.” And he advised that it might become a must soon if you want to be able to do business in certain markets or countries. “Do you want to be the only one not up to meet such expectations?”

For the logistics providers in the room, he asked, “Have you started looking into what might be your next competitive advantage? Is going green one of them? Maybe, maybe not. Maybe you operate in a country or a state where people do not care and you’ll be fine for the foreseeable future. But if you want to do business in Netherlands or in Austria, you’re going to have problems in the future.”

Back home in Vienna

At Takeda in Vienna, the internal engineering team has been driving around for years using electric cars that are charged at the site. “We started talking to our 3PL as we have small fleet of trucks used for sample and material transport between various locations around the Vienna plant. We might transport one box with five samples in a diesel truck. We wanted to do this with electric trucks so our neighbors don't scream at midnight if we do that.”

In the short term, Filippi thinks long-haul shipments are still the problem. One 3PL noted that they would rather ship a full load goods for 1000 kilometers in a diesel truck than drive a truck half a load of goods (with batteries occupying the other half) because at the moment, the technology isn’t there.

What’s the next step for our company?

At this point, no one can tell you the exact right solution or technology for your business. But you should begin evaluating and talking to people. A good first step is to talk to your local municipality/council. 

Filippi suggested starting the conversation with council members, explaining that you’re exploring alternative fuels, but that you need the infrastructure. “Engage your politicians to understand whether they have a plan, because you’re not working in a vacuum, and you’re not going to be able to do amazing things without the ability to charge your car or trucks.”

Recently Takeda’s EHS manager went to talk to the city of Vienna. They took the electric vehicle, but had to point out to the mayor that they didn’t have a charging station at the municipal office.

How things will go depends on the local government’s attitude. “If they’re 20 years behind you, you might have difficulties. But if they’re thinking about it as well, you might get tax breaks, collaboration, you might get something unexpected out of it,” noted Filippi.

He said not to forget that by the time the regulations come in, it’s usually pretty late to start thinking about it. 

“I’m not saying electric cars are the solution, I’m not saying you should be able to do this by 2020, what I’m saying is, I think you need to start somewhere. It may be a symbolic effort to show your neighbors that you do care, to show locals you are driving electric because you want to be one of the first companies who does that, compared to your competitors who don’t care,” he explained. 

PMMI Media Group editors have purchased carbon credits through to ensure any flights we take to cover events in 2020 are carbon neutral.

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