The Intergration of Enviromentally Friendly Practices Within the South African Logistics System

8/2/2019 The Intergration of Enviromentally Friendly Practices Within the South African Logistics System

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2011

By Madri Joubert

Student Number: 16311620

Logistics 214 Assignment

Friday 15 April, 2011

An Overview of South African Logistics for

2009 to 2010 and a Foresight for 2011


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Plagiaatverklaring / Plagiarism Declaration

1 Plagiaat is die oorneem en gebruik van die idees, materiaal en ander intellektuele

eiendom van ander persone asof dit jou eie werk is.

Plagiarism is the use of ideas, material and other intellectual property of anothers

work and to present is as my own.

2 Ek erken dat die pleeg van plagiaat 'n strafbare oortreding is aangesien dit n vorm van

diefstal is.I agree that plagiarism is a punishable offencebecause it constitutes theft.

3 Ek verstaan ook dat direkte vertalings plagiaat is.

I also understand that direct translations are plagiarism.

4 Dienooreenkomstig is alle aanhalings en bydraes vanuit enige bron (ingesluit die

internet) volledig verwys (erken). Ek erken dat die woordelikse aanhaal van teks

sonder aanhalingstekens (selfs al word die bron volledig erken) plagiaat is.

Accordingly all quotations and contributions from any source whatsoever (including theinternet) have been cited fully. I understand that the reproduction of text without

quotation marks (even when the source is cited) is plagiarism.

5 Ek verklaar dat die werk in hierdie skryfstuk vervat, behalwe waar anders aangedui,

my eie oorspronklike werk is en dat ek dit nie vantevore in die geheel of gedeeltelik

ingehandig het vir bepunting in hierdie module/werkstuk of n ander module/werkstuk

nie.

I declare that the work contained in this assignment, except where otherwise stated, is

my original work and that I have not previously (in its entirety or in part) submitted it for

grading in this module/assignment or another module/assignment.

16311620

Studentenommer / Student number Handtekening / Signature

Ms M Joubert

Voorletters en van / Initials and surname

Friday 15 April, 2011

Datum / Date


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Table of ContentsPage Range

1. Abstract.. 4

2. Introduction. 4

2.1 Figure 1 5

3. An Overview of Green Logistics. 5

4. Green Logistics in South Africa 2009. 6

5. Green Logistics in South Africa 2010. 7

5.1 Figure 2. 8

6. Green Logistics in South Africa An Analysis and Foresight for 2011. 9

7. Conclusion 11

8. Bibliography 12


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1. Abstract:

In todays society, the negative impact of transportation on the environment has become a

crucial and well known fact. Due to the role that Logistics play in the modern day

transportation systems, it is has become a main industry influenced by environmentallyfriendly practices. In this paper a brief overview of the integration of environmentally

friendly systems and its impact within the South African Logistics industry is given. The

ultimate aim is to analysing how the South African Logistics industry is affected by the

incorporation of green practices. An overview of what environmentally friendly practices

entail will be presented. The paper then briefly traces the progression of these practices

within logistics in South Africa during 2009 up until 2010. A foresight for the year 2011 will

also be given.

Key words: Green Logistics, Economy, Logistics Industry, South Africa

2. Introduction:

During South Africas era of global disruption, the precedent question has been aimed at the

countrys economic strength and stability. According to Havenga, Van Eeden, and Simpson,

(2010),The country is relatively small in global terms, distant from its natural markets in

Europe and Asia and possesses an open economy that is often negatively affected by global

economic cycles. Furthermore, South Africa has a higher than normal domestic transport

demand owing to long inland transport corridors and mining and production centres far

from the coast. Green logistics are not only beneficial to the environment, but also

profitable to the business applying it. It has the capability of increasing business turnover

and profit, in that it is based on the concept of reverse logistics which in turn is structured

around the recycling of resources.

Logistics and supply chain processes enable or disable a countrys expansion and growth

and thereby, its global competitiveness, South Africas rating of 28th

out of 155 countries on

the global Logistics Performance Index (LPI)* indicates an increasingly competitive sector,

with the potential to outperform much larger, more established economies. (Post

transport month considerations, 2010).

