Why Sustainability in Logistics Matters to Marketing

Research shows that up to 40% of goods bought online are returned by consumers. To reduce the rate of returns—estimated to reach over a trillion dollars a year within the next several years – marketers must ensure that shoppers are happy with what they buy. To do this, savvy marketing executives have been adopting technologies shown to reduce returns, like 3D body scanning and other fit innovations for apparel purchases. However, there are other factors that are often not evident in sales and marketing reports.

As CNBC recently reported, “With costs mounting…dealing with the logistics is a key issue that retailers are only beginning to tackle.” Marketers need to have an understanding of logistics and supply chain costs of returns that impact the bottom line. Simply put, while marketers continue to ramp up their customer-pleasing quick and easy delivery and returns, there is a tandem impact of fuel costs on their bottom line.

In their drive to please consumers and deter returns, it is imperative for marketers to understand logistics costs and the role of sustainability.

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Political Matters

On June 24^th, 2021 President Biden and a bipartisan group of senators announced a deal on infrastructure spending. The plan “makes transformational and historic investments in clean transportation infrastructure, clean water infrastructure, universal broadband infrastructure, clean power infrastructure, remediation of legacy pollution, and resilience to the changing climate,” according to a White House fact sheet on the plan released Thursday.

The future of reducing costs and carbon footprints will be through adoption of liquid hydrogen technology.  On June 7^th, the Secretary of Energy, Jennifer M. Granholm, launched the U.S. Department of Energy’s (DOE) Energy Earthshots Initiative to accelerate breakthroughs of more abundant, affordable, and reliable clean energy solutions within the decade.

The first Energy Earthshot—Hydrogen Shot—seeks to reduce the cost of clean hydrogen by 80% to $1 per kilogram in one decade. Achieving these targets will help America tackle the climate crisis, and more quickly reach the Biden-Harris Administration’s goal of net-zero carbon emissions by 2050. Clean energy will also create good-paying jobs and help grow the economy. The key principle here is that there is no such thing as “small” when it comes to hydrogen infrastructure. It will need to be big, and given the global government, private investment, and public investment support, it will be.

The Technology Challenge

The hydrogen economy is upon us, and the growing demand for hydrogen has already far surpassed supply.  While this initially has the appearance of a typical logistical problem, it is growing at a pace that may significantly hinder the advances to date of the global energy transition to cleaner alternatives.  The issue is not necessarily with the supply chain, it is that the supply and core infrastructure is almost non-existent.  Currently in the US there are 150,000 gasoline stations and 500 electric vehicle power stations. Yet, there are only about 70 hydrogen filling stations, even though hydrogen is being sold as the fuel of the future.  Many of these stations are found to be not always operational – making matters even worse.

“The Energy Earthshots are an all-hands-on-deck call for innovation, collaboration and acceleration of our clean energy economy by tackling the toughest remaining barriers to quickly deploy emerging clean energy technologies at scale,” said Secretary Granholm. “First up: Hydrogen Shot, which sets an ambitious yet achievable cost target to accelerate innovations and spur demand of clean hydrogen. Clean hydrogen is a game changer. It will help decarbonize high-polluting, heavy-duty and industrial sectors, while delivering good-paying clean energy jobs and realizing a net-zero economy by 2050.”

With the Department of Energy’s call for a “Hydrogen Shot,” there is a definitive cost-benefit to hydrogen.  According to the American Trucking Research Institute (ATRI), fuel costs account for roughly 35 percent of average marginal costs per mile. As diesel prices are expected to remain high, trucking companies that are best able to manage fuel consumption and contain costs will realize a competitive advantage.

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Technology Meets the Challenge

Many logistics and transportation companies have recently launched initiatives to minimize their carbon footprint.  Hydrogen has become the strategic cornerstone of sustainability for the trucking industry. Both industry stalwarts and brand-new players to the industry have identified this new opportunity and begun a global roll-out of solutions to take advantage of the market and the government incentives.

Daimler, Hyzon Motors, Nikola Motor Company, as well as Toyota, GM, Hyundai and Volvo, are all racing to get their hydrogen trucks on the road by next year, or sooner. Transport companies that invest in these new vehicles will have a distinct cost advantage and will rise to the Department of Energy’s clean energy challenge.  Breaking from the pack, Daimler Trucks prefers liquid hydrogen (LH2) and announced the launch of rigorous testing for its fuel cell trucks.  Utilizing liquid hydrogen is clearly the future, but what little infrastructure that is currently in place is primarily focused on gaseous solutions.

Building out the infrastructure of hydrogen filling stations is critical for market growth and will start to eliminate the logistics issues. Technology now exists that allows hydrogen solutions to be mass produced and installed at existing gas stations and truck stops in both urban and rural settings. While many hydrogen filling stations will continue to be simple gaseous distribution centers, truck stops and high traffic stations require a new approach. New total station solutions are capable of onsite hydrogen production with zero carbon emissions and can store the hydrogen in liquid form that is both safer and ensures its purity.  The ability to dispense in both gaseous and liquid form will be a requirement in the very near future.

With the logistics issues associated with hydrogen production, distribution and storage now solved, the success of the hydrogen economy is secured. Now it’s up to marketers to support their logistics providers in their efforts to “go green.” It will reap benefits on their own bottom line and meet consumer demand for lower prices and greener goods.

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