What is circular logistics? Rethinking supply chains for a sustainable future

In this interview, Justin Frank delves into the problems of the current logistics model and the concept of circular logistics. He also shares his passion for regenerative supply chains, emerging trends and his vision for the future of logistics. 

What are the problems caused by the current logistic model?

There are quite a few problems. From an environmental perspective, the most obvious one is scope 3 carbon emissions, a significant contributor to greenhouse gases. Adding to the challenge are congestion and pollution, which also pose health risks.

From another social perspective, land use for all the nodes in the supply chain, like warehouses and depots, drives up land value, which can impact house prices in the areas.

The logistics industry has an ageing workforce with an average heavy goods vehicle driver age of around 45. It's an increasing trend as it's difficult to attract younger workers. There are also chain of responsibility risks such as driver fatigue, as well as road traffic accidents associated with it.

It's really difficult to fix these problems and switch to a more sustainable way of doing things. The current system has been heavily invested, making it hard to change, but there are modular, more sustainable and innovative solutions out there.

How can we address the logistics challenges in Australia?

The logistics sector in Australia faces unique challenges due to its geography and demography. Manufacturing industries distribution networks span various states to cater to nationwide demands. Trucks and trains carry goods from these hubs, but often make return trips with empty or minimal loads. These resources are underutilised, but still contribute to carbon emissions.

A collaborative and customer-centric approach could solve some of these problems. By fostering open and transparent discussions, we could find solutions together.

For example, how do we solve the empty vehicles problem? Can we collaborate with companies who travel in opposite directions? We've done that in my work before. It reduces carbon emissions and costs, but also makes use of underused resources.

The sharing economy is also a great example. Services like Uber and Car Next Door match underused cars with people who need them. In the example of ReCo, it collaborates with consumers to reuse empty jars. It's a two-way street.

However, to fully address these challenges, we need a more efficient and sustainable network, and sustainable sources of fuel for heavy-goods vehicles. We're still a long way behind in terms of infrastructure development compared to some of our international peers.

‍Can you explain what circular logistics is?

Essentially, circular logistics aims to build closed-loop logistics networks, to reduce new use of materials, energy and other resources used in the supply chain. It adopts practices such as avoiding inefficient transport legs, reusing and recycling. It's also about improving efficiency and using renewable energy. 

One of the best examples of circular logistics at scale is CHEP, a pallet and container pooling service. It allows manufacturers to lease pallets and containers, and use them to ship their products to distributors or retailers. Once the products are unloaded, the pallets return to CHEP's local distribution centres. The pallets go through inspection, maintenance, and then are reused again.

Without this reuse system, it'd be incredibly wasteful given millions of pallets are going around globally. CHEP's model makes perfect sense.

We must look beyond logistics with a more holistic approach. Regenerative supply chains will not only focus on minimising impact, but also promote regeneration of natural capital and social environments.

Can you share an example of a regenerative supply chain?

The Nature Conservancy's shell recycling project is a great example of a regenerative supply chain.

Young oysters need surfaces like shells to attach to and hatch. The project collects used shells from restaurants in Geelong and builds new shellfish reefs. At CHEP, we repurposed obsolete automotive shipping containers, due to the automobile industry moving overseas, giving them to TNC and in turn a second life transporting the shells.

Working with Geelong disadvantaged community groups, TNC prepared the shells and introduced them as part of a semi-artificial reef into the bay. It helped oyster population growth, but also came with many benefits:

• Water filtration, as each oyster filters 120 to 150 litres of water daily.
• Reduce land erosion, as the reef disperse wave energy.
• Restore biodiversity, as fish return to inhabit the reef.
• Better fishing, which benefits local restaurants.
• Reduce waste and emissions from restaurants’ food waste going to landfill.

A project like this was only possible through collaborations at all levels, from sponsorship, to knowledge sharing and physical work. All of which contributes to several of the United Nations Sustainable Development Goals.

How do we know which product is better in terms of environmental impact?  

It depends on many factors. How is it designed and produced? How is it being transported? The weight, size and recyclability of a product also play a role in its environmental impact.

A life cycle assessment assesses the whole end-to-end process to help us make better decisions. Something might seem eco-friendly, but could still use a lot of water or cause pollution during production.

It’s an intensive process. However, there's hope that in the future, as technology advances, they might become easier and more affordable. There are companies, like Edge Environment, who specialise in doing these assessments and can provide valuable insights.

We heavily rely on imports in Australia because many industries have moved overseas. Where you can, try to buy local. When you're considering different sustainable options, a good practice is to compare similar items. Think about why they might be different and what those differences mean for the environment. It's all about making choices that have a positive impact on the planet.

What sustainability trends are emerging in the logistics industry?

Emerging trends are moving towards low-carbon logistics. There's a growing focus on renewable energy sources, including exploration of hydrogen-based solutions. We're seeing a significant move towards electric vehicles for personal use. Commercially, we're still catching up, but when I was at SUEZ, we already trialled electric waste trucks.

Digitisation is on the rise, from customer apps, to AI-powered systems and automation. Will we get to driverless trucks? Probably. Manufacturers like Volvo are already working on them.

Sustainable packaging is another key trend. Major retailers have already shifted away from plastic bags on a national scale, and are moving to paper bags and cardboard boxes instead. But in terms of a circular approach, we still have a long way to go to understand which products are designed to be more environmentally-friendly, and how we can reuse them for as long as we can.

What's your vision for the future?

The world's population is projected to increase by nearly 2 billion people by 2050. We need to think ahead. How can we do things smarter?

While we need to build new infrastructure, can we also use our current infrastructure better? We should invest in a more sustainable transport system, move to clean energy, and use technology to utilise existing resources better and smarter.

Collaboration is key. We won't be able to do this by focusing on our singular view. It needs a collaborative approach amongst customers and supply chain partners.

And we need to take action really quickly. The natural ecosystems are facing multiple tipping points, so the urgency is clear. If we can't meet the 1.5°C target, there's a domino effect. If we're not able to give the next generation a planet that is liveable in the way we've been fortunate enough to enjoy, then I feel we've failed them really badly.

We may feel, what can we do when 25 fossil fuel companies continue business as usual? But we're all contributors to the problem. We can all make an impact by choosing where we shop, what we do, and who we support. If we all do nothing, change will never happen.

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