Through the encouragement and support of this environmental system in the logistics

industry, not only the natural environment benefits by being protected, but also the logistics

industry itself due to an improvement in its functioning allowing it to lower costs and

increase its production. The research done in this industry to improve its environmental

practices (which in turn positively affects its efficiency) results in technological growth and

ultimately a competitive advantage.


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3. An Overview of Green Logistics:

Green Logistics originates from out of Scandinavia and Germany (Going the Green Way,

2009). According to Jean-Paul Rodrigue, Brian Slack, and Claude Comtois (2001), the

concept of greenness became familiarised within the transportation industry during the

late 1980s and early 1990s, especially after 1987 when the World Commission on

Environment and Development Report declared environmental considerations and

sustainability to become and international goal. It grew out of the growing awareness of

environmental problems, and in particular with well-publicised issues such as acid rain, CFCs

and global warming. The transportation industry was identified as being a majorcontribution towards the degradation of the environment. Green Logistics is the process of

reducing negative and environmentally harmful components during the movement of

supplies.

The negative effects of unmonitored Logistics on the environment can be denoted from

Figure 1 (Operational Environment / Green Logistics, 2010). Inventive eco-friendly logistics

come in many forms. It might be implemented through a company reducing its carbon

footprint/emissions during the logistics process or sourcing new technologies to minimize

the detrimental effect such as air and water pollution stemming from production and

transportation. This type of pollution could be curbed by putting into operation alternative

energy sources such as solar powering or wind turbines or using environmentally friendly

equipment/machinery. Another way it may be applied is through companies using different

packaging materials and packaging techniques such as reusing boxes (or any other reusable

item) or using less detrimental materials such as plastic for the production of goods. (Using

less plastic, in turn, affects the weight of the production and subsequently results in lower

transport costs).

Green Logistics aid businesses to achieve what they have been concentrating on for years

the improvement of supply chain visibility, refining efficiency and minimizing costs. Apart

Figure 1


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from protecting the environment and resources, it is an opportunity to generate additional

revenue and to differentiate market position.

From a South African perspective, the executive director, Hans Ittmann of CSIR (Council for

Scientific and Industrial Research) of built environment said that it was widely acceptedthat logistics enabled trade, foreign direct investment, development and economic growth.

However, it has significant externality effects on the environment, which must be curtailed.

(Smit et al., 2011).

4. Green Logistics in South Africa 2009:

During the year 2009, 23-million tons of green house gasses were emitted in South Africa

alone, owing to land freight transport activities. This amounted to 49% of transportemissions and just over 5% of total emissions for the country. Road freight contributed 20,3-

million tons and rail 2,7-million tons, which translates to R4,6-billion and R0,6-billion in costs

to the environment. (Smit et al., 2011).

According to the annual Supply Chain Foresight, there was an overwhelming awareness in

the local business community about climate change as the flagship environmental issue.

Over 80% see it as serious or very serious. Perhaps more tellingly, almost 70% see the

concept of an environmentally friendly supply chain as being important and very important

to their organisation. (Supply Chain Foresight, 2009:15)

In the 2009 South African Logistics Report, DC failures were found to be the largest source

of extra kilometres (345 696 extra kilometres annually) and therefore additional CO2

pollution (10 415 kg). (State of Logistics, 2009:49)

Extra kilometres account for 6,35% of the total kilometres run and the rest are value-added

kilometres. The total extra kilometres represent R170 859 additional costs and 20 600 kg

additional CO2 pollution. (State of Logistics, 2009:48). According tothis report, there are

four main causes of extra kilometres, namely: DC failures, short-notice volume increasesfrom the client, client-planned volumes more than actual, and vehicle size less than

planned. (State of Logistics, 2009:48).

The extra kilometres results in South Africas average volume of fuel consumed per

capita in the transport sector... [being] much higher than the world average. (State of

Logistics, 2009:45). Methods of decreasing extra kilometres during 2009 were: the teaming

up of client and LSP to improve the product picking process and the planning of demanded

volume; improve the synchronization between the transport and Distribution Centre

through both parties reassessing their warehousing process. (State of Logistics, 2009:50)


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During 2009, there were three noticeable environmental considerations surfacing

worldwide: Consumers give preference to economies that adhere to sustainability

principles; Measurement of critical elements is becoming more transparent and used as

bargaining tools, giving rise to phenomena such as emissions trading; and Freight andinventory users are starting to favour less harmful solutions. (State of Logistics, 2009:22).

