The Urgent Need to Rethink Supply Chains

The environmental challenges of today are clear and present. From wildfires spreading in numerous countries to devastating hurricanes, floods, and the rise of sea surface temperatures, our planet is sending a clear message. Last year marked a particularly alarming sign as Europe witnessed its hottest summer on record. The data is undeniable: continued greenhouse gas emissions mean more record-breaking climate events that will greatly impact our societies and ecosystems.

In this urgent context, global supply chains play a significant role, often overlooked amid other issues. These extensive networks, which often span across various countries and continents, are at a critical point. They not only contribute to global warming and environmental challenges but are also at risk from them. As central structures in today’s global commerce, the transformation of supply chains is not merely about recognising environmental duty – it represents an essential shift in the way businesses operate.

Both a challenge and an opportunity

Addressing the dual mandate of decarbonising while upholding resilient operations is the call of the hour. Delving into the numbers, it’s evident that supply chains often shoulder a significant environmental burden. According to McKinsey, “the typical consumer company’s supply chain creates far greater social and environmental costs than its own operations, accounting for more than 80 percent of greenhouse-gas emissions and more than 90 percent of the impact on air, land, water, biodiversity, and geological resources”.

Empirical evidence supports this approach. A joint study by the World Economic Forum (WEF) and Boston Consulting Group (BCG)  posited that nearly 40% of emissions embedded in global supply chains could be eradicated using current, accessible strategies. The best part? This can be achieved with minimal effects on end-consumer costs. However, there is still a disconnect between the potential of these solutions and their actual implementation in the industry.

Globally operating and fully sustainability committed companies confirm Mckinsey’s findings with their scope 3 reporting. Examples are Carrefour  with 98%, and Nestlé with 95%. And if we narrow down to logistics related emissions specifically – let’s dive into Nestlé as an example: 7.8 % of their scope 3 emissions come from logistics. For businesses with complex supply chains, like Nestlé, this situation poses both challenges and opportunities. 

Optimising freight capacity is a low-hanging fruit

As an innovative, green-tech based company focused on helping companies optimise freight capacity throughout their supply chains, we believe it’s crucial to explore how transportation and logistics can be decarbonised in the short term. The illustration below shows that trucks making empty runs still emit 70% of the CO2 that a fully loaded truck emits. A sad fact that is not sustainable and must be changed to the better.

In SpaceInvader we help companies adjust and innovate their operations with the aim to ensure not just resilience but also a more sustainable future. For many business leaders, a pressing question is: Can we make meaningful, sustainable changes to supply chains without facing huge costs? If you ask us, it is a clear ‘yes’! In other words, capacity can be optimised by saving delivery runs and making sure that trucks are loaded to the extent possible. That is a very low hanging fruit, guaranteeing savings in both fuel cost and CO2-reductions. Industry experts also suggest that cutting CO2 can cut costs at the same time, bringing additional business advantages. So, let’s look at what the experts have to say. 

How thought leaders see logistics decarbonised

Diving deeper into the specifics, we find invaluable insights from thought leaders like the eco-conscious logistics firm CHEP, ALICE, the ´Alliance for Logistics Innovation through Collaboration´ in Europe, and Professor Alan McKinnon. According to CHEP , truck electrification is expected to play a significant role in about a decade. While ten years may seem distant, especially when urgent climate action is needed, we must acknowledge the reality.

Commercialising new technologies often requires substantial CAPEX investments and time, not to mention the need for willing investors. Thus, for immediate action, we should focus on the most effective tools and readily available solutions. For supply chain improvement and reducing carbon, we must focus on better load planning, combining shipments, and improving route efficiency. A key method recommended by CHEP is double-stacking pallets. According to CHEP this method increases transport space by a notable 41%.

This sentiment resonates with the findings of Professor Alan McKinnon in his extensive research and very influential book “Decarbonising Logistics – Distributing Goods in a Low Carbon World”, (2018) . According to McKinnon logistics accounts for around 9-10% of global CO2 emissions. This significant contribution is partly due to the expected sharp rise in demand for freight transport in the coming decades and the sector’s heavy reliance on fossil fuels. McKinnon has developed a five step model to “Decarbonising Logistics” as illustrated in fig. 1 below by previously mentioned ALICE – showing that much decarbonisation can be done here and now.

