Environmental, social and governance (ESG) standards are no longer an add-on to corporate operations, but have become a core element of global cargo transportation and play an important role in promoting sustainable development. The electronics industry faces many challenges in adapting to this transformation. In this article, Rick LaGore, co-founder and CEO of InTek, a third-party logistics service provider, deeply analyzes the challenges of ESG in the supply chain and proposes corresponding solutions. He also details the advantages of sustainable logistics practices and multimodal transport, providing valuable insights for the industry.

As the U.S. business environment transforms, the emphasis on environmental protection and transparency is increasing, which directly shapes consumer and investor expectations, thereby driving the widespread adoption of ESG norms. In addition, the EU's new ESG regulations have far-reaching and important impacts on global companies and companies engaged in cross-border cargo transportation.

Achieving sustainability in the supply chain is often limited by its inherent complexity. It is undoubtedly a challenge for companies to manage a complex network involving suppliers, manufacturers and distributors and achieve environmental goals in the process. In order to integrate environmental protection measures, companies may need to make significant investments in new technologies, employee training and product design innovations.

Although these measures may involve initial costs, they can ultimately bring long-term economic benefits to companies by improving operational efficiency and reducing resource waste.

01 How does consumer behavior influence ESG standards in the supply chain?

ESG is now a consumer and stakeholder expectation, not just an added benefit. Growing public demand for information on the ESG certification of a product or investment is placing significant pressure on supply chains and highlighting their critical role in shaping the environmental footprint of consumer goods companies. According to analysis by McKinsey & Company, approximately 80% of the greenhouse gas emissions of the world's largest companies and more than 90% of the impact on biodiversity actually originate from the supply chain rather than the company's direct operating activities.

It is crucial to transform sustainable development from ideas into practical actions, which requires companies to go beyond mere verbal commitments. Choosing freight and logistics partners who also value ESG values is critical to driving companies to achieve their sustainability goals. Therefore, when evaluating potential partners, identifying their specific actions and results on ESG commitments has become a crucial factor in determining partnerships.

02 How big is the impact of freight transportation on supply chain sustainability?

As supply chains become more globalized, the production of goods often involves transportation across longer distances, and accordingly, energy consumption and environmental impacts increase. Freight activities are a major source of greenhouse gas emissions, especially contributions to air pollution, and traffic congestion and empty driving further exacerbate the problem. Therefore, industry leaders need to take effective measures to reduce the environmental footprint of transportation.

In this context, heavy trucks, as the fastest growing part of emissions, optimize their transportation methods. Exploring and adopting alternative transportation modes, such as rail, sea or multimodal transport, to reduce reliance on road transportation is an important strategy for achieving supply chain sustainability.

03 The electronics industry faces unique challenges during transportation

How should shippers balance sustainable development goals with the specific requirements of the electronics supply chain?

There are many complex factors involved in transporting electronic products, especially the importance of temperature control. Electronic products (which we can get all kinds from Easelink Electronics) usually need to be maintained within a suitable temperature range to prevent damage or melting caused by overheating, and condensation caused by low temperatures, which may cause damage to the goods and pose safety hazards, especially for sensitive components such as batteries.

In the face of these challenges, pursuing sustainable development is not impossible. Adopting a temperature-controlled multimodal transport strategy, that is, a mode of transportation that combines two or more means of transportation, can not only ensure the temperature requirements of the product during transportation, safeguard its integrity and safety, but also provide environmental benefits and cost savings for enterprises. In addition, optimizing transportation routes to reduce extreme temperature exposure and implementing real-time temperature monitoring are essential to ensure the safe, efficient and damage-free delivery of goods.

Working with a professional third-party logistics provider can effectively deal with the complexity of supply chain management while ensuring regulatory compliance and sustainable development priorities. In the following content, LaGore will further explore how to implement sustainable practices in the supply chain and conduct an in-depth analysis of the advantages of multimodal transportation.

04 What specific strategies can we adopt to achieve sustainable development in the shipping industry?

Achieving carbon neutrality in the shipping industry is challenging, but through a series of practical measures, its sustainability can be significantly improved.

First of all, ensuring that containers and trailers are fully loaded and avoiding empty or partial loading can effectively reduce energy waste. In addition, by consolidating less-than-truckload shipments (LTL), cargo space can be fully utilized and unnecessary empty movements reduced.

Intermodal transport is a simple and cost-effective way to improve sustainability, helping to lower carbon emissions by reducing the number of trucks on the road and being more fuel efficient than trucks. In international transportation, giving priority to sea transportation instead of air transportation can significantly reduce greenhouse gas emissions. Additionally, transportation management system (TMS) software and its add-ons play an important role in optimizing routes and increasing fuel efficiency.

05 What factors make intermodal transport the most sustainable mode of freight transport?

Industry experts are discussing green alternatives, although these ideas are more conceptual than widely implemented. Electrified truck fleets are seen as a highly regarded environmental solution, but they cannot completely replace diesel-powered trucks on the road due to existing infrastructure and technology limitations.

Intermodal transportation has a direct positive impact on businesses as a viable solution. It benefits businesses by simplifying the supply chain, increasing shippers' freight capacity, and minimizing harmful emissions. An intermodal rail train can carry the equivalent of 280 trucks, effectively reducing the number of trucks on the road, reducing emissions, and easing traffic congestion. It is estimated that intermodal transportation can reduce carbon emissions by up to 60% compared to truck transportation. A report by Cleveland Research Corporation pointed out that as many as 45 million truck trips have the potential to be converted to intermodal services, showing a huge market opportunity.

Looking ahead, the rail industry is actively exploring electric and hydrogen power technologies to replace traditional diesel power for long-distance trains and intermodal terminals. In a May 2023 report, Forbes magazine ranked several Class I railroads as the companies most likely to achieve net zero emissions by 2050, indicating a positive outlook for the rail industry in its environmental transformation.

06 In the current economic environment, how can organizations effectively balance the challenges of cost control and maximizing efficiency while prioritizing ESG?

ESG strategies are often associated with higher costs, but intermodal transport is an environmentally friendly and economical solution. Incorporating intermodal transport as part of a company's supply chain can bring dual advantages in terms of economic and environmental benefits.

According to the Business Daily's quarterly intermodal savings index, intermodal transport can reduce freight costs by 15% to 18% compared to truck transportation on the same route. This strategy not only optimizes logistics costs, but also demonstrates a company's commitment to environmental protection.

In the long run, adopting green transportation solutions can help reduce the risk of fines and penalties for violating environmental regulations. As environmental regulations become increasingly stringent, companies that integrate intermodal transport and other sustainable supply chain practices will find it easier to meet emission standards and other environmental regulations and avoid possible financial penalties.

07 For organizations that want to start an ESG program to reduce their carbon footprint

Through sustainable transportation, but are unsure how to get started, what key steps do you recommend they take to get started?

Managing a complex supply chain is undoubtedly a challenge. Outsourcing logistics to a professional third-party service provider can make it easier for companies to plan long-distance transportation tasks involving multiple modes of transportation.

It is important to choose partners with a track record of sustainable practices, especially those that have obtained EPA SmartWay certification in the United States. Such certification not only proves the partner's commitment to environmentally friendly transportation practices, but also brings a positive impact on the sustainability of your supply chain.

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