In South Africa, the above mentioned critical elements were measured, and it was found

that the main contributors to externality costs are emissions and accidents. (State of

Logistics, 2009:23). It was estimated that external costs would add another R34 bn (or

another 19%) to the South African transport bill (State of Logistics, 2009:22). In response

to the these problems efforts were merged to increase efficiency aided advancements and

improvements such as the development of environmentally friendly equipment which used

less fuel and produced a smaller CO2 discharge (State of Logistics, 2009:23). 32% of

businesses investing within these green initiatives expected no return on their businesses,whereas 31% expected a return on the investment within 2 to 5 years (Supply Chain

Foresight, 2009:17). The movement of the logistics industry toward environmentally

friendly practices undoubtedly has an influence on consumer loyalty this movement

strengthens consumer loyalty due to the industry adhering to the change in consumer

sentiments - a change towards environmentally friendly practices.

5. Green Logistics in South Africa 2010:

During the year 2010, South Africa was already the largest African country emitting carbon

dioxide resulting from fuel consumption. The consumption of 27% of South Africas total

final energy was caused by the transport sector. 78% was liquid fuels and 1,6% was

electricity. It was calculated that South Africas freight transport contributed roughly 8% of

energy-related CO2 emissions globally (Smit et al., 2011).

In that year, when South Africa became a part of the BRICS countries, it was estimate that if

the strong economic growth of these countries continued, then their carbon footprint

would be likely to experience an increase (State of Logistics, 2010:36).

It was founded in the Annual State of Logistics for 2010 that the transport sector

depends on liquid petroleum fuels for 98% of its energy, and on electricity for 2%. Road

transport accounts for 87% of energy consumed by the transport sector, with aviation using

11% and rail just 2%. The energy-efficiency ranking for freight transport rates pipelines the

most efficient mode, followed by rail, then road, and air as the least efficient mode. (State

of Logistics, 2010:38).

This report concluded that the transport industry, shippers and logistics service providers

had a major impact on reducing emission by simply optimizing the elements affecting


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emissions. These factors were: vehicle parameters; operating conditions; fuel parameters;

and environmental conditions. Two levers were presented as means to achieve greener

logistics. The first: optimising equipment (improving the emission characteristics of

transportation equipment) emissions for the country. Road freight contributed 0.3 million

tons and rail 2.7 million tons48, which translate to R4.6 billion and R0.6 billion in costs to theenvironment.The second lever: optimising movement (improving the efficiency of

logistics operations and superior network design). As an example of the latter lever, sub-

optimal routing and scheduling of deliveries and cargo loading/space utilisation can add

significant additional emissions through unnecessary distance travelled and wasted space.

(State of Logistics, 2010:38).

In 2010 there was talk of implementing a green tax this proposed carbon tax by Treasury

would result in emission externalities becoming an internal logistics cost. This tax is an

effort by the Government to reduce the affects of pollution and would force the LogisticsIndustry to enhance and adjust the current systems in place by implementing alternative,

environmentally friendly equipment and methods. The tax will have an initial negative

effect on the transportation sector and hence the logistics industry, but the ultimate

solutions derived for this problem may serve to transform a major part of the operational

structure and eventually result in a great degree of profitability. The profitability may arise

from the alternative solutions being much more effective than the current methods in place.

For the year 2010, many initiatives to combat South Africas carbon footprint within the

transportation and logistics industry were formulated. Refer to Figure 2 (State of Logistics,

2010:22) for an in depth analysis to what the initiatives were and what the barriers were.

Figure 2


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The industries that invested the most revenue and time in environmentally friendly projects

and technologies were those involved in heavy transport-related emission and hazardous

chemical production the Agribusiness, logistics and FMCG sectors. The lengths of time

companies are prepared to invest in improving SAs woeful emissions profile has diminished

though, moving from an estimated 5 years in 2009 down to 4.5 years this year. (SupplyChain Foresight, 2010:20).

