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Freight Logistics: Strategic Focus for Sustainable Development
Pablo GuerreroTransforming TransportationWashington DC, January 2011
TT IDB Freight Logistics 2Washington DC 2011 | Transforming Transportation
http://www.iadb.org
The Inter-American Development Bank Discussion Papers and Presentations are documents prepared by both Bank and non-Bank personnel as supporting materials for events and are often produced on an expedited publication schedule without formal editing or review. The information and opinions presented in these publications are entirely those of the author(s), and no endorsement by the Inter-American Development Bank, its Board of Executive Directors, or the countries they represent is expressed or implied.
This presentation may be freely reproduced.
TT IDB Freight Logistics 3Washington DC 2011 | Transforming Transportation
GHG emissions, motorization and freight distribution
– What are the implications for policy makers?
Logistics Decisions and Sustainable Freight Transportation
IDB Freight Logistics and Trade Facilitation Strategy
Conclusions
How bad is the situation in LAC on GHG emissions from the transport sector
2000 GHG Emissions by Sector as Percentage of Total Emissions—LAC vs World.
Source. Taking Action on Climate Change in LAC. IDB 2009Climate Analysis Indicators Tool (CAIT) Version 6.0. (Washington, DC: World Resources Institute, 2009)
Looking at relatively low LAC GHG emissions levels, the region may not play a major role in reducing GHG emissions worldwide
However, CO2 emissions from transport have increased more rapidly than from any other energy consuming sector: – as a consequence of rapid urbanization– increased vehicle ownership– aging vehicle fleet– fuel combustion patterns
TT IDB Freight Logistics 5Washington DC 2011 | Transforming Transportation
Albeit a small share of total GHG emissions in LAC, the transport sector should play an important role in the region’s climate change agenda
12%-20% annual increase in private vehicle ownership (cars and motorcycles)… before 2008
1995 2005
LAC (6) 91 128
U.S.A. 756 837
OECD (14) 455 563
High income (4) 303 423
Motorization rates
LAC: Chile, Colombia, Ecuador, Mexico, Dominican Republic and UruguayOECD: Germany, Austria, Denmark, Finland, France, Greece, Island, Italy, Korea, New Zeeland, Norway, Sweden, Switzerland and UK
LAC motorization rate: two decades and counting of continue vehicle growth
Source: Objetivos de Desarrollo del Milenio. 2010 CEPALBase de estadísticas de indicadores sociales, económicos y medioambientales de América Latina y el Caribe (CEPALSTAT) http://websie.eclac.cl/sisgen/ConsultaIntegrada.asp. Argentina, Belice, Brasil, Chile, Colombia, Costa Rica, El Salvador, Estado Plurinacional de Bolivia, Guatemala, Honduras, México, Panamá, Paraguay, Perú, República Bolivariana de Venezuela y República Dominicana.
Number of vehicles per person
TT IDB Freight Logistics 7Washington DC 2011 | Transforming Transportation
- 25,000,000 50,000,000 75,000,000 100,000,000 125,000,000 150,000,000 175,000,000 200,000,000 -
5,000,000
10,000,000
15,000,000
20,000,000
25,000,000
30,000,000
35,000,000
40,000,000
45,000,000
50,000,000
Population
Flee
t
BR
MX
AR
CO
PECL
Source: 2007 Population WB. Fleet and motorization rates ECLAC
LAC motorization rateStrong correlation between population and vehicle ownership
TT IDB Freight Logistics 8Washington DC 2011 | Transforming Transportation
As motorization grows, the region fails to achieve national and international air quality standards
Source: Comisión Económica para América Latina y el Caribe (CEPAL), sobre la base de Organización Panamericana de la Salud (OPS) Evaluación de los efectos de la contaminación del aire en la salud de América Latina y el Caribe,Washington, D.C., 2005.
