Rethinking Logistics in the Light of Climate Change: Interview with KLU Professor Alan McKinnon

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Alan McKinnon, Professor of Logistics at Kühne Logistics University, has a clear message when it comes to logistics solutions under climate change: “We must act fast in decarbonizing logistics if we are to meet the ‘well below two-degree’ target set by the 2015 Paris Agreement”, he warned recently at several high-level transport and logistics conferences. At these events in Vienna, Marrakesh, London and Leipzig, McKinnon spoke about the future of freight transport and supply chain resilience in view of increasing extreme weather events and the need to rethink logistics.

Professor McKinnon, in a true conference marathon you strongly emphasized the urgency of decarbonizing logistics. Have you found the conference audiences receptive to your arguments?

With a share of 9 to 10 per cent of global CO2 emissions, logistics needs to be decarbonized as soon as possible if we are to stay within the global temperature limits agreed in the 2015 Paris Climate Change Agreement. This is an indispensable part of the global mitigation strategy. Indeed, there is currently a great deal of interest among transport planners, managers, and policy makers in the decarbonization of logistics and especially of freight transport. This sector is going to be one of the hardest to decarbonize. This is because the amount of freight traffic is expected to grow rapidly over the next few decades and continues to be powered mainly by fossil fuels. Emission reductions per unit of freight movement could be more than offset by economic growth. And, even if we are able to achieve deep reductions in carbon emissions from logistics and other sectors, this will not avert much of the climate change already “in the pipeline”. 

Has the message about decarbonization been getting across to industry and government?

Most public policy-makers and managers responsible for the logistics sector have yet to grasp the full scale of the challenge. Rather than just getting logistics-related emissions down to a particular annual figure by 2050, we must minimize the accumulated emissions between now and then – something that many businesses have yet to appreciate.  Nor do many of them realize the magnitude of the required reduction in emissions. A general rethink is needed.

Could you give an example?

Let us take a look at the case of European freight transport. If one accepts current forecasts of freight traffic growth, carbon intensity in terms of CO2 emitted per unit of freight movement will have to plunge by a massive 83 per cent over the next 30 years.  This will be a gargantuan task.  Eyebrows were raised at the EU Transport Research Arena (TRA) conference and the conference of the European Logistics Association (Eurolog), when I suggested that this was probably not going to be possible. I pointed out that we may need to consider the option of restraining the growth of freight traffic, something understandably unpopular with politicians and company managers.

More examples can be found in my recently published book Decarbonizing Logistics. Distributing Goods in a Low Carbon World (June 2018), in which I make a detailed assessment of the available options, including restructuring supply chains, shifting freight to lower carbon transport modes and transforming energy use in the logistics sector.

Supply chain resilience is another major research field of yours, leading us from mitigation to adaptation...

Adapting our supply chains to climate change is likely to prove to be as great a challenge as decarbonizing them. Great managerial and governmental efforts will be needed to climate-proof logistics systems and improve the resilience of supply chains to extreme weather events like hurricanes, droughts and flooding. Of course, extreme weather is only one of a range of risk factors increasing the probability of supply chain disruption and strengthening the case for new resilience strategies. 

In preparation of the International Transport Forum (ITF) in Leipzig, you were asked to moderate a roundtable on supply chain resilience in Paris. What were its key conclusions?

35 specialists from seventeen countries came together for this two-day brain-storming session. We discussed business trade-offs between efficiency, resilience and sustainability in the management of supply chains. There was general agreement that most companies still prioritize economic efficiency over minimizing risk of disruption. This is seen in the minimization of inventory levels, centralized warehousing, wide sourcing of supplies and the compression of order lead times. Adhering to these strategies can prove costly in the long run as they increase risk exposure and make it harder to recover when a supply chain failure occurs. But, advances in technology, particularly IT-related developments such as blockchain and the Internet of Things, and a greater organizational willingness to collaborate are helping companies reconcile efficiency and resilience goals.

As for the interplay between efficiency and sustainability, we definitely are in a “low-hanging fruit phase” as most of the things enterprises do to save money in their supply chains will also reduce energy consumption and greenhouse gas emissions.

There can also be synergies between supply chain resilience and environmental sustainability strategies, though these need to be more fully researched, particularly with respect to climate change.  A number of recommendations for companies and governments emerged from the Roundtable which I reported at the ITF 2018 Summit. In response to questions from the moderator and the audience at this event I also discussed the likely disruptive effects of Brexit on European supply chains – a subject rather close to my heart as a British citizen!

The topics raised in this interview were discussed by McKinnon as a speaker at the bi-annual European Transport Research Arena (TRA) conference, Vienna, and at the annual conference of the European Logistics Association (Eurolog 2018), Marrakesh. McKinnon also was a panelist at the 70th Anniversary Forum (IMO70) of the International Maritime Organization (IMO), London, attended by representatives of most of the IMO’s 174 member countries. Finally, McKinnon was invited to speak in three separate sessions at the International Transport Forum’s (ITF) 2018 Summit, Leipzig, bringing together over 50 transport ministers, CEOs of large transport businesses, academics and representatives of NGOs. The ITF  is a part of the Organisation for Economic Co-operation and Development (OECD) and has 59 member countries.

More information:

OECD/International Transport Forum Roundtable (Paris, April 12-13): Moderated by Alan McKinnon on “Supply Chain Resilience, Efficiency and Sustainability”
https://www.youtube.com/playlist?list=PLmidloSvnJgLXHGjm9j24ENXAt5sycS3I

EU Transport Research Arena conference (Vienna, April 16-19): Plenary discussion panel on “decarbonising transport”
https://www.traconference.eu/

European Logistics Association conference, EUROLOG 2018 (Marrakech, May 8-11)
http://www.amdl.gov.ma/amdl/agenda/eurolog-2018-2/

International Maritime Organization IMO70 Forum (London, May 15): World Maritime Day
http://www.imo.org/en/About/Events/WorldMaritimeDay/Pages/WMD-2018.aspx

International Transport Forum, ITF Summit 2018 (Leipzig, 23-25 May)
https://2018.itf-oecd.org/
https://2018.itf-oecd.org/supply-chains