Mobility & Climate : Eco-metrics to reduce of Carbone Dioxide. Seock-Jin HONG, Professor of Supply Chain and Transport, Kedge School in Bordeaux For the second year, the EIGSI General Engineering School organizes in La Rochelle, France, a high quality forum focused on interregional mobility in the Atlantic Area. La Rochelle Mobility Forum is part of a 4 high quality forum cycle. Climatlantic is a project co‐funded by INTERREG IVB ATLANTIC AREA Programme,aimed at developing an Atlantic Strategic Agenda for Sustainable Urban Development and the reduction of the Carbon Footprint covering four main pillars: mobility, energy, territorial management and social behavior.

1. Mobility and Eco-Metrics to Reduce of
Carbon Footprint
20/02/2014

2. Seock-Jin HONG
Ph.d. in Economics
Professor at Kedge Business School
in Bordeaux
2

3. Executive Summary
• Mobility and sustainability initiative have a relationship
tradeoff.
• Sustainability ratings risk seriously misleading consumers and
shareholders.
• Corporate activism should be considered in a much broader
set of environmental ratings including employees and
customers engagements.
3

4. Content
•
•
•
•
•
•
Mobility focus on Air Transport
What are logistics concern on?
Sustainability initiatives
Major environmental measures and legistration
Supply chain strategies to reduce carbon footprint
Conclusion
4

5. Mobility
5

6. Mobility
• Mobility is one of the most fundamental and important
characteristics of economic activity as it satisfies the basic
need of going from one location to the other, a need shared
by passengers, freight and information.
• Economies that possess greater mobility are often those with
better opportunities to develop than those suffering from
scarce mobility.
• Reduced mobility impedes development while greater mobility
is a catalyst for development. Mobility is thus a reliable
indicator of development.
6

7. Air Mobility
9.00
United States
United Kingdom
8.00
Thailand
Ln(RPK/Capita)
7.00
6.00
Korea
Phillippines
France
5.00
Vietnam
Japan
Germany
Mexico
4.00
3.00
China
y = -0.0033x 6 + 0.1633x 5 - 3.3372x 4 + 36.599x 3 - 227.71x 2 + 763.91x - 1076.5
R2 = 0.8612
2.00
1.00
5.00
6.00
7.00
8.00
9.00
10.00
11.00
Ln(GDP/Capita)
7

8. Number of Air Passengers Carried,
2010 (per 1000 Inhabitants)
2500
2000
1500
1000
500
0
page 8

9. Number of Air Passengers Carried and
GDP per capita 2010 (per 1000 Inhabitants)
3000
USA
2500
Australia
2000
Canada
1500
Europe
1000
Korea
Turkey
South Africa Russia
500
Indonesia
India
China
Argentina
Japan
Saudi Arabia
Brazil
Mexico
0
3
3,2
3,4
3,6
3,8
4
4,2
4,4
4,6
4,8
5
page 9

10. Air Freight Traffic
2012
2032
CAGR
GDP
North America
30%
24%
3.9%
2.5%
Europe & CIS
21%
21%
4.8%
1.8% (3.3%)
China
15%
22%
6.6%
Asia-Pacific
18%
16%
4.1%
India
3%
4%
6.3%
Africa & Middle East
6%
6%
5.0%
(4.4%) 3.7%
Latin America
7%
7%
5.1%
4.0%
World
4.5%
4.8%
• In 2012, the average value for each kilogram transported by air was
$127, while for ships it is approximately $1.10.
• Air transportation will continue to be hugely important to world trade,
carrying over 30% of all world trade by value.

11. Air Traffic
2012
2032
CAGR
GDP
North America
25%
18%
3.0%
2.5%
Europe
26%
22%
3.8%
1.8%
CIS
4%
4%
5.8%
3.3%
Asia-Pacific
29%
34%
5.5%
4.5%
Africa
3%
3%
5.1%
4.4%
Middle East
8%
12%
7.1%
3.7%
Latin America
5%
7%
6.0%
4.0%
World
4.7%