Representing decarbonisation solutions to the transport and logistics industry, our focus lies on McKinnon’s central three pillars, aiming to scale up for greater impact. And if we zoom in on the red circled middle column specifically, the potential for decarbonisation becomes unmistakably clear.

McKinnon underscores the undeniable connection between maximising road freight capacity and achieving significant carbon reduction, as illustrated by the concrete examples and optimisation tools already discussed. Inefficiencies from underutilised truck space directly result in increasing CO2 emissions. His approach resonates with the principles of foresight, efficiency, collaboration, and innovation in load optimization. Utilising strategic route planning, adhering to precise loading practices, and leveraging data analytics are all crucial for ensuring optimal truck utilisation. 

Our Vision

At SpaceInvader, we’re dedicated to navigating the challenges ahead. We see the overlap of environmental responsibility and cost efficiency more as a business opportunity than a hurdle. The move toward circularity and sustainability isn’t just about being eco-friendly; it’s the foundation of the next phase of smart business. Through supply chain innovation, businesses can achieve both cost savings and reduced CO2 emissions.

This perspective isn’t unique to us. Forward-thinking businesses worldwide are already recognising the importance of aligning environmental efforts with strategic financial decisions. However, it is essential to understand that making a real difference isn’t a solo journey. True progress involves collaboration among manufacturers, transporters, retailers, and even policymakers and regulators.

The SpaceInvader DNA is green, and we firmly believe that our green-tech solution is a part of society’s circular and sustainable economy, as outlined below.

SpaceInvader in Action

Our initiatives are guided by expert, technical, and operational insights, and learnings from working closely with our customers. Our offerings include a state-of-the-art pallet rack double-stacking solution bolstered by solid and customised data analytics, along with tailormade implementation and change management programs. These are grounded in robust industry knowledge and designed to boost road transportation efficiency.

Hence, the evidence is clear. The environmental advantages are clear, and the financial benefits are equally strong. In fact, these two aspects align closely: cost efficiency and decarbonisation can be achieved in tandem. By making smart investments in both CAPEX and OPEX, companies can realise significant value.

The Sustainable Road Ahead

While the journey to net-zero emissions might seem daunting, the incremental benefits of each strategic decision compound over time. Through the synergies of innovation and collaboration, businesses can not only meet but exceed their climate commitments.

Tackling supply chain decarbonisation is crucial yet exciting. Our customers are a clear testament to this, reducing CO2 emissions and costs by 15-25% through smarter freight capacity management. Tools like the SpaceInvader pallet system score a double win: they boost both environmental outcomes and the bottom line, proving that green logistics is not only viable but smart business.

As we wrap up, let’s keep in mind the impact of our choices. Opting for particular brands and services today shapes not only our immediate bottom line but also the legacy we leave. Our decisions, especially in sustainability, are about more than us; they’re about the choices we make today – not tomorrow’s promises – and ultimately, about the world we pass on to future generations.

 

The earth’s climate is challenged like never before, and we need to find solutions that are proven to work and implement them fast. We have one of those solutions at SpaceInvader. We worked with Kobra Advice to put our money where our mouth is and the result is our climate report for 2021.

Beyond documenting our own green balance sheet, the report also contains the climate model we use, Green Space Impact (GSI), which calculates how much CO2 our clients save by using SpaceInvader. Producing this report was both a costly and labor-intensive affair, but it’s something we feel is of great strategic importance. We want to prove to our clients what we already know – the CO2 reduction our solution offers is real and attainable. 

We were put in the world to make transportation more sustainable, and the climate model is an eyeopener for our partners when they see the CO2 savings that are possible. When the majority of companies discuss the green transition of heavy road transports, they usually focus on greener fuels, electrification, etc. Very few consider the great CO2 savings that are possible from something as simple as making fewer runs. We need to start having this conversation, for the sake of the environment, costs and congestion on our roads. There’s so much to be gained. 

Let me give you an example: In the grid below, we’ve calculated how much CO2 a client can save with every truck per year by using SpaceInvader. (The model is based on a client who drives 24-ton trucks with 33 pallet positions and a diesel consumption of 3.1 km/liter.) If SpaceInvader on average frees up merely 8 of the 33 pallet positions through double-stacking of pallets, the yearly net savings reach 37.7 tons CO2 and 12,000 liters of diesel per truck based on a daily distance of 500 km. driven per day. (180,000 km. per truck per year)

So if we just imagine a carrier who employs 100 trucks in their daily operations, the collective yearly savings grow accordingly. 100 trucks reduce the carrier’s carbon footprint by 3,770 tons CO2 yearly. And as a company this carbon footprint is your footprint, as it’s included in your so-called scope 3 emissions – something everyone in the supply chain must work together to reduce.

