Cutting Emissions Through Better Transportation Planning
Oracle Fursion Cloud Transportation Management offers a solution that allows transportation planners to see estimated emissions – carbon dioxide, nitrous oxides, and particulate matter – before a trip is executed. Transportation is, of course, a major source of green house emissions. According to the environmental protection agency, in the US, the transportation sector accounts for 29% of all greenhouse gas emissions. That is more than any other sector.
A transportation management system (TMS) allows a shipper or carrier to plan the most cost-effective set of shipments that meets service level goals. A TMS can be a great way to save money while lowering costs. Running more efficient routes, with more fully loaded trucks, saves money and reduces emissions. The desire to improve service, reduce cost, and reduce emissions, is part of the reason their customer Unilever selected their solution. Unilever is one of the world’s largest food manufacturers.
But can TMS solutions do even better? Now, Oracle Transportation Management (OTM) allows cost and sustainability to be traded off. Oracle’s TMS has built in analytics to make these estimates. Currently, the estimates are only for truckload shipments. But the product roadmap has them adding this functionality for other transportation modes in the future.
Estimates of emissions are made based on the estimated fuel consumption for a trip. The emissions per gallon of diesel is than used to calculate the emissions. Calculating estimated fuel use is based on estimated miles in a trip, the weight of the load, and the type of equipment. Derek Gittoes, a vice president of supply chain management product strategy at Oracle, said “this is very much an estimate. Much additional detail needs to go into the model for more precise estimates.”
For example, Oracle is using average emission from a 5-ton truck, or a bulk tanker. Ultimately, where they hope to get to, is to understand that if a 2019 Freightliner Cascadia model semi, using 2021 Michelin X Line Energy Z tires, that is on a 1,000 mile route taking them over the Rocky Mountains, and that truck will spend 46 minutes idling on average, then that truck will generate X amount of emissions.
Rich Kroes – Oracle’s vice president of global sustainability – was also on the call. Oracle has set a target to achieve net zero emissions by 2050, and to halve their greenhouse gas emissions across their value chain by 2030. Mr. Kroes said that across their supply chain there are times when it can be impractical to get to an exact GHG number. For example, if they buy a component for their hardware products in Thailand, they have an estimate for the logistics emissions associated with the component. But Oracle may not know whether there were delays causing a product to be shipped to them by air rather than by ocean or in a container that is not 100% full. “We don’t want perfection to be the enemy of the good. Estimates that are directionally correct can still help us to make the progress we need.”
But for companies that do want more precision, Oracle’s consulting organization, and TMS consulting and implementation partners like Inspirage, can configure extensions on top of OTM to provide more refined estimates.
Emissions Estimates Can Improve Over Time
Advanced transportation management solutions are already closed loop systems. The TMS estimates the cost of a trip inclusive of a carrier’s rate for the lane along with estimated accessorial and fuel surcharges. When the invoice from the carrier comes in, the TMS’s freight audit module can see whether the expected cost of the trip matches, or comes close to matching, what was expected.
If a carrier is willing to share the gallons of diesel information consumed on a trip with their shipper clients, then the same kind of closed loop predictions and corrections around sustainability can be made. Many shippers are now using transportation visibility solutions – like those from FourKites – that can monitor a carriers telematics data and generate post trip GHG emissions based on the actual fuel consumed. Oracle customers can buy a solution from FourKites that is preintegrated to OTM. That means, over time, the TMS could get better at predicting emissions on a particular route.
Transportation Modeling Can be Used to Reduce Emissions
Oracle also offers a logistics modeling tool to look at how different policies would affect sustainability. This tool can also be used to estimate transportation emissions in advance of any shipments. A company, for example, could model the operational impact of shifting the lead time for deliveries to customers from 4 days to 6 days. In the same dashboard that shows how much money would be saved from this new policy, analysts can also view the carbon impacts. Again, this is not a precise estimate, but it would allow companies to make better decisions on what kinds of policies to implement.
Mr. Kroes, however, believes that while companies should commit to aggressive sustainability goals, “organizations cannot compromise the service levels their customers have come to expect.” If consumers are demanding next day deliveries, shippers need to meet those requirements while finding other ways – for example, the use of electric vans – to improve their sustainability performance.
Carbon Taxes, SEC Sustainability Reporting, and “Greenwashing”
Carbon taxes are also something that a TMS must deal with. In British Columbia there is a carbon tax that applies to the miles driven in that province. Some of Oracle’s customers need to be able to calculate the miles driven in the province, so that they can adhere to the regulatory requirements.
For companies that are committed to reducing their Scope 1 emissions from their own trucks or Scope 3 emissions from trucks used by their common carriers while carrying the shipper’s goods, the issue of carbon taxes is also important. Intel is an example of a company that has committed itself to be carbon neutral by 2040. To encourage internal operations to make the right decisions that will drive sustainability, operations must calculate a carbon tax before selecting a solution or service. Their internal carbon tax will raise over time. An internal carbon tax is, in a sense, a fictional number; the company does not really have to pay this tax. The tax is there to drive the right kind of sustainability decisions. A TMS will need to do double accounting to deal with this. This is what the trip costs inclusive of the internal carbon tax, but this is the lower price that was actually paid for the trip.
Finally, in the US, the Security and Exchange Commission will require publicly listed companies to submit sustainability reports, in addition to their Annual Reports, by 2023. These reports will follow international reporting standards, making it more difficult for companies to engage in “greenwashing” – making grand claims of progress in this area that cannot be backed up. This will provide an added incentive for using a TMS that can estimate emissions. Other nations, like the UK, have similar regulations planned.
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