Sustainable logistics

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Sustainable logistics

  1. 1. W.-R. Bretzke and K. Barkawi: Sustainable Logistics, LNL, pp. 1–84.DOI: 10.1007/978-3-642-34375-9_1 © Springer-Verlag Berlin Heidelberg 2013Chapter 1BasicsSummary. The first chapter clarifies the initial situation by stating the importanceof logistics for the topic at hand and by providing supporting figures, and definesthe aim of this book. Then the terminological and conceptual basics are explainedin detail. In doing so, the focus initially lies on specifying the term “sustain-ability,” which has become much overused in everyday language and thereforerequires clarification. In connection with this explication, we elaborate on theinitial basic concepts such as the external costs model and the issues it raises,knowledge of which is a prerequisite for the analysis to follow. We delimit thethree reference systems for sustainability that form the basis of this book,including the mobility sector, and we illustrate the interdependencies that existamong them. Another section deals with the three essential determinants, which,when changed, will force logistics to thoroughly adapt its system in the future. Forthe sake of the analysis, a planning horizon of fifteen years is assumed.On the whole, we intentionally broaden the analysis horizon in the first chapterbefore we focus on technical issues in logistics. As logistics specialists we aim toclose the gap in our specialist area when it comes to the general discussion aboutsustainability issues. To do so, however, we need to understand the broadercontext of that debate to be on a par with everyone else involved.1.1 Initial Situation and ObjectiveThere is hardly a word that has boomed as much over the past few years as the termsustainability. On 28 April 2011, Google returned about 47,700,000 hits for theEnglish term “sustainability.” However, the scope of its popularity is remarkablyout of proportion with its conceptual clarity. We can no longer afford thatdiscrepancy in view of the tasks we are facing, as it clearly has some gravepractical consequences. For example, if the term is unclear, people can blow smokewith impunity and engage in some superficial greenwashing without the fear ofbeing detected. Above all, however, if the term sustainability is insufficientlydefined, it will not restrict the leeway for human action to the extent it actuallyshould, considering the status quo.It is quite obvious that there is still a vast gap between what companies realizeis a new need for action and what they are already doing today. “Most companies
  2. 2. 2 1 Basicsconsider the environment when making strategic decisions but significantly fewerhave implemented ‘Green Supply Chains’, citing the lack of information as themain reason” (BearingPoint Survey Report 2008). Many current measures appearto be marketing-driven above anything else, and their dimensions – compared tothe dimensions of the aforementioned gap – resemble tentative first attempts toexplore a new path in mainly uncharted territory. And quite often the marketingmessages about social responsibility do not accurately reflect what companies areactually doing. Again, we would like to quote from the 2008 BearingPoint study(op. cit.): “When companies take action, they are typically taking the easy route ofreputation and brand protection on green messaging.”At the moment, only a few pioneers can boast a combination of a detailedstrategy, a solid organizational foundation, dedicated projects, clear goals, rules ofmeasurement, and dedicated resources. (However, it must be said that the numberof those pioneers has increased since the first edition of this book was published.)This lack of proactive action, supported by conceptual uncertainties, can probablynot only be blamed on a lack of ethics and responsibility but, above all, on thewidespread, deeply rooted tendency of leaders to strive for quick success andtherefore to be reluctant about changing priorities between economic andecological objectives and thereby incurring costs. Obviously, it is precisely thesectors that count transportation among their core business activities that are stillhesitant in this respect. According to a study by the Fraunhofer Workgroup forSupply Chain Services (SCS) published in May 2011, only 20% of the logisticscompanies in question were able to report about relevant measures for thepromotion of sustainability (cf. the German magazine DVZ, No. 62, 2011, specialsupplement, p. 7).Similar behavioral patterns can be observed in consumers who, in surveys, havepretended for years to be much more environmentally aware than they turn out tobe in their actual purchasing behavior. In both cases, it may be a lack ofknowledge about the long-term consequences of our actions and the options wehave for promoting sustainability that plays a role; a lack of knowledge that onlymakes it harder for the real Homo oeconomicus to make rational decisions. Thealternatives are not always as obvious as the decision to either support free-rangechickens or to buy cheaper eggs from a battery farm. In the context at hand, it isnot only about estimating the consequences of our actions, but always also theconsequences of doing nothing. The pressure to act which we will be under in thefuture primarily arises out of the difference between those two factors.Methodological Classification and Definition of the Object of StudyIf in our pursuit of eliminating these knowledge gaps we turn to science for help,we will soon enough learn that research is at a very early stage as well. “There hasbeen little research on the impacts of supply chain practices on green logisticsperformance,” is the summary by Harris et al. (2010, p. 116), and Halldórssonet al. (2009, p. 89) describe the current state of their carefully researchedliterature as “rather sobering.” You can read a lot about life cycle assessmentand environmental management certifiable pursuant to ISO norms, but what is
