CO2 EMISSIONS MITIGATION POTENTIAL OF BUYER CONSOLIDATION ACTIVITY AND RAIL-BASED INTERMODAL TRANSPORT IN THE CHINA-EUROPE CONTAINER SUPPLY CHAINS



CO2 EMISSIONS MITIGATION POTENTIAL OF BUYER CONSOLIDATION ACTIVITY AND RAIL-BASED INTERMODAL TRANSPORT IN THE CHINA-EUROPE CONTAINER SUPPLY CHAINS

Nominated for The Planning for Sustainable Land Use and Transport Award

Authors

Ning Lin, Molde University College, Harald M. Hjelle, Molde University College & Møreforsking Molde AS

Description

The findings are that a new logistics solution characterized by upstream buyer consolidation may reduce emissions due to the reduced warehouse/port/inland terminal activities, traffic volume and the possibility of using inter-modal solution.

Abstract

The Asia-Europe container trade is one of the most important trades in the world in terms of volumes transported. The typical structure of the supply chains associated with this trade is that containers are stuffed in China and the cargos are subsequently cross-docked at major European logistics hubs or DCs in the destination countries for further road transport to the final retailing points. However, this solution effectively contributes to higher air pollution. To pursue an increasingly improved supply chain solution, certain early movers in the market have adopted an alternative solution that is characterized by upstream buyer consolidation and downstream intermodal rail-based transport.

This paper develops a group of models for analysing the environmental saving potentials of such an alternative solution. In this paper, the models are applied to a case obtained from a Swedish retailer with a chain of retailing points in Scandinavia and Poland. Our findings are that the alternative solution may reduce total carbon emission due to the following two aspects. Firstly, in terms of the small-sized shipments, compared with the traditional commercial consolidation service (LCL/LCL service), the buyer consolidation service (LCL/FCL service) can convert LCL shipments to FCL shipments, thereby avoiding the deconsolidation and sorting activities in the destination country. These two activities must be conducted in the traditional solution because every container contains cargos of more than one consignees after commercial consolidation. In addition, the FCL shipments transported by intermodal containers could more easily be transported by an intermodal rail-based solution after arriving at the port of the destination country. Reduced warehouse activities and the possibility of using intermodal solutions at the end of the supply chain may lead to lower carbon emissions.

Secondly, shipments of lower volume than the capacity of container may often be transported as FCL shipments to avoid the extra deconsolidation and sorting at the destination. However, this traditional solution may lead to low container utilization and higher traffic. By contrast, without the need of deconsolidation and sorting at the destination, our study prove that upstream buyer consolidation may be effective if almost full 20-foot container shipments are converted into 40-foot container FCL shipments in China under certain assumptions. That is to say, buyer consolidation in China may facilitate harvesting economies of scale from most of the legs and nodes of this China-Europe supply chain from the point of buyer consolidation in China to the buyer’s DC in Europe. Reduced container volumes may in turn lead to reduced traffic on congested networks in China and Europe and better capacity utilization on the deep sea legs. This may mean decreased carbon emissions of these supply chains.

Publisher

Association for European Transport