12. Market Outlook
•
Boeing forecast 20 years from 2012 to 2031.
World
AsiaPacific
China NE
Asia
North
America
EUR
Middle Latin
CIS
East
America
Africa
Economy
(GDP)
3.2%
4.6%
6.5%
1.3%
2.6%
1.9%
3.9%
4.1%
3.4%
4.4%
Traffic
(RPK)
5.0%
6.4%
7.0%
3.7%
2.8%
4.1%
6.4%
6.6%
4.7%
5.6%
Cargo
(RTK)
5.2%
5.9%
6.2%
5.8%
4.5%
4.6%
5.7%
5.9%
5.0%
5.8%
Airplane
3.5%
5.5%
5.9%
3.3%
1.4%
3.2%
4.8%
5.1%
1.7%
3.4%
•
Boeing forecast each year for 20 years
2000
2002
2004
2006
2008
2010
2012
GDP
3.0%
2.9%
3.0%
3.1%
3.2%
3.2%
3.2%
Traffic ((RPK)
4.8%
4.9%
5.2%
4.9%
5.0%
5.3%
5.0%
Cargo (RTK)
6.4%
6.4%
6.2%
6.1%
5.8%
5.9%
5.2%
page 12

13. Which Factors Impacts on Mobility?
• The world globalization lies with capital flows: Emerging
countries, which represented 12% of the world Foreign
Direct Investment (FDI) in the early 2000s, currently
represent more than one third (38%) of world-wide FDI flows.
• The air ticket price stimulation with an average yearly
decrease of 3% per unit of passenger traffic over the last 30
years (in real terms, inflation removed).
• The air transport productivity improvements from both
airline operations (aircraft utilization, fleet maintenance,
improved passenger load factors, etc.) and more efficient and
capable aircraft.  oil price volatility.
13

14. Which Factors Impacts on Mobility?
• Air transport liberalization and emergence of low cost
carriers have also played a decisive role in this productivity
improvement and price stimulation.
• It is well known that economic growth is a key factor when
explaining air traffic growth.
• Increasing connectivity between people, between regions with
the multiplication of new routes and the increasing capacity in
airports.
14

15. Which Factors Impacts on Mobility?
• Demographic trends also play a major role in air traffic evolution:
population growth, urbanization and new middle-class emergence.
• In 2032, 61% of the world population will live in a city compared to 52%
in 2012. This will represent an increase of 1.5 billion urban dwellers.
15

16. What are Logistics
concern on?
16

17. Widening The Scope of Outsourcing
• Outsourcing strategies typically just transfer work to lowercost providers.
• Connect and develop, by contrast, is about finding good
ideas and bringing them into enhance and capitalize on
internal capabilities.
• To do this, company collaborate with organizations and
individuals around the world.
17

18. Split of Logistics Cost in 2003 and
2012
Unit: Billion dollars
• Carrying Costs (32.1%)
- 1,493 trillion all biz inv.
• Carrying Cost(32.6%) (4.0% inc
than 2011)
Interest
$17
Taxes, Obsolescence, Depreciation,
Insurance
$205
Warehousing
$78
Subtotal
$300
• Transportation Costs (63.4%)
Motor Carriers(51.5%)
Truck-Intercity
Truck-Local
Subtotal
$315
$167
$482
- 2,269 trillion all biz inv. (9.9%)
Interest
$3
Taxes, Obsolescence, Depreciation,
Insurance
$302
Warehousing
$130
Subtotal
$434
• Transportation Costs(62.8%)
(3.0% inc than 2011)
Motor Carriers(48.6%)
Truck-Intercity
Truck-Local
Subtotal
$445
$202
$647
18

19. Split of Logistics Cost in 2003 and
2012 (Continued)
Unit: Billion dollars
Other Carriers(12.5%)
Railroads  74% inc
$42
Water(Int’l 22, Dom 6)
$28
Oil Pipeline
$9
Air(Int’l 9, Dom 22)
$31
Forwarders(1.8%) 106% inc $18
Subtotal
$127
Other Carriers(14.2%)
Railroads
Water(Int’l 27, Dom 7)
Oil Pipeline
Air(Int’l 17, Dom 16)
Forwarders(2.6%)
Subtotal
$72
$35
$13
$33
$37
$189
• Shipper Related Costs(0.8%)
• Shipper Related Costs(0.76%)
$10
$8
• Logistics Administration(3.8%) • Logistics Administration(3.9%)
$51
$39
$1,311
• Total Logistics Cost
$1,015 • Total Logistics Cost
(3.4% inc than 2011)
19

20. The Concept of “Soft $3”
Product
design
Sourcing
Logistics
Wholesale
retail
Information
Management
$1
$4
The cost that is spread throughout the distribution
channels – the “Soft $3”
20

