Strategies for Sustainable Freight Transportation

Freight transportation, whether by truck, rail, or ship, is widely perceived to be among the most environmentally damaging activities in contemporary supply chains. Much of the environmental impact is attributed to greenhouse gas (GHG) emission, especially harmful carbon dioxide that accounts for more than 90 percent of GHGs.

Globalization, short product lifecycle, and dynamic consumer demand are key areas defining modern supply chains that involve movements of freight many times around the world in various stages of production. The fact that the freight transportation sector depends heavily on fossil fuel resources that are not only damaging to the environment, but also increasingly expensive makes the move to find cleaner, more cost-efficient methods of transport more challenging.

Recent research from a research team at the Penn State Smeal College of Business examines current strategies used by organizations in both private and public sectors in order to develop a strategic framework of environmentally and economically sustainable freight transportation.

Evelyn Thomchick, associate professor of supply chain management, and Kusumal Ruamsook, research associate at Smeal, conducted an extensive literature review in order to develop a conceptual framework outlining strategic and operational approaches to promote sustainable freight transportation. The researchers propose a framework encompassing technology, people, and process initiatives that range from individual organizational efforts to those that harness public-private sector partnerships and collaborations. These initiatives are aimed at balancing technological innovation and market demand to ensure long-term environmental and economic success.

Commonly used practices employed by private firms include the adoption of more fuel-efficient technology, shifting to cleaner energy sources, and improving transport operation efficiency.

“There is a growing recognition among private companies that reducing freight-related GHG emissions can also drive improvement in efficiency and competitiveness,” write the researchers.

However, the researchers maintain that in order to achieve long-term benefits of costs and customer services along with environmental sustainability, a strategic shift is required.

“Strategies may involve a shift in supply chain configuration, such as re-locating manufacturing sites and warehouses, modifying a company’s governance and control systems, and strengthening employee training programs,” the researchers write.

Customer service programs represent another strategic element companies can use to improve sustainable practices. Some companies require 48 hours advance notice on customer orders, or require a minimum order amount to ensure full truckload shipments.

Strategies used in the public sector involve some level of regulation, incentivizing, and facilitation. This includes regulation of emission and engine standards, taxation, grants, or subsidies, and research and development support.

A program embracing both private and public sector partnerships is the EPA SmartWay Transport Partnership Program. Through the program, carriers gain a competitive advantage as preferred providers for participating shippers, while shippers gain a better understanding of their supply chain carbon footprint, which they can then use to optimize performance.

“The program is considered the leading example of a successful market-based and public-private partnership program,” write the researchers, “It has doubled in size each year since its inception in 2004.”

Much in the way the SmartWay Transport Partnership Program embodies collaboration between the public and private sector, the researchers suggest a holistic approach encompassing all aspects of transportation to creating solutions that are both environmentally and economically viable.

“Reducing the environmental impact of freight transportation in the face of increasing trade and economic growth in the United States requires much more than continued progress on fuel economy and transport technology,” write the researchers. “For a start, the driving force in fuel and vehicle innovation is the profit-seeking goal of entrepreneurs in response to a potential market demand. Institutions are needed to strike a balance between driving technological innovations and ensuring the market for such technology is sustained.”

The study, “Sustainable Transportation: A Review of Strategies,” was recently published in the 2012 Transportation Research Forum proceedings.