  3. 3. 1.1 Initial Situation and Objective 3lacking – beyond such rather formal instruments – is answers to the question as towhich substantial contribution can be made by logistics in its own sector in orderto realize the eco-political target of an 80% reduction of greenhouse gas emissionsby 2050, which will be discussed in more detail later.Methodically, there are several ways to acquire and/or generate suchknowledge. Surveys are a popular way, e.g. in the form of Delphi studies, asdeveloped by the Rand Corporation at the end of the 1950s. The results of suchsurvey studies are usually interesting and well worth reading, but they never tell usabout reality; instead, they only tell us what experts think or assume about how thesituation will develop. (It is equally difficult to generalize case studies, whichoften merely yield singular and anecdotal evidence.) Therefore it is precarious toderive a trend on a factual level from the mean value of the opinions gathered insuch studies. Apart from the possibility that these experts may be wrong, that theyoccasionally adjust their answers to what they feel is mainstream or sociallydesirable, and that they sometimes just do not have the time or means for more in-depth causal analyses and model evaluations, surveys carried out among managersare mere snapshots that inevitably tend to trail behind developments rather thananticipate them. They help us assess the current state of affairs at a given time, butare less helpful in answering the question as to what specific course of action wecan take in the immediate future. This question lies at the heart of this book. Inorder to answer it, we need to take an independent look from a different angle atthe content of the current logistics systems and practices as well as to what extentthey can be changed.It is remarkable that many relevant studies about promoting sustainable freighttraffic barely even touch upon the topic of restructuring logistics network andprocess models. Obviously, the authors of these studies fail to take intoconsideration that these systems, which are implemented and run by the shippers,have a much stronger impact on the utilization of transport capacities than theorder allocation and route planning decisions of the owners of these capacities. Atypical example is the most recent WWF study, “Blueprint Germany – A Strategyfor A Climate Safe 2050” (WWF 2009). The “Freight Traffic” section (apart fromthe ever-abiding theme of modal shifts – so far, all attempts at tackling this issuehave been chronically unsuccessful) is almost exclusively about measures toreduce energy consumption as well as shifting to alternative, ideally renewable,energy. (If you read the text carefully, you will find that it is mostly demandsrather than measures.) Traffic performance is expected to substantially reduce itsgrowth as compared to relevant estimations, but no one even tries to suggest howthat might be done. Therefore, the logistics models that cause the economy to beso traffic-intensive do not even enter the analysts’ radar – which, by implication,means that people are, or even have to be, conducting “business as usual.” Quiteobviously there is a knowledge deficit in logistics among both environment andtraffic experts. It is one of the aims of this book to fill that gap.“Numerous studies have illustrated how practices such as the centralization ofinventory, just-in-time-replenishment and wider sourcing of supplies can carry asignificant environmental penalty” (McKinnon 2010, p. 15). Examining and
  4. 4. 4 1 Basicsadjusting logistics process and system architectures requires more effort thanevaluating questionnaires, yet at the end of the day it will probably also yieldsmore results. We would like to invite our readers to walk down that road togetherwith us, and we see the results of our work as a contribution that may serve tospark a debate. Anyone who participates in that discussion breaks new intellectualground, just like the authors. Decarbonizing our economy and reducing itstransportation intensity is a task that will take more than one generation tocomplete.A widespread methodical approach for taking into consideration the uncertaintyof future developments would be the scenario technique, an approach which wemade a conscious decision not to use. We know that we thus deprive ourselves ofthe chance to include unexpected developments and events in the analysis, such asanother economic crisis or a growing danger to global trade posed by a rise interrorism. On the other hand, however, we make sure to have the possibility toconcentrate intensely on three main development lines which we are convincedwill distinctly mark the future of logistics. We will deal with these drivers of thelogistics system adjustments that become more and more necessary in a separatechapter (1.3) at the beginning of the book.Undeniably, there is a range of measures which support both environmentalprotection and profitability. A trivial example would be training classes for truckdrivers on how to save fuel. However, in contrast to what people like to say incelebratory speeches, such examples cannot be generalized and streamlined into auniversally applicable harmony