How can LTL carriers and their customers put more E into ESG?
Most if not all LTL carriers today have an ESG program. Their customers, their stockholders, and their employees expect carriers to have plans for Environmental, Social, and Governance factors. Further, it just makes good business sense. Let’s take a look at the E of ESG.
E = Environmental. Carriers focus on reducing carbon emissions by increasing load factor, reducing empty miles, and reducing total miles driven. Reducing the miles it takes to move freight means reduced diesel, which means real dollar savings. The environment wins, the company wins.
Here is a real example. One large top 5 LTL carrier noted that they drove 773 million miles in the last 12 months. Reducing these miles by 1% equals 7.73 million miles. At 6 MPG, that reduces diesel usage by 1.29 million gallons. And that translates into 29 million pounds of reduced carbon emissions while saving around $3 to $4 million per year. Nice!
There are many ways to reduce emissions, reduce miles, and increase load factor. Some, such as electric vehicles, will take massive investment. Others, such as driver training to enhance MPG are training-related. These are initiatives taken by the carriers.
One simple initiative can come from the customers themselves: Provide an accurate weight and dimensions for each handling unit on the BOL. How does this help?
Carriers need to know the weight and dimensions of each handling unit so they can effectively load trailers. Having this information allows them to “tetris” the freight such that they can maximize how many shipments are loaded on a trailer. It allows them to run highly-accurate optimization models daily for their linehaul and delivery schedules, using actual dimensions and not just estimated pallet positions. This reduces trailers needed which reduces miles driven. And getting this data via an EBOL can also help carriers optimize their pickup routes as well.
Having this weight and dimensional information on the front end can help in other ways. Shippers can review their pallet weights and dims, and densities, to help determine if packaging changes are in order. Maybe their pallets can be built denser, or use of cones and oversized corner posts can be eliminated. This in turn reduces space requirements on trailers, which means carriers can load more shipments on their trailers and thus reduce miles. Shippers can play a role in ESG here also.
There are many other benefits that come from a Shipper of Choice who provides their LTL carrier partners with accurate BOL data on the front end. This level of visibility and transparency means reduced invoice discrepancies, better preparation for the evolving NMFC and LTL pricing, better preparation for sourcing events, cheaper carrier pricing, reduced service failures, reduced damage/shortage claims, and better partnerships. Reduced carbon emissions is just the cherry on top!