A survey was conducted to conclude, amongst others, the effectiveness of the industrys

planning and forecasting in reducing the impact of their supply chain on the environment.

The response was that 37% indicated that their businesses were somewhat effective, 30%

viewed themselves as effective, 19% were completely ineffective and only a mere 7% was

very effective (Supply Chain Foresight, 2010:25). With only 7% of the industry asserting that

their planning and forecasting exceedingly reduces the impact of the supply chain on the

environment, there is left much room for improvement during the year 2011.

6. Green Logistics in South Africa An Analysis and Foresight for 2011:

A recent report illustrates that 75 percent of a company's carbon footprint comes from

transportation and logistics alone (Going the Green Way, 2009). In response to this,

according to the Supply Chain Foresight for 2011, only a mere 16% of the industry sample

aims at reducing the impact of their supply chain operations on the environment for this

year (Supply Chain Foresight, 2011:9).

There are many aspects within the logistics process which influences the carbon emissions

in the transport industry in South Africa. Some of these aspects cannot be remedied by the

logistics industry itself, for only the government has sole power over how these aspects

should be administered and improved. Amongst these aspects influencing the environment

and controlled by the government, are the conditions of the roads and traffic congestion.

The poor conditions of South Africas roads have a negative impact on the transportation

devices used (i.e. busses, trucks, mini busses etc.). The poor conditions of the roads result in

an increase, of amongst others, vehicle vibrations which might damage not only the vehiclesbut also the cargo, increasing the vehicle maintenance and repair costs and ultimately the

industrys logistics costs and therefore decreasing the capital available for investment within

green initiatives. As an added factor, the increases in fuel prices do not lighten the

industrys burden. One of the solutions, according to the government, to the poor

conditions of South Africas roads, is the construction of toll gates which will allow for the

accumulation of adequate funding to keep the roads in the necessary condition. The toll

gates will also decrease traffic congestion by making specific primary routes travelled too

expensive to use by motorists. This may be observed by the current Gauteng toll gate

system erected.


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Something to be prepared for during the year of 2011 is the upcoming green tax which is

to be implemented by the Treasury. Initial indications from Treasury were that these

emissions could be taxed at around R165 per ton, though the proposed tax range can be

between R75 and R200 per ton. The worst case scenario for carbon tax in Treasurys

proposal is R750 per ton, however a constricted economy scenario with a R2 000 costimpact per ton is also a possibilityGiven Treasurys R75 R200 tax range per ton, it

could add R1.7 billion to R4.6 billion to South Africas freight bill, if implemented. (State of

Logistics, 2010:38-39).

Whether its alternatively fueled vehicles ranging from compressed natural gas to

experimental hybrid trucks, transport companies are racing to be the first to discover the

breakthrough technology that allows the nation to wean itself off imported oil. (Schulz et

al., 2010). During 2010, Barloworld Logistics has given the green movement in the trucking

industry a tremendous boost via its development of what it refers to as the first green trailerin the industry (Green vision becomes reality, 2010). This development, which will be

discussed shortly, may serve this year as an example and inspiration to current businesses

within the logistics industry, of how profitable and effective going green can be for a

company.

The development is known as the Green Trailer.

In the case of Barloworld Logistics, a different tact was taken in that they used existing equipment as the

base from which to effect improvements. The trailer is, in fact, a 2005 Afrit interlink while the Hino trucktractor is a Euro 2 unit that was operational in the fleet with some 360 000kms already on the clock All

changes that we made to the green trailer are within the bounds of current legislation. It was also decided

that whatever changes we made would be backed by research data and that these changes would be

practical in normal operating conditions. The focus of the project was therefore to provide a sustainable

road transportation solution for our clients that is both practical and which complies with l egislation, says

Van Rensburg Apart from the obvious changes, there are also some hidden improvements such as having

the last 1,5 metres of the roof slope downwards towards the back of the trailer Tyres have also played a

huge role with energy efficient Michelin 315S fitted to the truck tractor and super singles on the trailers

The end result is that the new design has resulted in a 35% reduction in drag which in turn has resulted in a

6% to 8% reduction in fuel consumption. We were getting 48 litres/100kms and after the aerodynamic

improvements were made, this dropped to 41 litres/100kms, says Adrian Van Tonder, national technical

manager, dedicated transport services, Barloworld Logistics Transport is the biggest area in logistics that

affects the environment directly but is one of the easiest components to address strategically .(Green

vision becomes reality, 2010).

