1. TRANSBALTICA 2011
The 7th International Conference ISSN 2029-2376 print / ISSN 2029-2384 online
May 5–6, 2011, Vilnius, Lithuania ISBN 978-9955-28-840-4
Selected papers http://transbaltica.vgtu.lt
Vilnius Gediminas Technical University Transport Engineering Faculty, J. Basanavičiaus g. 28, LT-03224, Vilnius, Lithuania
UTILISATION OF TRANSPORT CAPACITIES AND OPPORTUNITY
TO MITIGATE NEGATIVE ENVIRONMENTAL IMPACT
OF LOGISTICS OPERATIONS
Aurimas Vilkelis
Dept of Transport Management, Vilnius Gediminas Technical University, Plytin s st. 27, LT-10105 Vilnius
Lithuania. E-mail: aurimas@vilkelis.lt
Abstract. The industry has worked hard on the efficiency of its own and its suppliers’ logistics operations for
many years. An effective management of the supply chain delivers environmental benefits by reducing resource con-
sumption and, therefore, cost savings. One of the problems faced today in the logistics industry is the underutilization
of assets, including trucks, trains and containers. Around 25 % of truck kilometers in the EU are running empty.
Empty journeys are not only wasteful economically, but also carry an environmental cost. The reasons behind empty
trucking are diverse: poor coordination of purchasing, sales and logistics, unreliable delivery schedules, vehicle size
and weight restrictions, demand fluctuations, incompatibility of vehicles and products, just-in-time (JIT) deliveries,
among others. The article provides an analysis of the load efficiencies, and logistic companies inefficiency.
Keywords: transport mode, strategic solution, supply chain, capacity management
1. Introduction threats to civilians, have emerged (Fig. 1.). To mitigate
negative environmental effects of transport, it is vital to
Since products are usually not produced where they come up with innovative solutions that would be adapted
are consumed, a distribution network has to be set up, in to the current situation.
order for the goods to reach the final customer. Distribu-
tion strategies are mainly concerned with network design, 2. Design of Transport Network, Considering
geographical distribution of warehouses and transship- Negative Environmental Impact
ment points, as well as the modal mix – that is, the mode
of transportation used to connect the nodes of the net- Most companies currently design their distribution
work, including warehouses and production sites. networks based on cost and speed. However, these pro-
Reductions in freight intensity in one country may cesses also have an influence on other factors, including
simply be counter-balanced by an increase in another. carbon emissions. Out of 1.62 billion tons of truck emis-
There will, however, to be a net increase in total energy sions in Europe, roughly one quarter are caused by trucks
consumption in the freight transport worldwide, partly running empty.
because of the growth in international trade volumes but Optimizing a network design, including the nodes
also because the energy intensity of freight movement in and interrelated transport flows, can reduce both costs
developing countries is often significantly higher than in and carbon emissions significantly. The problem today is
developed countries (Piecyk and McKinnon 2009; that a lot of networks are inefficient due to change inertia
Kamakate and Schipper 2009). and failure to factor sustainability into their design. From
The majority of manufacturers develop intermodal a sustainability point of view, the design of a network
schemes focused on sea or railway transport in an effort faces two contradicting objectives: on the one hand, to
to achieve their environmental objectives, however, this have the lowest inventory and warehousing CO2 emis-
may lead to interruption of road transport connection sions, while, on the other hand, to achieve the lowest
routes and weaken the link between factories and trajec- transportation CO2 emissions. A common way to improve
tories of road traffic. Intermodal solutions should be as- the sustainability of networks is for companies to come
sessed in the global respect of the manufacturer and the together and create consolidation centers and multi-user
retailer, as well the local respect of carrier or a logistic warehouses, which can improve the load factor of the
company, considering the use of energy resources. transportation, while keeping the warehousing costs to a
Road transport accounts for carrying the largest minimum (Sathaye et al. 2010; Liimatainen and Pöllänen
amount of cargo, therefore, problems, such as transport 2010; Humpf et al. 2009).