21. Sustainability
Initiatives
21

22. How Urgent Are Climate Change
Issues to Your Company?
• Few companies view climate change as very (5%) or quite
urgent (15%). Source, MIT Sloan Management Review, Fall 2013
8%
Not at all
urgent; 28%
Slightly
urgent; 26%
15%
Fairly
urgent; 21%
22

23. How Are Managers Thinking about
Climate Change?
• The less urgent climate change is for a company, the less
prepared the organization is likely to be for its effects.
• There is a link between business model change and views on
climate change.
I believe my company is prepared for climate
change risks.
30%
20%
10%
0%
Agree
strongly
Agree
Neither agree Disagree
somewhat nor disagree somewhat
Disagree
strongly
23

24. How to Become a Sustainable
Company?
• Sustainable organizations are effective at engaging with
external stakeholders and employees.
• They have cultures based on innovation and trust.
• They have a track record of implementing large-scale change.
(Source, Eccles, Perkins and Serafeim, 2012)
24

25. High Sustainability Companies
• High sustainability companies significantly outperformed their
counterparts over an 18-year period in terms of both stock
market and accounting criteria, such as ROA and ROE.
• Sustainable companies learn from the outside.
• They are more likely to encourage their employees to
assimilate knowledge from sources external to their company
than are traditional companies (70% vs. 20% at traditional
companies). (Source, Eccles, Ioannis and Serafeim, 2011)
25

26. CEO Message, SNCF GEODIS
• “Through heightened environmental awareness, a
commitment to the community, open-mindedness, and
innovation, we intend to fully embrace our role as a
responsible company.”
26

27. 27

28. GEODIS, Metrics of Sustainability
Sector
Profile
Env.
Social
Classification
ISO 9001, 14001, TS;
OHSAS 18001; TAPA
Fuel
Metrics
Number of Certification
Reporting
Consumption
Total Vehicle Size, Modernization Vehicle
Vehicle
(Euro 0, 1, 2, 3, 4 and 5), Clean Vehicle
(Electric Car)
Electricity, Gas, Water Consumption and Waste
Building
from activity (hazardous and non-hazardous)
Region,
Emissions linked to the consumption of
Division
CO2 Emission
electricity and gas (ton)
Abseentism, Men and Women share, White and
Employee
Blue Collar
Training
Training hour per employee
Frequency and severity of Occupational
Personnel Safety
Accident
Rate of Traffic Accident Accidents per 100km
28

29. CEO Message, Schiphol Airport
• “We conduct our business with respect for people and the
environment and assume responsibility for five key focus
areas in particular:
• sustainable employment,
• accessibility and air quality,
• climate-friendly aviation, (electric busses for transportation
between the terminal and the aircraft)
• commodity shortages and
• noise and local community.
29

30. Key Performance Indicators
• Net Co2 emission own activities (tonnes at Schiphol)
- 2011 6,482 tonnes
- 2012 0 tonnes
30

31. Strategic Objectives
•
•
•
•
Top connectivity
Excellent Visit Value
Competitive Market place
Sustainable Performance
- Ensuring a proper balance in the relationship between
people, planet and profit.
31

32. CEO Message, ADP
• “Our environmental performance targets are clear, our
investment programmes are geared towards energy
diversification requirements, …”
• “.. No longer use an annual rating of non-financial aspects…
will encourage us to make continual progress, improving our
weak points and consolidating our strength.”
32

33. Key Figures, ADP
• Water Consumption
• Internal energy consumption
• Greenhouse gas emission
33

34. Scorecard of Environment, ADP
•
•
•
•
•
•
•
Energy efficiency
Carbon footprint
Renewable energy
Transportation
Waste
Water
Biodiversity
34

35. Major Environmental
Measures and
Legistration
35

36. DOW JONES SUSTAINABILITY INDEX
Corporate governance
Economic
Dimension
6.0 %
Risk and crisis management
6.0 %
Codes of conduct/compliance/anti-corruption and bribery
6.0 %
Industry-specific criteria
Environmental Environmental reporting
Dimension
Industry-specific criteria
A
3.0 %
B
Human-capital development
Talent attraction and retention
5.5 %
Labor practice indicators
5.0 %
Corporate citizenship/philantropy
3.0 %
Social reporting
Social
Dimension
5.5 %
3.0 %
Industry-specific criteria
C
* A+B+C=57%
36

37. LEED; Leadership in Energy and
Environmental Design
• LEED uses five different categories to judge a building's sustainability;
•
•
•
•
•
1) site location,
2) water conservation,
3) energy efficiency,
4) materials,
5) indoor air quality, and a bonus category for innovation and design
37

