Making Decarbonization a Self-Fulfilling Prophecy
Welcome to the 85th edition of The LogTech Letter. TLL is a weekly look at the impact technology is having on the world of global and domestic logistics. Last week, I posed a question about whether logistics professionals had more rational views around home delivery than their civilian peers. This week, I’m suggesting a proactive role shippers can take to help them meet decarbonization targets.
As a reminder, this is the place to turn on Fridays for quick reflection on a dynamic, software category, or specific company that’s on my mind. You’ll also find a collection of links to stories, videos and podcasts from me, my colleagues at the Journal of Commerce, and other analysis I find interesting.
For those that don’t know me, I’m Eric Johnson, senior technology editor at the Journal of Commerce and JOC.com. I can be reached at email@example.com or on Twitter at @LogTechEric.
We tend to think of patronage as an already complete process. In other words, we celebrate the people who underwrote history’s most masterful artists and the industrial titans that paid for geniuses to build our most vital inventions as if there was no prologue to the story. The Medicis commissioned Michaelangelo and he created David on the spot. Boom.
In reality, of course, patronage of anything worthwhile is a tedious, frustrating, and often unfulfilling journey. For every world-changing creation, there are a thousand times something crashed and burned, a million times something was nearlythere but never got all the way there. It takes faith, and resources, and, most of all, persistence.
This is all to say that the bevy of supply chain-related sustainability technologies that are being developed today are not perfect. Rome wasn’t built in a day, and neither will the arduous task of building solutions that measure, reduce and avoid excess carbon emissions in transportation. Whether it’s carbon calculation tools, capacity optimization systems, tools that align headhauls with backhauls to reduce empty miles, alternative fuels, or the many other ideas in development, this is a grand project in motion. And it is, by definition, not a finished product.
So what does that mean to users of these existing and future technologies? Well, it means that if you’re waiting for perfect, you’re standing in the way of progress. Investing in something, at this point, is far better than doing nothing, and maybe not even for the reason you think. The obvious thing to think is that some form of calculation is better than none, that any reduction in carbon is better than none. These are both true. But they miss the bigger point. And that is, investing in tools today accelerates the value and efficacy of those tools down the road. A portion of every dollar of revenue a company building decarbonization technology gets today can be devoted to improving the product tomorrow. And if the company is venture-backed, that single dollar of revenue might turn into 10X or 20X the funding it can generate.
What’s more, every data point a technology provider captures from a paying customer can go toward improving the product, and toward developing new ones. This is all a big cycle, and customers have the power to make it a very virtuous one.
You may believe that it’s too early to commit to underbaked technology. You may feel it will set you back to invest in tools that aren’t ready for primetime, that there’s an opportunity cost for going too early with one tool in lieu of waiting for a better one. That precious internal resources and cash will be spent on something that ultimately isn’t the long-term backbone of a carbon reduction platform. But no one will penalize a shipper for having tried to reduce its carbon footprint. There will be no slaps on the wrist for having actively tried to foster development of new approaches.
By the way, this virtuous cycle is true for all software. Every early stage company wants customers, so it can generate revenue, and then reinvest that revenue in the product. That’s not unique to sustainability technology. But, the patronage of generic enterprise technology does not have the broader societal implications that climate tech does. If your TMS reduces my freight spend 10 percent, and I pay you $50,000 per year for it, I can expect that you will use that $50,000 to incrementally improve my future experience as a customer. That’s great, but it’s not existential. A patron of a climate tech provider may see that provider enable it to reduce its carbon footprint, but it is also helping it achieve a much broader goal than a pure financial one for an individual company.
This patronage of decarbonization-enabling technology is particularly important in logistics, where much of the carbon generated is produced by providers outside of your direct control. Yes, you can choose carriers that run cleaner trucks or vessels or source in such a way as to minimize miles traveled. But ultimately, a shipper is really only in control of emissions generated from the product it manufacturers, not of the conveyances that transport its goods around the world.
Taking a leap of faith into systems that reduce carbon output should not be seen as some attempt at green-washing reputations, but should rather be seen as patronage that accelerates the overall efficacy of much-needed tools. Tools that, if they hit the mark, will ensure there is freight to be moved for decades to come.
Here’s a roundup of recent pieces on JOC.com from my colleagues and myself (note: there is a paywall):
Hope you’re not sick of me covering the Hapag-Lloyd container sensor story yet! This week, I wrote about how the container line is thinking about this investment, including how the pandemic decreased the number of times a container cycled through its network in 2021.
Fair to say the last two years have recalibrated what supply chain risk entails, and therefore it has stoked broader traction in tools that help logistics professionals manage that risk. In that context, Everstream Analytics announced a $24 million funding round this week.
And here are some recent discussions, reports, and analysis I found interesting:
Had a fantastic discussion with Heather Mueller of Breakthrough this morning on LogTech Live. We discussed how freight procurement strategies have changed during the pandemic, what rate and volume softening Breakthrough is seeing in the domestic market, and how to tell if the data you’re using is credible or not. Also, an Amazon-related dadjoke…
Andre Simha of MSC and the DCSA asks a very pertinent question: is container shipping going digital fast enough?
Cathy Morrow Roberson’s Freight Forward newsletter delves into a bunch of things, but kicks off with port automation and contentiousness in longshore negotiations. Side note: we reported today that the ILWU wants to take a negotiation break.
Ari Ashe discusses whether we’re in a freight recession in his latest Please Haul My Freight newsletter.
This is one of my go-to resources for real-time data on consumer spending. It’s also a lesson in understanding the context of data. Despite a steep drop in spending since April ‘21, we’re still virtually at the same levels we were in Jan. ‘20. Not all downturns are the same.
And by the way, weren’t we all saying things were overheated and unsustainable in fall ‘21?
Plus, there’s this to consider on the ocean freight side…
Some upcoming events I’ll be involved in:
I’ll be moderating a panel on how the freight industry can gird itself against the threat of cyber attacks at the NITL Virtual Transportation Summit May 24-26. See the full agenda here. Especially pertinent given the Blume incident and another recent attack on Expeditors International earlier this year.
If you’re at Reuters’ Supply Chain Execution conference June 2 in Chicago, come and say hello. I’ll be interviewing Port of Long Beach Executive Director Mario Cordero about the port’s Supply Chain Information Highway initiative.
Also on June 2, I’m doing a virtual fireside chat with Transporeon and SupplyStack (which Transporeon acquired in ‘21) about the future of real-time visibility.
Lastly, the agenda for our Inland Distribution Conference in Chicago Sept. 26-28 is taking shape. I’ll be doing a one-on-one with Emerge CEO Andrew Leto and then leading four tech-oriented discussions on LTL, freight procurement, small carrier tech, and venture’s future role in trucking. Don’t miss this - it’s the most substantive surface transportation conference in the market.
Disclaimer: This newsletter is in no way affiliated with The Journal of Commerce or S&P Global, and any opinions are mine only.