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Green Logistics and its Paradoxes: What Drives Supply Chain Management?

Green Logistics and its Paradoxes: What Drives Supply Chain Management?. Jean-Paul Rodrigue Associate Professor, Dept. of Global Studies & Geography, Hofstra University, New York, USA. What Drives Supply Chain Management?. Added Value. Efficiency. Control.

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Green Logistics and its Paradoxes: What Drives Supply Chain Management?

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  1. Green Logistics and its Paradoxes: What Drives Supply Chain Management? Jean-Paul Rodrigue Associate Professor, Dept. of Global Studies & Geography, Hofstra University, New York, USA

  2. What Drives Supply Chain Management? Added Value Efficiency Control

  3. A Paradigm and Its Externalities: The Environmental Vicious Circle of Logistics Added value Efficiency Control Paradigm More ton-km transported Less spatial constraints Energy consumption Pollutant emissions Network changes Space consumption Externalities

  4. Network Changes: Hub-and-Spoke Network and Externalities Rationalization Improvement of system-wide performance Concentration of externalities Local / regional pressures Increased vulnerability to disruptions Hub Feeder

  5. The Commercial Gateways of the Global Economy 39 Gateway Regions 90% of the World’s Freight Transport Pearl River Delta: 16.7%

  6. Land Requirements for Freight Distribution: A Form of Externalization Freight Village Transportation Storage Terminals 1 OutdoorStorage Warehousing Networks 2 Distribution centers Cross-docking Port terminals Rail terminals Airports Roads / lines Rights of way Energy Inventory at terminal Inventory in transit 1 2

  7. Willow Springs Freight Distribution Center Site, Chicago N Site Area WaterCollection Distribution Center WaterCollection BNSF Willow Springs Terminal

  8. The Pitfalls of Green Logistics: Trying to be Green Leads to Being in the Red • Green Logistics • The bulk of “greenness” is actually regulatory compliance. • Asymmetric (impact more some than others). • Arbitrary cost structure. • May cost a lot of green… and put you in the red… • Green plus red equals brown… • Possibly unsustainable. Compliance Costs Regulations “Brown” Logistics

  9. Potential Impacts of Energy and Environmental Issues on Freight Distribution 1. Demand Destruction 2. Modal Shift Energy & Environment 6. Supply Chain Propagation 3. Service Area Changes 5. Network Configuration 4. Gateway / Hub Selection

  10. 1. Principle of “Demand Destruction” Quantity Q1 ΔQ Q2 ΔP P2 P1 Price

  11. Change in Vehicles-Miles Traveled and Nominal Spot Oil Prices (Crossing the Threshold) OS(1) OS(2) CS(1) CS(2) CS(3) OS(3) CS(4)

  12. Breaking the Comparative Advantages Threshold

  13. Containerization Growth Factors: Which Opportunities are Left? A B C D

  14. 2. Principles of Modal Shift Modal Share A/B ΔP (A/B)2 ΔQ(A/B) (A/B)1 Price P1 P2

  15. Distance Travelled for One Ton of Cargo Using One kWh of Energy

  16. Logistics, Modal Shift and Intermodal Integration INTERMODAL INTEGRATION Drayage Domestic Rail Short Sea Shipping

  17. Share of the Northeast Asia – U.S. East Coast Route by Option

  18. 3. Service Area Changes Cost ΔR(B) ΔB ΔA A B R1 R2 Range

  19. Optimal Location and Throughput by Number of Freight Distribution Centers

  20. 4. Gateway / Hub Selection A C B

  21. Transit Times from Shanghai and North American Routing Options (in Days) Prince Rupert 12 Vancouver 4 13 8 5 Seattle / Tacoma Toronto Oakland 5 3 26 Chicago New York 13 Los Angeles 25 Norfolk Atlanta 5 14 Dallas Savannah/Charleston 5 25 28 Houston 8 19 Lazaro Cardenas 22 Panama

  22. Gateway and Hub Selection is Controlled by Private Commercial Interests Container Terminals of the World's Four Major Port Holdings, 2009

  23. 5. Network Configuration Rail Road

  24. Distribution based on two gateways Distribution based on RDCs Distribution based on local DCs Distribution based on tiered system

  25. BNSF Logistics Park, Chicago Distribution Centers Wal-Mart CaliforniaCartage Chicago (60km) ► BNSF Intermodal Yard Maersk Thank you for providing large tracks of land (former military installations) that have been converted into logistical zones

  26. 6. Supply Chain Propagation: Input Costs or Transport Costs? Input costs Transportationcosts Reverse Distribution Costs Distribution Centers Retailers Raw Materials Manufacturing

  27. American Foreign Trade by Maritime Containers, 2008 (in TEUs): Reverse Distribution on Steroids

  28. Logistical Strategies to Cope with Energy and Environmental Constraints

  29. “Double Green” Logistics • The “double green” concept • Environmental endeavors that are not grounded in efficiency and productivity improvements are bound to fail, unless subsidized (which also leads to failure). • Green logistics is rife with unintended consequences (complex system). • Greenness, particularly if regulatory (compliance) based, may be unsustainable. Distributional Efficiency Environmental Performance Green Logistics

  30. The Paradoxes of Green Logistics

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