Why Your Supply Chain Sustainability Matters

As public and corporate awareness increases of the impact that international freight and trade has on global carbon emissions and climate change, sustainability has become a critical component of change management and operations for freight and logistics organizations.

Sustainability discussions revolve around environmental and social governance (ESG) practices, CO2 emission regulations, compliance policies, and the environmental impact global supply chains have. It's no longer a popular discussion up for debate within freight and supply chains - consumers and global government and corporate bodies are demanding more transparency from the freight world regarding their sustainability efforts.

Becoming more sustainable, whether you're a forwarder, carrier, NVOCC, customs broker, or even 3PL doesn't mean you have to sacrifice profitability for performance metrics. Adopting more sustainable practices and supply chains can help you claw back unnecessary costs, improve operational efficiency, and drive greater net revenue. The key thing to remember is that sustainability is not an overnight endeavor - it's a culmination of steady, consistent strategy adoptions over time.

Unpacking sustainability within freight and logistics: why it's so important

Sustainability within freight and supply chains consists of several subsets relating to different key areas, including environmental sustainability, economic sustainability, social sustainability, and human sustainability. Let's take a brief look at each of these in more detail.

Environmental sustainability consists of efforts and initiatives to reduce negative environmental and climate-related impacts of freight transportation and shipping across supply chains. Minimizing CO2 emissions, choosing alternative shipping and last-mile fulfillment routes, sourcing raw materials that are more environmentally friendly, and greener manufacturing and packaging practices all fall under environmental sustainability.

Economic sustainability focuses on supporting economic development and moving away from potentially harmful economic practices. It includes practices like ethical resource management, local job creation, fair and equitable labor policies, and supporting long-term economic growth without coming at the cost of environmental and social well-being.

Social sustainability revolves around improving the quality of life and creating opportunities for communities within regions that are part of existing supply chains. Social development and opportunities for growth and upskilling make up social sustainability efforts.

Lastly, human sustainability focuses on well-being development of individual workers and employees across supply chains. It promotes protecting employees from labor malpractices and also ensuring they're fairly compensated, are not at risk of exploitation, and have the resources and support necessary to thrive in their roles.

Collectively, all of these issues fall under the umbrella concept of ESG, relating to environmental and social governance. Freight and logistics organizations need to examine not only their internal operations but also their existing partnerships both up and down the supply chain when looking to become more sustainable.

What are the risks of failing to adapt and become more sustainable?

Aside from contributing to negative and potentially harmful environmental and social practices impacting the planet, failing to become more sustainable also holds very real financial and revenue implications for freight and supply chain organizations.

According to research, global supply chains contribute more than 50% of greenhouse gas emissions (GHG). Although forwarders and carriers only make a segment of these supply chains, they still form part of them and, by extension, still contribute to these emissions.

Globally, consumers as well as trade regions are putting greater pressure on businesses, particularly within shipping and trade, to become more transparent in their emissions levels and environmental and social practices.

Sustainability reporting is becoming obligatory for meeting regional trade compliance regulations. Organizations that cannot demonstrate transparency or any active effort to improve their sustainability are at risk of fines, penalties and even potentially being barred from trading within or shipping across certain regions.

It pays to incorporate sustainability initiatives. Ignoring or downplaying them is no longer an option for long-term business viability in freight and logistics.

Sustainability starts with data: how to become more sustainable

Data and digitalization are the building blocks necessary to deploy sustainability initiatives, both internally and externally across supply chains. More specifically, the digitalization of processes and data centralization and visibility are crucial to building transparent, sustainable supply chains and ESG-compliant operational procedures.

Digital technologies and fully digitalized processes allow freight forwarders, carriers, NVOCCs, customs brokers, and other supply chain players to streamline their operations and adjust swiftly. Digitalization enhances the visibility of operations, route tracking and management, monitoring of shipment movements, and better fleet management. This is all powered by the data generated by digitalization, aggregated and centralized so it can act as a guide for all strategies and decision-making.

Aside from giving freight and logistics organizations better visibility and control over their entire supply chains, data also provides key insights into granular operational areas, making it easier for businesses to identify where they can improve sustainability efforts and meet compliance regulations. Sustainability reporting becomes an easy task when the data you need is at your fingertips.

The question is - how do you achieve this when operating from multiple, disconnected systems bringing in disparate data from up and down the supply chain? The short answer is: you can't. Or rather, it's an expensive, time-consuming, and difficult process that leaves your teams exhausted and disengaged.

Instead of relying on outdated, siloed systems that house data at each operational touchpoint, freight and supply chain organizations need to look to the future, investing in a single digital solution that provides the efficiency, visibility, and agility they need.

Stargo is an all-in-one data management platform that aggregates, structures, and enriches incoming freight and supply chain data. Turning unstructured data into structured, usable data and offering full visibility, Stargo empowers freight and logistics organizations to do more with their data, from improving operational efficiency to achieving better ESG and sustainability scores.

Book a demo to see how Stargo can unlock hidden efficiencies within your operations and supply chain management.