Average annual concentration of MP10 in micrograms per cubic meter (μg/m³)
TT IDB Freight Logistics 9Washington DC 2011 | Transforming Transportation
Motorization rate does not only affect the environment, it also poses a huge constraint to the countries logistics system
Logistics costs in LAC = double those of OECD countries Modal split critical for efficiency= LAC intra-country freight transport total
80%-90% on trucks Freight and private vehicles share scarce infrastructure in last mile
operations Increase logistics cost affect city competitiveness
Source: Kogan & Guasch, 2006
Logistics costs (% of GDP)
TT IDB Freight Logistics 10Washington DC 2011 | Transforming Transportation
Last decade of strong economic output and international supply chains operation in LAC generated a strong pressure on national logistics systems
0.0
1.0
2.0
3.0
4.0
5.0
6.0
7.0
8.0
2000 2001 2002 2003 2004 2005 2006 2007 2008
Mill
ion
TEU
Tráfico marítimo de contenedores*en algunos países de América Latina y el Caribe (miembros del BID)
entre 2000-2008(TEU: unidades equivalentes a 20 pies)
Elaborado: BID (INE/TSP) Fuente: Banco Mundial
BR 15%
PN 14%
GU 13%
MX 12%
Source: WDI, selected countries
Port container traffic: flow of containers from land to sea transport modes and vice versa, show consistent average growth for all countries
Which in turns increased demand for both last-mile and long haul freight operations affecting countries’ mobility
1995 2000 2005 20070
100,000
200,000
300,000
400,000
500,000
600,000
700,000
83,103
141,172
228,778
273,697
83,642
141,334
190,234
213,236
13,310
23,152
39,377
45,014
Car (private) Motorcycle Minibus Taxis LDV Freight <2 Ton Heavy Truck > 2 Ton
< Freight
< Public transport
< Private
<< Urban distribution
Growth 2000-2007: 93,9% 50,9% 94,9%
<< Intra-country and medium distance
Source. El Salvador. Energy Efficiency Program. Study and Categorization of Energy Consumption in the Transport Sector. IDB 2010
TT IDB Freight Logistics 12Washington DC 2011 | Transforming Transportation
Current projections on emissions and energy consumption have important implications but we might have a different reality…
Source. Road transport emissions in Latin America by vehicle type. Source: (Schipper et al., 2009) Original source: 2004 WBCSD Sustainable Mobility Project and IEA.
Note: 1 EJ (exajoule=10^18 joules) = 24 MTOE (million tonnes of oil). Data adjusted to include Mexico. Emissions for rail were included in the original Sustainable Mobility Project spreadsheets but are omitted here.
Vehicle type
Vehicles (100,000)
Km / year
Energy, EJ
Emissions Mtonnes
CO2
Share of total CO2
emissions
LDV Pass. 40,127 13,000 2.11 155.4 41.7% Motorcycles 6,948 7,500 0.05 3.0 0.8% Minibuses 930 40,000 0.21 14.1 3.8% Busses 511 40,000 0.20 14.5 3.9% LDV freight 4,459 13,000 0.23 16.2 4.4%
Med Truck 5,385 22,000 1.15 77.6 20.8% Heavy Truck 2,314 50,000 1.38 92.2 24.7% Total 5.33 372.9
49.9%51.7%
Road Transport Emissions in LAC 2000 by Vehicle Type
TT IDB Freight Logistics 13Washington DC 2011 | Transforming Transportation
Type of transport
Average daily travel
Daily occupancy
Average yearly travel
(1)km/day
(2) year
(3)km/year
(4) = (2)*(3)
Car (private) 25 208 5,200
Taxi 100 312 31,200
LCV freight 50 260 13,000
Minibus 50 312 15,600
Heavy truck 100 260 26,000
Busses 100 312 31,200
Motorcycle 40 260 10,400
When relevant data and consistent report mechanisms are implemented, findings will increase the pressure for better more efficient logistics and freight transport systems
Source: El Salvador. Energy Efficiency Program. Study and Categorization of Energy Consumption in the Transport Sector. IDB 2010
TT IDB Freight Logistics 14Washington DC 2011 | Transforming Transportation
Energy consumption in road transportation: the case of El Salvador
Type Area Modality MeansEnergy (Tcal)
Gasoline Diesel GLP Total
Passenger
Urban Road
Private 1,330 59 0 1,389
Taxi 175 2 0 177
Minibus 180 274 0 454
Motorcycle 296 0 0 296
Inter-urbanUrban Subtotal 1,981 334 0 2,316Road Busses 2 644 0 646Rail Rail 0 6 0 6
Inter-urban Subtotal 2 650 0 653Total Passanger 1,984 985 0 2,968
Freight
UrbanRoad
LDV freight< 2 Ton 2,609 1,107 0 3,716
Inter-urban Heavy truck> 2 Ton 33 2,812 0 2,845
Total Freight 2,641 3,919 0 6,560Total Transport 4,625 4,903 0 9,529
68.9%
Source: El Salvador. Energy Efficiency Program. Study and Categorization of Energy Consumption in the Transport Sector. IDB 2010
TT IDB Freight Logistics 15Washington DC 2011 | Transforming Transportation
Evidence of freight participation by type of service (in Tcal) could imply more emissions than previously estimated from the freight sector and urban distribution
Gasoline
Diesel
0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%
1,981
334
2
650
2,609
1,107
33
2,812
Urban pax. Inter-city pax. Urban freight Intra-country freight
Energy consumption in road transportation: the case of El Salvador
Source: El Salvador. Energy Efficiency Program. Study and Categorization of Energy Consumption in the Transport Sector. IDB 2010
TT IDB Freight Logistics 16Washington DC 2011 | Transforming Transportation
GHG emissions and motorization
Logistics Decisions and Sustainable Freight Transportation
IDB Freight Logistics and Trade Facilitation Strategy
Conclusions
TT IDB Freight Logistics 17Washington DC 2011 | Transforming Transportation
Logistics Decisions and Sustainable Freight Transportation: why emissions and motorization matter for freight logistics
Global, regional and local patterns of movement of goods are a consequence of the interaction of three key stakeholders: Customers: are the driving force behind freight transportation movements.