thesis. A catalyst makes a vehicle more expensive,just like a city toll or a green tax make its operation more expensive. The rudeawakening will come only when – behind a pretty façade such as a “CorporateSocial Responsibility Program” – measures are being considered that benefit thegeneral public but have a negative impact on shareholder value. That has so farnot been part of our economic system’s constitution, and realistically it should beseen as the exception rather than the rule in highly competitive markets. The onlyway to escape this conflict is for politics to provide framework conditions thatmake environmental protection a question of compliance for all companies alike.Another incentive might be that environmentally friendly behavior displayed byforward-looking companies will be rewarded with premium prices or at least alarger market share.In the past, clean air was never regarded or treated as a scarce resource. Asindivisible “public property” that cannot be allotted to any individuals, it used tobe open for unrivaled use by everyone. One additional emitter did not restrict theother emitters’ options for use, and no one could be excluded. By now, the earth’spotential for self-cleaning is unable to cope, and this behavior is no longersustainable. Therefore we are convinced – and will give more specific reasonslater in this book – that we can only guarantee a sustainable future if the state (e.g.by issuing emission permits) acts as a sort of substitute owner of the environment,puts a price on scarce capacities for greenhouse gases to accumulate in the earth’satmosphere while at the same time imposing a quota on their usage if need be;and if
  5. 5. 1.1 Initial Situation and Objective 5a) the state (e.g. by issuing emission permits) acts as a sort of substitute ownerof the environment, puts a price on scarce capacities for greenhouse gases toaccumulate in the earth’s atmosphere while at the same time imposing aquota on their usage if need be; and ifb) companies make a successful effort to adapt their logistics models to thedramatically changing framework conditions that were detailed at thebeginning of this book, thus providing for more sustainability out ofeconomic self-interest. This book is about precisely those adjustments.In many recent publications about “Green Supply Chains,” the authors headstraight for a debate about objectives and measures for the realization of “greenlogistics” without considering the broader context (as an example, see the “ActionManifesto” by Emmett and Sood, 2010). But we are convinced that in the broadercontext of the debate about sustainability that is held by economists, politicians,climatologists, and environmental protection organizations around the world,logistics specialists will only be able to participate, and their proposed resolutionsbe heeded, if they understand that very context. Moreover, this knowledge (e.g.familiarity with the logic and the consequences of emission certificate trading)also has an impact on their own work. In this book, we therefore consciouslyembed special logistical analyses in the broader context of the discussion about thepossibilities and limits for restructuring our economy and making it a sustainable,mainly decarbonized economy. Advances in small details require a view of theentire picture.Even though it is clear that any measure that helps to reduce emissions (fromthe aforementioned training of truck drivers to running warehouses on solarpower) is helpful and necessary, it is becoming ever more clear to us that thepressing problems that lie ahead will require us to make much more drasticadjustments. Target values for emission reduction were formulated by politiciansin international agreements and published with a clear commitment, but were notyet adopted internationally in Copenhagen, Cancún and Durban. These targets willonly be met, however, if we take the dimensions of the changes to a new level, ifwe strive for that goal with all our intelligence and creativity, if we stopconcentrating so much on short-term successes, if we develop an accordinglystrong disposition to make and accept changes, and if – as most climatologistswould add – we do not waste any more time.Focusing environmental issues on the aspect of climate change brought aboutby greenhouse gas emissions brings with it the danger of detracting attention fromother eco-political topics and objectives such as the preservation of biodiversity,the pollution of potable water, or the acidification of our oceans. Within thecontext at hand, however, namely a book about sustainable logistics, such goaldisplacement is comparatively harmless. Instead we will tackle another topic,which is closely interlinked with highly pressing sustainability issues: maintainingmobility on our traffic routes.Due to the broad range of at times very different approaches to promote aneconomy which anticipates the conceivable long-term consequences of itsdecisions and does not become a victim of the side effects of its own actions, we