congestions, overfilled road network, air pollution and
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2. A. Vilkelis / TRANSBALTICA 2011
100%
90%
80%
70%
60%
50%
40%
30%
20%
10%
0%
EU27 BE BG CZ DK DE EE GR ES FR IT LV LT HU NL AT PL PT RO SI SK FI SE UK
Inland waterway Rail Road
Fig. 1. Modal split of freight transport in EU countries 2008 (% in total inland freight tonne-km) (Source: Eurostat)
Many manufacturers and retailers build their distri- processes, the efforts should be focused in four main
bution channels on individual solutions. However, to areas:
ensure more efficient use of intermodal transport, the 1) Increase in low-emission transport;
tendency today involves reduction of the number of 2) Use of intermodal solutions;
warehouses and terminals and increase of the distance of 3) Optimisation of transport capacity;
transportation. The network of warehouses and terminals 4) Better route planning.
was shaped in a way to curtail distances to the end con- Legislative measures, such as vehicle taxation, road
sumer, however, in larger countries, the arrangement of usage charges, congestion charges, and carbon taxes, will
terminals allowed serving certain regions from a few further push companies to increase their vehicle utiliza-
terminals, which were relatively close to each other. This tion levels. The reasons behind empty trucking are di-
led to overlapping of logistics operations. To avoid over- verse: poor coordination of purchasing, sales and logis-
lapping of operations and increase the distance between tics, demand fluctuations, unreliable delivery schedules,
terminals, it is necessary to reduce the number of transi- vehicle size and weight restrictions, incompatibility of
tion points. This would also allow enhancing the potential vehicles and products, goods-handling requirements, JIT
of use of intermodal transportation. In longer distances, deliveries, and regulations (e.g., cabotage restrictions in
the use of railway and sea transport is more efficient, it Europe, which oblige trucks to run empty cross-border
also enables to achieve a higher degree of economies of after providing services in a neighboring EU member
scale. Evasion of long-distance haulage and use of inter- state), among others. While increases in fuel prices are
modal transportation increases the efficiency of the use of forcing companies to give greater priority to vehicle utili-
road transport, thus diminishing the degree of traffic con- zation, there is a limit to how much an individual compa-
gestions and CO2 emissions. ny can do to improve its utilization.
While changes such as the redesign of distribution Some companies are highly responsible in their re-
networks, the optimization of transportation modes or the sponse to negative environmental effects and use low-
implementation of city logistics concepts can notably emission transport in their transport operations (needs).
improve the CO2 footprint of logistics, the industry will For example, since October 2009 for inbound transport of
not become a low carbon sector without operational components and materials, Fiat Group Automobiles has
changes, especially without adopting new, more efficient been using low-emission (Euro III-IV-V) vehicles only.
technologies. In fact due to the inclusion of specific terms in transport
agreements, vehicles that fail to meet the Euro III stand-
2.1. Optimization of Transport Operations ard were prohibited from enetering plants. For outbound
transport in Europe, Euro III or even stricter standard
Transport efficiency is an important way to reduce vehicles are used for approximately 33 % of shipping
an environmental impact. Logistics can be made more requirements (Fiat Sustainability Report 2009).
efficient through two major approaches. One is to raise A significant problem for logistics is managing ca-
the loading ratio, by increasing the amount that is carried pacity. In most cases where capacity is exceeded, the
at one time and decreasing the number of shipments, the logistics firm will use sub-contractors to take up excess
other is to shift the transport mode from trucks to ships or material. Using sub-contractors on a regular basis can
trains, which emit less CO2 (Dinwoodie 2006; Humpf et increase the environmental impact because capacity utili-
al. 2009). To reduce the environmental impact of logistics sation, fuel efficiency and emissions standards may be
lower on sub-contractor vehicle. Contracts with logistics
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3. A. Vilkelis / TRANSBALTICA 2011
companies should contain clauses stipulating that all sub- It’s pricing must therefore reflect the fact it is only one
contract hauliers must meet the same standards as the leg of the delivery chain. The main negative issues with
main logistics companies. EU rail tend to be:
− Geographical infrastructure relative to access to
2.2. Integration of Rail Transport into the Supply suppliers;
Chain − Excess cost given that road has often to be used
at each end of the journey;
No general statistics are compiled on the efficiency − The bulk nature of rail, with small loads being
of freight movement by rail transport. This is a serious uneconomic. Infrequent delivery results.