– demand for product and services – generates good movement in the freight transportation system
Supply Chain: corporations of different sizes and geographies exchange goods, information and money to maximize the value between the willingness to pay and the total cost of providing the good or service to the customers.
Government. Setups the “playing field” for the supply chain to operate – This playing field is a combination of regulations, infrastructure and economic
incentives.
Empty-load trucks entering Belo Horizonte’s metropolitan region on a daily basis, MG Brazil
TT IDB Freight Logistics 19Washington DC 2011 | Transforming Transportation
Customers demands for products and services affect the supply processes (and collections to a lesser extent) in cities:
Zero inventory– Fresh products and ready available 24-7– Collection points (retailers, restaurants) avoid having inventory and
request only goods to sell or consume in short periods of time Numerous small orders
– Strong competition demands large UPC in stores ready accessible– Consumption in short periods of time– Require systematic and more frequent deliveries
Lack the proper equipments for reception– Storage, handling and delivery to their points of sale
Complex and conflicting supply logistics– Pharmaceutical industry, hospitality industry (inverse logistics), high
value density industry products
TT IDB Freight Logistics 20Washington DC 2011 | Transforming Transportation
Key logistical variables and their impact on freight transportation drivers
Developing Sustainable Freight Transportation in Latin America: Best Practices and Policy Alternatives. Adapted by Edgar Blanco for IDB from Mckinnon and Woodburn (1996) and Piecyk and McKinnon (2009)
Companies implement environmental parameters (e.g. GHG) to evaluate alternative network designs
CENTRO DE FORMACIÓN DE LA COOPERACIÓN ESPAÑOLA. Seminario Internacional sobre Soluciones de Transporte en Ciudades Emergentes. Cartagena, Colombia mayo 2010
What is the knowledge of LAC public agencies and expectations regarding Urban Freight Distribution and freight transport?
<< Do you have knowledge of any current diagnosis regarding Urban Freight Transportation Systems in emerging cities of your country or any other city? >>
What are the expe-riences undertaken by your institution
0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%
72 14 11 3
None Access improvements Local regulations Unloading at night
Do you have knowledge of a diagnosis on freight
transportation
0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%
76 24
Does not exist/not aware Yes
<<What are the experiences undertaken by your institution regarding Systems that improve urban freight transportation capacity?>>
What improvement models will be imple-
mented in your country
0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%
78 12
Not aware Assumptions
<<What models for Systems that improve urban freight transportation capacity will be implemented in your country in the future?>>
TT IDB Freight Logistics 22Washington DC 2011 | Transforming Transportation
Stakeholder Analysis is a cornerstone for developing an Agenda that is in line with the needs of the countries: more efficient and sustainable logistics systems
Type of Stakeholders analyzed
0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%
Public Public & Private Private International NGO
IDB’s stakeholders database includes 437 entries currently covering nine countries
Logistics dimension
0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%
TT IDB Freight Logistics 23Washington DC 2011 | Transforming Transportation
However, there is still a long way until common agreements and perception regarding the importance of a National Logistics Agenda is achieved
Public
Public & Private
Private
International
NGO
0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%
Opponent Moderate opponent Neutral Moderate supporter Supporter
Stakeholders position with regards to advancing a logistics agenda
TT IDB Freight Logistics 24Washington DC 2011 | Transforming Transportation
Advancing the agenda implies a long effort on strengthening institutional capacity for critical policy making
Stakeholders position and capacity assessment
High
Low
Supporter Moderate Supporter
Moderate opponent
Neutral Opponent0
20
40
60
80
100
120
-
0.5
1.0
1.5
2.0
2.5
3.0
3.5
4.0
4.5
5.0
Number of actors Average Capacity
TT IDB Freight Logistics 25Washington DC 2011 | Transforming Transportation
GHG emissions and motorization
Logistics Decisions and Sustainable Freight Transportation
IDB Freight Logistics and Trade Facilitation Strategy
Conclusions and next steps
BelizeTrade and Transport Facilitation Assessment
BahamasCustoms Modernization project, including ESW
HondurasModernization of Puerto Cortes
Modernization of Customs in Puerto Cortes
T&T
Preparation of an Action Plan for implementing the SAFE Framework
Implementing the Regional Single Administrative Document for CustomsCaribbean Maritime Freight Performance Analysis
Caribbean
Customs Performance Indicators
LAC Regional