According to the Supply Chain Foresight for 2011, an estimated 52% of the industry expects

their suppliers and logistics companies to report their carbon footprint (Supply Chain

Foresight, 2010:13), indicating perhaps an increased awareness of the efficiency of

environmental practices. The implementation and awareness of environmentally friendlypractices affect the overall manufacturing, packaging, modes of transportation, DCs, routes


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travelled, lead times, fuel consumption, equipment utilized and waste recycling by making it

more effective and efficient resulting (in the long-term) in profitability for the company. If

the company you are dealing with incorporates environmentally friendly systems, you are

apt to experience better services and products, hence perhaps part of the reason why

companies demand their suppliers and collaborating companies to make known theircarbon emissions. All of this indicates towards a growth of awareness and consequent

action towards protecting the environment and natural resources. Keep in mind that the

year of 2011 is far from over, presenting an opportunity for the overall community to

witness more improvements and growth within the green logistics industry.

7. Conclusion:

In an overview, it can be denoted that green logistics is not only beneficial to the

environment, but also (predominantly in the long run), to those companies applying it. Theoverall impression is that many companies are not aware of the benefits of improved

environmental performance such as a decrease in training costs and waste-disposal, a

smaller number environmental-permitting fee, as well as the often, reduced materials

costs. ( Murray et al., 2010)

Pertaining to the implementation of environmental initiatives, there are many strategies

and opportunities for a company to choose from. Green logistics do not require companies

to be limited in their creativity, it in fact encourages innovation. Innovation in turn leads to

an increase in efficiency and productivity for companies and the achievement of a

competitive advantage within the markets they are operating. The current awareness

within South Africa of the affects of the logistics industry carbon footprint and other

negative impacts on the environment has led to a change within the industrys operations

and has presented many new opportunities for the South African home-based and global

logistics market. If green logistics is managed well, there is hope that this industry might

become as well established as those of the developed nations.


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Bibliography

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1664-goingthegreenway-LogisticsAsia.html [2009, November 1].Green vision becomes reality. 2010. [Online]. Available:

http://www.fleetwatch.co.za/magazines/Jul2010/12-Green%20vision.htm [2010,

July].

Havenga, J., Van Eeden, J. & Simpson, Z. 2010 . The State of Logistics in South Africa:

Infrastructure and the Environment - Decline within Decline [Online]. Available:

http://www.civil.ist.utl.pt/wctr12_lisboa/WCTR_General/documents/01051.pdf

[2010, July 11-15].

Murray, M. 2010. Introduction to the Green Supply Chain [Online]. Available:

http://logistics.about.com/od/greensupplychain/a/green_intro.htm [2010]

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logistics/pictures.html#diagrams [2010, July 23]

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http://www.freightintoafrica.co.za/news/255 [2010, Novemebr 8]

Rodrigue, J.P.,Slack B., & Comtois C. 2001. The Handbook of

Logistics and Supply-Chain Management. London: Pergamon/Elsevier. [Online].

Available: http://people.hofstra.edu/Jean-

paul_Rodrigue/downloads/Green%20Logistics.pdf [2001]

Schulz, J.D. 2010. Industry giant are going green to get green [Online]. Available:

http://www.logisticsmgmt.com/article/industry_giants_are_going_green_to_get_the_green/ [2010, September 28]

Smit, P. 2011. Logistics sector needs to make big carbon inroads, survey asserts.

[Online]. Available: http://www.engineeringnews.co.za/article/logistics-sector-

needs-to-make-big-carbon-inroads-survey-asserts-2011-03-08 [2011, March 8].

State of Logistics Survey for South Africa, 2009










Supply Chain Foresight, 2009




Supply Chain Foresight, 2010Supply Chain Foresight, 2011


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The Intergration of Enviromentally Friendly Practices Within the South African Logistics System

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