anomaly given the strenuous efforts of governments and The vast majority of the European network accom-
the EU to transfer large amounts of freight from road to modate passenger and cargo trains, that due to their low
rail, primarily for environmental reasons. In the absence (relatively to passenger train) speed, reduce dispropor-
of data energy efficiency on the rail freight system, it is tionately the network capacity in mixed circulation. For
not possible to compare the environmental performance that reason, the commercial trains travel usually over-
of the different modes on a consistent basis. However, night and are served during the day (Janic 2008; Knörr et
some countries such as Poland, Spain and others provide al. 2010).
utilization rates of rail freight at the national level
(Fig. 2.). 3. Efficiency of Utilisation of Transport Capacities
70%
Using government data it is only possible to assess
the efficiency of road freight transport. It is also likely
60%
that the definition of empty varies both within and be-
tween countries, as often this is not exactly specified in
50%
the questionnaires. Operators are sometimes unsure
40% whether to classify as empty vehicles returning various
types of handling equipment. While a truck carrying only
30% enough wooden pallets for the next load may be consid-
ered empty, another returning empty roll cages from su-
20% permarket to a distribution centre could be considered
loaded. One haulier moving an empty ISO container back
10% to a port might consider this to be load, as they are being
paid to move it, while another might, for statistical pur-
0% poses, record the as an empty journey. There is a need for
PL SK CZ SI LT ES HU more rigorous definitions of what types of trip should be
classified as empty. The interpretation of empty running
Fig. 2. Rail freight utilization (load factor as % by tkm) – na- statistics also requires some qualification. There is a
tional 2007 (Source: European Environmental Agency) common perception that empty running is the result of a
prodigal use of transport capacity and clear evidence of
It is widely believed that rail as an alternative mode inefficiency. In practice, it is often very difficult, if not
of transport has a lower environmental impact per tonne impossible, to obtain a return load and thus eliminate
of product transported than road. Rail commands a much empty running. Much empty running, for example, is the
smaller share of the freight market in lighter, higher value result of geographical imbalances in freight traffic flows,
manufactured goods. Move to more flexible JIT manufac- in many countries it is illegal for companies operating
turing: the intrinsic inflexibility and slower speed of rail trucks on an own account basis to collect a return load
freight services make them less suited to the systems of from another company (McKinnon 2010).
order replenishment that have evolved over the past few Most of the available data for road is compiled by
decades (Piecyk and McKinnon 2009; Woodburn 2003; EU countries and published by Eurostat. This comprises
Jeong 2007). statistics on the distances that trucks run empty and laden.
Rail transport is generally slower than road The proportion of truck-kms run empty varies widely
transport, but on sufficiently long distances, for instance across Europe and averages around 25 % (Fig. 3). Inter-
of 500 km and more, the average speed may decrease as a national variations can reflect differences in the size of
result of the driving time regulation: truck drivers must the country, the nature of its freight market, regulatory
spend sufficient resting time. Theoretically, resting time controls and regional imbalances in freight flows.
regulation should make long distance transportation time The longer the haul the greater is the financial incen-
quite comparable between single mode road and inter- tive to find a backload. In larger countries, therefore, the
modal transport (Davydenko et al. 2006). Lack of infra- level of empty running tends to be lower. Reductions in
structure, vandalism and reliability have also played their empty running are likely to be the result of several factors
part in the demise of rail. In order to have any chance of including the development of load matching agencies,
recovery, rail must realize that in virtually all cases road online freight exchanges, the strengthening flow products
transport have to be used for final delivery to the dealers. going back along the supply chain for recycling and re-
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4. A. Vilkelis / TRANSBALTICA 2011
manufacture, backloading initiatives by retailers and economies of scope or economies of scale. Equally, own-
manufacturers and the outsourcing of transport to third- account transport may be the preferred or even the only
party carriers (Piecyk and McKinnon 2009; Van de option because the goods traded need special care or
Klundert and Otten 2011). knowledge, or when marketing strategies include delivery
by the manufacturing company itself (Aberle et al. 1999).
