The challenges facing of Malaysia logistics industry
The logistics industry in Malaysia should prepare itself for some dramatic changes in the way products are handled, stored and transported when permissible carbon footprints on products traded across borders become mandatory. With various strong global initiatives on sustainability under way, it may not be too long before our exports which do not tally up the right carbon footprints will not be allowed to be traded across borders.
Products which are not shipped in “green ships” for instance, or handled at a port that is not green compliant, or transported via a truck that is not environment-friendly or stored in a warehouse that does not go green, may be banned in the trade across borders. Malaysia as a heavily trade-reliant economy and 24th leading exporter nation, can ill-afford such disruptions to its trade.
It is not unforeseeable, like the way now all aircraft (regardless of their nationalities) that fail to acquire the Emission Trading Permit to fly in and out of the European Union are banned (from March 2013), that it may not be long before ports may turn away ships that are not green. But, of course, before they do so, ports themselves must turn green hence, the green port .
As the carbon footprints on products receive greater attention, it is inevitable that the whole transportation and logistics chain will come under scrutiny. Products packed in plastics will have higher carbon footprint tally than if packed in recycled cardboards boxes. Similarly, agricultural exports that use chemical fertilisers will receive higher carbon footprint than if grown organically.
The same goes for carbon footprints on garments, fresh or frozen meat, rubber products, electrical and electronic products and so on, and of course the leather shoes that you wear which packs lots of carbon!
Going along the value chain, products trucked on Euro III diesel engine vehicles (which unfortunately are most prevalent in Malaysia) will have higher cargo footprints than if trucked on Euro IV diesel engine vehicles that emit less CO2. Likewise, goods must be stored in warehouses that are green compliant which utilises less fossil fuel, uses more remote sensor lights, battery power forklifts and equipment, will score low on carbon footprints.
Ports that offer higher crane efficiency (to reduce berthing time and waste emission), deploys automatic vehicle monitoring system and gate control (that reduces vehicle idle time and air pollution) as well as equipped with electric-powered rubber tyred and rail-mounted container gantry cranes (to reduce fuel and CO2 emissions) and use more solar-powered panels will be deemed green ports. Some studies have indicated that an E-RTG crane reduces up to 384 tonnes of carbon footprints within a period of three months compared to a diesel RTG.
To maintain the carbon footprint tally, the goods handled at a “green port” must also be shipped on a “green ship”. What is a green ship?
Perhaps more than any other interface in the logistics and transportation chain, shipping has moved ahead with greater speed to go green and keep the ocean blue.
This is despite the fact that shipping, compared with the other transport modes, is the least CO2 emitting source. The CO2 emission by ship per tonne of freight per km is only between 10 and 40 compared with the aircraft which is between 400 and 950 tonnes/km or, the modern truck between 60 and 150 tonnes/km or the train between 30 and 150 tonnes/km.
It is to be noted that even though it is the least of the source of CO2 emission in the transportation sector, shipping, more than any other transport mode, has been burdened with a raft of internationally-mandated measures. Even though the CO2 footprint on a pair of shoes, transported by ship from Rotterdam to Port Klang, covering a distance of about 18,000 km, is less than 100 gm, compared with your 20 km car drive from your home to a shopping mall which leaves a CO2 footprint of 1,800 gm, it must be noted that shipping is governed by more rules on CO2 emission then the automotive sector.
But considering that more than 85% of the world trade is seaborne and that emissions by the global shipping industry amount to about 1 billion tonnes a year (and accounting for 3% of the world’s total greenhouse gas emissions), it is not surprising that shipping has come under such close scrutiny.
This has already prompted some of the leading lines to adopt “green ship” design. These new vessels emit between 15% and 25% less CO2, built for lower speed but with greater economies of scale and better hull design with efficient propulsion system to reduce fuel consumption and waste emission. The green ships are also equipped with alternative maritime power (that allows ship’s generator engines to be shut down while at port to avoid air pollution) and numerous other technical and environmentally-friendly features consistent with objective of reducing CO2 emission and promote greater sustainability.
In this regard many modern ports are providing facilities for shore supply power for docking the ships.
It is thus abundantly clear that as far as there is a need to move or transport goods (and passengers) the issue of sustainability cannot be avoided. The logistics industry may not be too concerned with the carbon footprint of products it is called to transport, store and handle. But its main concern should be if the process flows in the transportation, storage and handling of the product contributes to reducing CO2 emissions.
Central to this idea is “green logistics” underlying sustainability in logistics. This simply calls for players in the logistics and transport chain to adopt supply chain management practices and strategies that reduce the environmental and cargo footprints of the freight distribution.
The initiatives and developments to ensure sustainability of the logistics industry are unstoppable. Our policy planners need to incorporate greening of the transport and logistics sector because trade is at the core to this. While such initiatives are already adopted, including by the Transport Ministry and other relevant agencies, there is a need to map out a more comprehensive sustainability development policy with a view to not just protecting our environment and, more importantly, to ensure sustainability of our trade which is the nation’s life-line. The policy approach could include fiscal and financial incentives or mechanisms to encourage the adoption of technologies and techniques that contribute to reducing CO2 emissions. It is hoped that the ongoing National Transport Strategy study by The World Bank (to be completed in November 2014) and the Logistics Performance and Trade Facilitation Study (to be completed in June 2014) commissioned by the Economic Planning Unit would also address these concerns.
In this regard I would think the players in the logistics chain have to take their own initiatives to think sustainably and apply sustainability, including forging collaboration and partnerships, like between shipping lines and port terminal operators and other transporters. Other supporters of sustainable future must also be involved in creating sustainability awareness programmes beyond green building, green technology and green belts, not only for the logistics players but for all strata of society.
The higher learning institutions must actively promote this part of sustainability as a requisite for any undergraduate course. In some countries collaborative strategies to cost-effectively reduce CO2 emissions among players in the logistics chain have been adopted successfully. It is time we go the same path to engage in strategies to simultaneously advance environmental, economic and community sustainability.
Abi Sofian Abdul Hamid is chief operating officer of Northport (M) Bhd.
SOURCE FROM: THE STAR ONLINE