Support to city logistics and urban freight distribution in Curitiba
Brazil
Support the application of ICTs to improve the Freight Logistics
Uruguay
Support to implement the National Logistics Plan
Paraguay
Support Logistics and Port Expansion
Colombia
Support for the implementation of the National Logistics Plan
Support the application of ICTs to improve the Freight Logistics
Support to design Specialized Logistics Infrastructure
PBL Policy Based Loan for Logistics Improvement
Regional Freight Logistics Observatory
C. America
Analysis of Freight Logistics and Trade Facilitation in MesoamericaImplementation of a system to facilitate the movement of goods in international transit
IDB Freight Logistics and Trade Facilitation Operational Activities
MexicoSupport for the Development of a National Logistics Park System
IIRSA Regional Initiative for Infrastructure Integration in South America- Border crossing – Productive integration methodologies
Mesoamerica Plan- Road corridors – Border crossings – Customs modernization
Regional Targets
PrimaryStake-holders Short term Long term
HighConsistently measure GHG transportation emissions
Public sector, NGO, Academia
Develop country specific emission factors
Establish measurement standards (e.g. GHG protocol)
Refine current GHG transportation measurements
Freight and logistics observatory: GHG
HighActively engage logistics partners in GHG reduction
Public and private sector
Establish local private-public GHG partnerships (e.g. SmartWay)
Education on GHG reporting Multimodal feasibility studies
GHG Certification programs
Consumer labeling GHG reduction targets Multimodal
infrastructure expansion
High
Reduce freight related emissions in urban environments
Public and private sector
R&D urban logistics programs Evaluate economic impact of urban
distribution platforms Set urban reduction targets
Invest in urban distribution platforms
Urban freight regulations
Monitor urban reduction targets
An Agenda for Achieving Sustainable Freight Transportation in LAC
Regional Targets PrimaryStake-holders Short term Long term
High
Consistently measure and monitor transport pollution in major urban areas
Public sector, Academia
Pollution studies across LAC cities
Set pollution reduction targets and incentives for urban areas
High Phase out high emitting vehicles Public sector
Inventory of freight fleet age Measure environmental benefits
vs. economic replacement strategies
Establish taxes and incentives for vehicle replacement programs
Med.
Evaluate distribution of biofuels and natural gas alternatives
Public sector
Document and disseminate existing success stories on biofuels/CNV
Evaluate economic feasibility of biofuel strategies in LAC
Evaluate economic feasibility CNV strategies in LAC
Track progress of biofuel and CNV
Med.Invest in alternative fuel sources infrastructures
Public and private sector
Determine economic feasibility
of electric infrastructure Invest in regional
alternative fuel distribution networks
An Agenda for Achieving Sustainable Freight Transportation in LAC
Regional Targets PrimaryStake-holders Short term Long term
Med.Educate private sector in urban driving environments
Public and private sector
Develop safety educational programs by country
Establish professional safety accreditations
Establish safety standards for private and public operators
Med.- Low
Monitor urban noise trends Public sector Document urban noise in major
cities Empower urban
citizen enforcement
Low Develop tire recycle markets
Public and private sector
Country studies on tire life cycle analysis
Invest in tire recycling supply chains
LowEncourage enforcement of pollution guidelines
None Empower urban citizen enforcement
An Agenda for Achieving Sustainable Freight Transportation in LAC
TT IDB Freight Logistics 30Washington DC 2011 | Transforming Transportation
GHG emissions and motorization
Logistics Decisions and Sustainable Freight Transportation
IDB Freight Logistics and Trade Facilitation Strategy
Conclusions and next steps
TT IDB Freight Logistics 31Washington DC 2011 | Transforming Transportation
Why is it important to manage logistics and freight distribution in LAC?
Cities are key to country's logistics performance Long Distance Traffic
– Cities are O/D of the main freight transportation flows High Demand for Mobility
– Increased population to be served– Excessive motorization
Sprawl– Comprehensive land planning shortcomings have resulted in
cities with low density– Greater, longer and crowded routes for delivery
More expensive and inefficient distribution networks
Urban patterns contribute to supply chain inefficiencies
TT IDB Freight Logistics 32Washington DC 2011 | Transforming Transportation
Typical work flow for a city logistics study
Data intensive exercise Fleet information Flows + O/D Infra diagnosis GHG diagnosis and inventory Identify business logistics and logistics nodes Market analysis Logistics platforms traffic simulations GHG simulations Define business model for logistics nodes identified KPI and institutional setting for logistics-driven city planning
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