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Green logistics puts green in the bank

Efficient logistics practices that are good for the environment can also save a company money. We look at approaches that firms in Hungary use to help the planet, and themselves.

When it comes to logistics practices, environmental-awareness makes good business sense. If a company’s supply chain is more efficient, it will reduce financial waste as well as emissions of carbon dioxide and other greenhouse gasses.

“We estimate that, at a global level, our transport and distribution systems emit a similar proportion of CO2 emissions from energy as our manufacturing operations,”

says Beáta Vince, communications manager, CEE, with Unilever in Hungary.

Here we look at efforts to efficiently maintain logistics by various firms in Hungary with differing levels of logistical needs – a telecom, a consumer goods company, and a logistical firms.

Supply chain audits at Telenor

Telenor Hungary, the local office of the global telecom company, has strict environmental standards, with which its partners must comply. As Telenor Hungary legal & assurance director Dr. Márk Erdélyi explains, Telenor ensures that its logistics is conducted in a more sustainable manner through audits before and after suppliers are contracted.

“Pre-assessment of suppliers is made by sourcing,” says Erdélyi. “An environmental check is a part of supplier evaluation during tender processes. Besides compliance with ethical standards, environmental sustainability criteria are also considered in procurement under our new sustainable sourcing system deployed in 2010.”

Once a supplier is hired, he says, Telenor’s supply chain sustainability team monitors their performance. “Telenor asks about 20% of its suppliers to fill in a self-assessment questionnaire via e-mail every year as a preliminary risk assessment,” Erdélyi says. “With this document, companies evaluate their operation and performance.”

In addition to these self-assessments, Telenor’s team also regularly conducts comprehensive reviews of the suppliers, to assess their efficiency, management and environmental performance, according to Erdélyi. He adds that the effort has resulted in improvements among the 12 suppliers that Telenor Hungary was able to assess in 2013.

Unilever’s internal transport management

Although it does not have its own vehicle fleet, Unilever Hungary, the local office of the massive consumer goods company, does a fair amount of shipping through subcontractors. According to Unilever spokeswoman Beata Vince, the local office is committed to the corporate strategy for cutting carbon dioxide emissions.

“Unilever has committed to ensuring that its CO2 emissions from its global logistics network will be at or below 2010 levels by 2020 – despite the significantly higher production volumes that will be generated as the company grows. This will represent a 40% improvement in CO2 efficiency,” says Vince. She explains that Unilver relies on its own internal transport management organization, called UltraLogistik. “UltraLogistik finds the most efficient ways to move raw materials and packaging to our factories and then transport finished goods to around 100 warehouses in Europe. In total, the hub system promises to reduce total distance travelled by 175 million km in Europe alone from 2013 to 2015 (compared to 2010 levels),” Vince explains.

Techniques for reducing Unilver’s carbon footprint include improving “loadfill”, so that each truck carries its maximum possible load, reorganization and optimization of freight shipping, and training for truck drivers. Another helpful practice the firm uses in Hungary is “backhauling”, in which Unilever uses other company’s trucks as they make their return trip, when they would normally be empty, Vince says

Thus far, Unilever Hungary is meeting its targets for CO2 reduction, according to Vince. She says the firm has achieved “a CO2 efficiency of 70.6 kg/tonne for 2013 and an 18% improvement since 2010,” and adds: “We achieved this by implementing smarter distribution networks and filling up vehicles efficiently.”

Ekol’s watery shortcut

Ekol is a major shipping and logistics firm that is based in Turkey but is growing its presence here. It says that its secret to efficiency is to employ multimodal transport, including ships and land transport.

In Ekol’s cargo transport from Turkey, which often involves shipments that have come overland from various points in Asia and are headed to Europe, the shipping containers are transported together as a single “block train”, according to Ákos Kovács, EKOL’s country manager for Hungary. Although they are hauled together, the shipping containers change modes of transport, from ship to train, he explains.

“The transport route, which initially went from Istanbul over the Balkan countries to Mannheim (Germany) is now changed for a route between Mannheim and Trieste (Italy) due to route, time and security concerns. In this route, which has never been used in Europe before, the first trip took place at the Mannheim Dusbahnhof Terminal on October 17, 2008,” says Kovács.

Trucks going from Turkey to Germany used to travel along 7,000 km of roads, facing delays at borders and other problems. Now shipping containers sail from Istanbul to Italy, and are then put on one single “block train” that takes them to the Mannheim Dusbahnhof Terminal, after travelling only 2,000 km overland. Given that Ekol is now doing 18 “block train” runs, or 36 round trips, a week, rather than sending a fleet of trucks, the savings really add up.

“Considering the 2014 figures on intermodal transportation, we saved 42 million liters of diesel fuel consumption and reduced carbon dioxide emission by more than 69 million kilograms,” says Kovács.