38. CO2 Information on Transport
Service
• Just like passenger transport firms,
• Freight carriers entering and leaving France are required from Oct
2013 to inform their customers of the CO2 emissions produced by
shipment of their freight.
• The program is designed to promote transparency. It provides a basis
on which to measure and subsequently reduce emissions.
(Source, Article 228 of the Grenelle II act)
38

39. Airport Carbon Accreditation
• Airport Carbon Accreditation is carbon management certification
standard for airports since June 2009.
• The program independently assesses and recognizes the efforts of
airports to manage and reduce their carbon emissions with four levels
of award: 'Mapping', 'Reduction', 'Optimization' & 'Neutrality'.
- Mapping: footprint measurement
- Reduction: Carbon management towards a reduced carbon footprint
- Optimization: Third party engagement in carbon footprint reduction
- Neutrality: Carbon neutrality for direct emissions by offsetting
(Source, http://www.airportcarbonaccreditation.org/)
39

40. EUETS
• Launched in 2005, the EU ETS is now in its third phase, running from
2013 to 2020.
• A single, EU-wide cap on emissions applies in place of the previous
system of national caps;
• Auctioning is now the default method for allocating allowances. In 2013
more than 40% of allowances will be auctioned, and this share will rise
progressively each year.
• The EU ETS works on the 'cap and trade' principle. The cap is reduced
over time so that total emissions fall.
(Source, http://ec.europa.eu/clima/policies/ets/index_en.htm)
40

41. Supply Chain
Strategies to Reduce
Carbon Footprint
41

42. Cargoshell, a Composite Folding
Container
• more environmentally friendly (the CO2 reduction in particular is
significant) and lowers the costs pertaining to business
economics.
- The volume of a folded Cargoshell is 1/4th of that of a traditional steel
container. This allows to save as much as 75% of precious storage
space.
42

43. Directional Imbalance
•
•
•
•
Euro 80 x 120 cm
USA and UK 40 x 48 inches (101.6 x 121.9)
ISO 100 x 120 cm
Korea and Japan 110 x 110 cm
13.4 m
2.5 m 2.43 m
Available Height 2.15 m ~ 2.4 m
33 Pallets (not possible double stack )
43

44. Beaujolais Nouveau
• Japanese consumed 8,3 million bottles in 2008 against 11,5
million in 2007 (-28 %).
• As for the Americans, they consumed 2,5 million in 2008 (-10
% comparing to previous year).
• Lyon-Saint Exupéry airport: BA operated 3 cargo flights with
B747-400 (compared to 17 flights in 2008) to Tokyo, AF 10
flight to Osaka in 2004
• AF-KLM 1,400 ton handled in 2011 (69% in CDG, 31% in
Amsterdam). JL 1,400 ton directly from CDG to Japan.
44

45. Foil & Flavor Lock
• Once roasted, coffee begins to lose its
flavor.
• FlavorLock™ bag will stay fresh for
several months (38 weeks).
• FlavorLock™ technology utilizes a
special one-way valve that allows the
carbon dioxide out without allowing
flavor-robbing oxygen to get in
45

46. Last Mile Problem
46

47. Last Mile Problem
47

48. HECORE Collaborations: How to
Deliver Faster & More Often?
• Key criteria :
- Find synergies to maintain full truck costs even if avg order < 30 pal
- Store closer to demand to reduce lead-time and transportation costs
- Increase delivery frequency to reduce time to market
• Opportunity : Pooling in warehousing and transport
 A real win-win solution to meet customers’ demands
 A competitive advantage vs bigger suppliers
48

49. HECORE Collaborations:
Environment Changing
49

50. Conclusion
50

51. Scorecard for Green
• Ceaser Entertainment Corp., the world’s most gaming company.
• The creation of a personal CodeGreen scorecard encourage
broad participation in activities that reduce the company’s
footprint.
• The scorecard should serve mostly as a tool for promoting
employee and customer engagement concentrated on the
issues.
• The scorecard summarize sustainability performance both
company wide and individual level.
51

52. Implications
• Educating employees about environmental impacts and
encouraging cultural and behavior changes to reduce.
• How to balance grassroots activity at the individual level with
top-down management?
• How to encourage the creativity and passion under a lack of
structure and coordination?
• How to increase customer’s awareness?
52

53. Many Thanks for Your
Attention!!!
53