05 February 2007 00:00 [Source: ICB]
Many obstacles must be overcome if the chemical industry is to go off road to environment friendly freight movement
THE ENVIRONMENTAL footprint cast by the logistics industry has never been under greater scrutiny. Nor has the sector been under greater pressure to reduce its impact on the environment - both by the need to increase its energy efficiency to cut costs and by the need to meet tougher rules.
Much of the current focus has been on the diversion of chemical freight from overcrowded roads. The EU has for some time encouraged alternatives to the road transport of chemicals. There are, for example, subsidies available for pipeline and barge transport of chemicals where it can be demonstrated that they reduce road haulage, with its greater risk of accident, as well as its much bigger contribution to pollution and global warming.
However, progress towards the diversion of chemicals distribution from road to rail and barge or short-sea shipping has been limited so far.
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There are several reasons for this. While subsidies for the construction of new pipelines, rail lines and other infrastructure can be significant, the incentives needed to promote a substantial switch from road to more environmentally friendly existing transport alternatives are limited at best.
Other barriers include the location of suitable loading and discharge ports, the lack of an extensive and modern, integrated rail freight network and the time and cost disadvantages often faced in making the move away from road transport.
There are signs, however, that substantial change is on the way. A combination of carrot and stick is being employed by governments and other regulatory bodies to encourage the more energy efficient use of transport and to discourage or prohibit chemical transport methods and modes considered to be inefficient or damaging to the environment.
Among those pushing hard for a radical reappraisal of port policy are environmental groups such as Friends of the Earth (FoE). It wants to see the location of new ports and the development of existing facilities determined with the wider environmental impact taken into account.
"You should be look ing at the impact of goods in and out and landing them as close as possible to their end use," says Mary Edwards, FoE ports campaigner in the UK.
Tony Bosworth, who represents FoE on shipping and marine issues, reflects the views of the wider environmental movement when he says: "We want to see the freight industry make a full contribution to reducing climate change emissions."
The view that shipping and other alternative forms of freight transport are failing to pay their environmental bills in full is, not surprisingly, challenged by the logistics industry, which points to the high levels of taxes paid, in particular by road users. But there have been increasing signals recently from the European Commission that shipping and rail freight will not be overlooked entirely, despite the acknowledgement that in many respects they present a greener alternative to road transport.
Cefic, the European chemical industry council, has long argued for competitive and sustainable logistics and has broadly supported the EU's white paper proposals for a European transport policy for 2010. It is wary, however, of initiatives that might distort the normal process of freight selection based on sound business economics. "There should be no interference with the normal process of freight selection based on supply chains, logistics optimisation, source quality and reliability," it says.
This view puts it at odds with some green campaigners, who argue that the importance of reducing global warming demands a radical change in the usual process of freight selection.
But Cefic, which represents most of the major chemical producers in Europe, insists: "The European transport infrastructure requires urgent investment to support total intermodal solutions funded through existing taxes.
"Transfer of freight from road to rail, inland waterways and short-sea shipping is a good objective, provided it is attained through viable economic alternatives with financial and service improvements, not through increased road taxation," Cefic adds. It strongly supports the liberalisation of Europe's railways and their long overdue modernisation and improvement.
Another key initiative, and one in which the stick is almost certainly having more influence than the carrot, is the improvement in energy efficiency of road transport. The substantial rise in crude oil prices over the past two years and its impact on transport fuel costs has accelerated the quest for greater economy in diesel consumption. Almost everyone involved, from fuel suppliers to aerodynamic bodywork producers, is striving to develop products that can eke out more miles or kilometres per gallon.
Encouraged by legislation mandating the greater use of biofuels in transport and by subsidies for the construction of biofuel production facilities, the freight transport industry is preparing for the widespread availability of greener diesel.
But even greater potential may lie in the reduction of the movement of one commodity moved in huge quantities by every chemical freight forwarder - empty space. Environmental groups such as the WWF, Greenpeace and FoE are united with the chemicals industry in seeking ways to make road and other forms of transport more effective by reducing the number of empty or partially empty backhauls.
Although much progress has been made, aided by cargo consolidation companies and the use of the internet to unite hauliers with return freight, the "just-in-time" philosophy of manufacturing industries has tended to put a brake on this desirable trend.
A more imaginative and far-reaching solution could be the greater use of swap arrangements among chemical producers and distributors. They have been widely adopted by oil companies and chemical manufacturers to balance supply and demand for commodity chemicals during lengthy plant maintenance turnarounds and to mitigate the impact of shortages through shutdowns caused by equipment breakdowns, accidents and emergencies.
This trend has been accelerated by the increased commoditisation of chemicals and the agreement on common grades fostered, among other things, by the growth of futures markets in widely traded products such as polyethylene (PE) and polypropylene (PP).
Spurred, it has to be admitted, more by cost-saving than environmental considerations, many major chemical producers in Europe already practise regular material swaps beyond those required on a one-off basis to cover plant outages. Competition from low-cost chemical producers in the Middle East and Asia, plus global shipping freight rate trends, have also had an impact on European manufacturers and their involvement in swap arrangements - both intra-regional and inter-regional.
Among other EU initiatives is the harmonisation of rules for transporting dangerous goods. Under proposals outlined this month, the EC wants to embody in one set of unified rules the laws governing road, rail and inland waterway transport.
"Today's multi-modal transport needs harmonised rules that render transport operations safer, faster and cheaper and reduce administrative work by all participants," says EC transport commissioner Jacques Barrot.
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