CO₂ Emissions from Freight Transport and the Impact of Supply Chain Management : A case study at Atlas Copco Industrial Technique

Abstract:

Freight transport is a large contributor to emissions of CO₂ and to mitigate its environmental impact is essential in strive for a sustainable future. Existing reports usually discuss the issues from a national or global perspective, but rarely provide any concrete or practical information on an organizational level. This report aims to describe the key driving factors of CO₂ emissions caused by freight transport and recommend suitable measures for organizations to mitigate their environmental impact. To do this, a case study at Atlas Copco’s business area Industrial Technique (ITBA) is performed, four different business scenarios are created and the emissions from the scenarios are simulated. ITBA is a decentralized organization with most of the production sites and sub suppliers in Europe. Over 90% of the finished goods are sent to a distribution center in Belgium and then delivered to the customers.

Today, most customers are located in Europe and this market accounts for nearly 80% of the distributed weight. However, ITBA believe in a strong growth in the North American and Asian markets and that the customer base will look much different in 2020. More customers at longer distances from the distribution center will lead to a heavily increased use of air freight, resulting in higher emission levels. This study shows a clear correlation between the total CO₂ emissions and the share of air freight. In order for ITBA to expand their business and at the same time lower their emissions, actions are required. This report shows that a lower share of air freight and the use of several decentralized distribution centers can reduce the emissions significantly. Other means to lower the emissions include relocation of production sites, education to increase the awareness within the organization and including environmental performance when evaluating third party logistics.