45% One of the leading manufacturer of automobiles in the
world Nissan has been sending its own trucks to take
40% delivery of needed parts from suppliers since 2000, mak-
35% ing it the first Japanese automaker to do so. This has ena-
bled to “visualize” waste during transport that had been
30% hidden in the past. They have worked with suppliers to
optimizme the frequency of deliveries and transport
25% routes. The result is better loading ratios and reduced
truck runs (Nissan Sustainability Report 2010).
20%
Breaking down the empty journey total by type of
15% operator, shows a higher incidence of empty journeys for
“own account” than for „hire and reward“ operators but
10% with some exceptions. For Sweden and the United King-
dom, this again may reflect very strong competitive pres-
5%
sures, forcing efficient organisation of logistics, as for the
0% major supermarkets chains. Empty running was lower for
CZ DK DE ES FR LT HU NL AT PL PT SI SK FI SE UK international transport than national transport. However,
all countries recorded higher levels of empty running in
international transport for own account operators, who
Own account Hire or reward
may find more difficulty in obtaining return loads on
international journeys than hire and reward operators
Fig. 3. Share of empty vehicle-kilometres in the total vehicle-
kilometres by type of transport, 2008 – % in Vkm (Source: (Pasi 2007).
Eurostat)
4. Conclusions
3.1. Comparison of Efficiency of the Use of Own
Account Transport with Hire or Reward 1. Transport companies are under constant pressure
Haulage to use their transport resources more efficiently, however,
in many cases the efficiency depends on strategic solu-
The EU rules were adopted in 1980 and should be tions of the manufacturer or retailers. Manufacturers and
seen in relation to the regulations governing road haulage retailers should place a bigger focus on the management
for hire or reward at that time. These latter have under- of transport resources by optimizing routes.
gone important changes at national level in the Member 2. Empty running and loading factors are efficiency
States. In parallel to the introduction of increasingly indicators of transport operations. Return cargo is im-
stringent quality criteria, quantitative licencing and oblig- portant for all modes of transport, therefore, the strategy
atory tariff systems were abandoned, leading to better and of the distribution network should ensure a higher level of
cheaper transport services which, in turn, made many interaction of transport modes and bringing empty run-
companies opt for transport for hire or reward instead of ning to the minimum.
using their own vehicles. 3. Economy of logistics operations can be achieved
Own-account transport of goods is an important part by reducing the number of transition points, while in-
of goods transport by road and a vital component of the crease of transportation distances would increase the
marketing and logistics concepts of hundreds of thou- efficiency of use of intermodal transport. Changes in the
sands of companies in the European Union and in Europe distribution network should reduce the inefficient use of
at large. More competition in road transport, better possi- transport resources and mitigate the geographical imbal-
bilities of adapting transport services to the needs of the ance of transport flows.
shippers, integration of other logistic services and an 4. Haulage of cargo at own account allows better
increase in average transport distances make transport for understanding of distances of transport operations, im-
hire or reward an increasingly attractive alternative to proving loading ratio and reducing empty running. How-
own-account carriage. ever, own-account haulage is less efficient in many coun-
Many companies continue to consider own vehicles tries due to the difficulty in finding return cargo in case of
and full control of the business, including the logistic and international routes. Nevertheless, due to extremely fierce
transport element, as the preferred solution for whole or competition among logistic companies in some European
part of their activities. The reason can be cost efficiency, countries, the efficiency of own-account haulage is mere-
when the characteristics of the transport operations make ly slightly different from hire or reward transportation.
it difficult for transport service providers to profit from
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