And the good news: there’s money to be made by getting the transition underway

There’s also the added benefit that our solution reduces costs as well as CO2. We’ve seen logistics professionals and carriers save somewhere between 15-30% by systematically optimising their freight. And with an additional carbon tax on the way starting in 2025, rumoured to be 750 DKK per ton, a typical optimization of 15% calculated on the above example would see potential yearly savings hit 280,000 DKK per year for every single truck.  

I hope you’ve been inspired to take action, because our environment demands it, and we need to move fast. The good news is the payoffs begin on day one. If you want to know more about how we work with our clients to reduce CO2 and optimise capacity, you’re welcome to give me a call. I’m attaching our climate report to this message – happy reading!

Best wishes
Steen Frederiksen
CEO

Britta Toftum joined SpaceInvader on June 1st, 2022 as Chief Commercial Officer. She arrives at SpaceInvader at a time when both the company and the logistics industry is busier than ever before, as more and more carriers are realizing the gains to be made by optimizing capacity and increasing a vehicle’s fill rate.

With Britta, we now offer our clients a new level level of expertise and insight when it comes to logistical analysis and sales, both in the initial phase with SpaceInvader pilot tests, and the follow-up phase, where most customers scale the use of racks in their organization, when having built familiarity with the system and seeing the tangible results made possible through SpaceInvader double-stacking.

Britta’s many years of sales and leadership experience in the logistics sector makes her an exceptionally competent sparring partner for both existing and new customers facing complex logistical challenges. In aid of taking on these challenges, Britta can offer qualified advice as she has a proven track record of navigating large corporations with complex supply chains.

“Now more than ever,  the world needs the capacity optimization the SpaceInvader system offers. I’m ready to bring about that breakthrough together with the rest of the team at SpaceInvader, whose client list already boasts prominent logistics companies like Bring, PostNord Logistics and Blue Water Shipping.”
– Britta Toftum, Chief Commercial Officer 

With her experience and analytical approach to capacity optimization, Britta can become your competent advisor. She draws on a wealth of experience from the logistics sector due to her long career working for SAS Cargo, among others. Firstly, as Sales Director for Europe, and later Head of Cargo Sales for North America. The last four years she proved herself as a leader for more than 1,100 SAS cabin crew members working in Scandinavia and in Asia. 

A sector she knows inside and out
Britta’s passion is helping carriers in a sector she knows inside and out, supporting them in becoming greener and more economically sustainable through capacity optimization. It’s about saving space, money, and CO2.

We’re looking forward to working with Britta and drawing on the valuable international sales and leadership experience she brings.

Maybe you want to meet Britta as well? In the coming months she’ll be meeting both existing and new customers as more and more logistics carriers realize the great potential in double-stacking.

You can read more about Britta on her LinkedIn, or contact her directly at +45 2856 8448‬ and bt@spaceinvader.com.

The climate crisis concerns us all, and global warming’s consequences become clearer with every year that passes. Denmark has a stated goal of reducing its CO2 emissions by 70% by 2030. The transportation and logistics industry has to do its part, but it’s tremendous and costly challenge to transition an essential socio-economic industry, which for decades has depended on fossil fuels.

For many businesses today, climate action is a strategic priority with equal importance to that of financial targets. Luckily, green technologies are being developed as we speak. Green technologiges that will help supply chains become more sustainable.

The transition requires both a willingness to change and often new investments. Some green solutions are more expensive and uncertain investments than others, particularly when they haven’t yet matured to a point of commercial viability.

In Denmark, trucks make their routes with an average fill rate of 56% (ITD). We can do better. Because if we load more on every truck, we’ll ultimately save trucks, and reduce CO2 and other harmful emissions. On average, SpaceInvader’s clients reduce their CO2 emissions by at least 15%.

We’ve written a small piece about how double-stacking pallets and cargo thereon can help the transportation and logistics industry save space, money and CO2 simply by optimizing capacity. There are gains to be made – throughout the supply chain.

Download climate-case: