Just how green is your supply chain? A U.S.-based organization had been asking itself that troublesome question for some time and — knowing the importance of carbon efficiency — didn’t like the answer it was getting. So it approached DHL Supply Chain to help it find ways to make its operations more environmentally friendly.
It’s easy to understand why it felt compelled to act. Statistics from the World Resources Institute reveal that the transportation industry is responsible for a staggering 24% of global carbon emissions. Equally worrying is that the U.S. is a major contributor to this vast total, with 29% of its carbon emissions coming from transport.
Available Diesel Alternatives To Clean Your Supply Chain
DHL Supply Chain brought in experts from DHL Consulting (DHLC) in Miami, Florida to work with them on the project. The DHLC team analyzed the customer’s network and was swiftly able to suggest some quick clean-up fixes for its fleet of trucks, such as load optimization and consolidation to reduce mileage. After conducting deeper research, it also recommended that the company change its fuel type.
This may sound problematic for a sector that overwhelmingly uses diesel for its main source of energy; but says Lars Voelkner, a Project Manager for DHL Consulting, it doesn’t necessarily have to be that way. “We looked at all clean fuel alternatives in the U.S. for the customer’s trucks,” explains Lars. “That included bio-diesel, Liquified Natural Gas (LNG) and Compressed Natural Gas (CNG), as well as the renewable alternatives. We wanted to find which biofuel had the lowest carbon footprint while being cost-effective and widely available.”
Whittling Down the Clean Fuel Candidates
At first, renewable diesel sounds like an exciting solution for sustainable supply chains because it generates 66% less carbon emissions compared to standard diesel fuel. Outside California, however, renewable diesel is unsubsidized and so 30% more expensive than diesel. There are also no renewable diesel stations located along popular transportation routes.
Limited availability of fuel stations was an issue when it came to biodiesel, too; but this fuel type presents another problem. “In colder regions, there’s the possibility of biodiesel coagulating, which would make a truck unusable until the temperature improved,” reveals Lars. “As long-haul freight can encounter all different kinds of temperatures and terrains, this wouldn’t be workable either.”
Then there was LNG and renewable LNG which are in decline in the U.S., making them unattractive options. “LNG is not exciting the market,” says Lars. “And, anyway, as with renewable diesel and biodiesel, its availability is limited.”
That same limited availability is an issue for hydrogen, another much-mentioned green fuel alternative. In the U.S., there are only approximately 50 publicly accessible hydrogen truck fueling stations — and the majority of them are in California. This was a problem for the customer because the majority of its business interests are located on the east coast of the United States.
Why Renewable Compressed Natural Gas Came Out on Top
However, there is an obvious money-saving, sustainable fuel candidate: Compressed Natural Gas (CNG). It is widely available in the U.S., is at least 20% cheaper than diesel, and has been found to reduce carbon emissions by 12%. What’s more, trucks can run for 700 miles on natural gas before they need refueling.
Yet Lars and the team had an even better solution than that: renewable CNG, an anaerobically generated biogas, sourced from the methane found in locations such as landfill sites and livestock farms, which has the exact chemical composition and performance of regular CNG. “Harmful methane is taken out of the environment, converted into fuel and put into trucks,” says Lars. “As a result, the trucks’ emissions are reduced to the point where they become carbon negative. So it’s a win-win for the environment and for the freight industry.”
While still 20% cheaper than diesel, this type of fuel can reduce carbon emissions by 90% already today — with the possibility of reductions totaling as much as 400% depending on the share of renewable CNG in the blended fuel.
It’s a sustainable way to power long-haul operations, too, because regular CNG trucks are able to run on renewable CNG fuel. Additionally, CNG fuel stations are widely located along all transportation routes and in major cities, and there is a significant movement in the private sector to build more CNG infrastructure.
Considering the Upfront Costs of Renewable CNG
Lars admits that there are undoubtedly upfront cost implications with both regular and renewable CNG. First, a truck that runs on CNG is approximately 45%-50% more expensive than a regular diesel truck. Additionally, repairs and maintenance bills are also more costly, increasing on average by 10%-20%.
Nevertheless, these higher fixed costs are offset by significantly lower operating costs, particularly if a company signs long-term agreements with a fuel provider to buy renewable CNG at scale from publicly available fuel stations. According to Lars, “Buying renewable CNG from a public station means that companies won’t have to make a large-scale capital investment in their own fuel station infrastructure. This is especially relevant for contract logistics providers as the transport contract may go to another provider after three years. Plus, buying fuel at scale dramatically reduces its cost. Suddenly, running a CNG truck for an estimated 600,000 miles becomes cost-competitive to running a diesel truck over the same distance.”
Proof That Sustainable Fuel Solutions Don’t Have To Be Expensive
But wait. Couldn’t the company simply use electric vehicles to help green its supply chain? Not at the moment, explains Lars, because the limited distance electric vehicles can travel on one charge means they’re currently a non-starter for long-haul freight. That’s before you even consider the relative difficulty of making heavy trucks electric, or the limited availability of charging stations on long-haul routes.
“Many firms think that electric is the only way to reach their sustainability targets,” says Lars. “Yet electric has its own challenges, particularly if a company has to invest in its own charging infrastructure and wait a long time for planning approvals. In addition, carbon emissions are not eliminated by switching to electric trucks, as a significant share of electricity continues to be generated through fossil sources. Instead, we’ve shown that the best solution for truck operators, and for the environment, could be renewable CNG.”
Maybe that message is getting through because renewable CNG is now being used in 39% of all CNG vehicles. “That’s a 290% rise in just five years,” according to Lars. “Many companies are realizing that, over time, this is a fuel that can help them save money — and the planet.”
It’s often assumed that green solutions have to be expensive. But, as DHL Consulting has proved, this doesn’t have to be the case. But, then, solving challenges is what we do. That includes helping your business find opportunities to be sustainable in the most cost-efficient way, while improving your supply chain performance.
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