  6. 6. 6 1 Basicswill focus on the “central lines” of network and process design in the main part ofthis study. In favor of that focus, we will do without a more detailed analysis ofsmaller fields which deserve separate, special and in-depth examination, such asoptimizing stowage space on loading platforms, reducing the volume of wastematerials during production, or replacing plastic bags by environmentally friendlypackaging materials at the point of sale.Likewise, analyses of reducing pollutants in logistics properties will also not beincluded, in order to leave more room for the focus mentioned above. There are,however, remarkable improvements possible in that area, as attested by theImmogate center near Munich Airport, which was awarded the gold medal by theDeutsche Gesellschaft für Nachhaltiges Bauen [German Society for SustainableConstruction]. (During a life cycle of 20 years, the 26,000 m2(280,000 sq ft) hallproduces 12,000 metric tons less CO2 than a conventional warehouse and lowersthe annual operational and energy costs by 25%.) Cutbacks of this kind usuallyapply to the construction of a property rather than its operation, and to that extentthey are system- and process-neutral. Even with an impressive carbon footprint(depending on location and object), their share in the total of greenhouse gasemissions that can be influenced by logistics is relatively small. Moreover, theapparently still unfavorable balance between additional investments and savedextra costs will, according to the head of the market department at the FraunhoferSCS group, lead to an economically unattractive payback period of 10 to 15 years(German magazine DVZ, No. 81, 07 July 2011, p. 13), which will slow down thespreading of the corresponding technology. The draft of a European standard forthe calculation of greenhouse gas emissions (DIN EN 16258) still does not takewarehousing and cargo handling into consideration, either.Although 19% of worldwide electricity consumption is used for lighting,replacing conventional light bulbs with energy-saving bulbs is not the subject ofour research, either. While we do dedicate a transportation-oriented chapter totechnological advances and innovations in the area of energy efficiency andpollutant reduction, that chapter merely serves to complete the picture andsuggests only exemplary solutions. The results and consequences of the inventivegenius of man can only be predicted to a certain extent. A detailed examination ofthe conceivable or expectable technological advances, such as elaborating on thepotential of improved propellers for deep-sea vessels, would go beyond the scopeof a book that is primarily oriented towards economic design options (and wouldalso exceed the authors’ expertise). Of course, this does not imply any valuejudgment. We need the synergy of logistical and technical innovations. For thisreason alone we must have an idea of the conceivable consequences of humancreativity in this sector: certain premises we use as an argumentative basis (here,especially the premise of a strong increase in fuel prices in the long term) arebased on the scarcity of natural resources, which can be balanced by technologicalleaps of efficiency and/or the substitution of primary fossil fuels.We would like to point out, however, that in our view, quantum leaps in energyefficiency will be hard to achieve with the carriers of today (a solar-powered cargoaircraft is indeed hard to imagine), whereas the contributions that logistics canmake to preserving the environment and maintaining free-flowing traffic might
  7. 7. 1.1 Initial Situation and Objective 7well be clearly above the level of any increase in technical efficiency. It is simplymore productive to make better use of a transport’s capacity, to shorten the routeor avoid it altogether than to keep running it with lower-emission vehicles inunchanged logistics systems and on overburdened traffic routes. It is also possiblethat there will not be enough time to make the necessary inventions and renderthem suitable for the market in time. After all, according to the InternationalTransport Forum (2008, p. iii), 98% of worldwide freight traffic depends on oil(the Carbon Disclosure Report 2010 states that this equals 60% of the total oilconsumption in the OECD countries). In principle, it is possible to start muchearlier with the logistics system adjustments developed here.Our work does not supply a panacea or recommendations for easy action; it isinstead meant to provide more of an initial, well-structured thinking platform onthe basis of a conclusive “if-then” logic for future system developments as well asencourage corresponding considerations and discussions that may lead us further.At the same time, we want it to provide a grid of criteria which enables individualcompanies to examine their current state and determine how far they still are fromconcepts that deserve to be called “sustainable,” and which barriers they still haveto remove in order to become part of a new economic-ecological balance.Anyone who expects this text to provide general trends or even simple formulasof a “quantum leap” kind will therefore be disappointed. Just like the initialsituation, sustainable models in the future will be contingent insofar as theirrelative advantage depends on a number of situation-specific frameworkconditions, which can differ vastly across various companies and industries.“Measure A looks promising if Condition X is met; if Condition Y is met, it iscertainly advisable to resort to Plan B.” Hence it is not possible to provide anydecision guidance through simple (future) “best practice” models that areuniversally applicable regardless of the context. That guidance can only besupplied by designing innovative configuration patterns for processes andnetworks while at the same time associating those patterns with beneficial orobstructive framework conditions. That will also be helpful to distinguish betweenthe companies which will probably be among the first to adopt certain systemadjustments and the “late followers” which follow later or go down an entirelydifferent road. (It is one of the flaws of most trend studies that they do not payenough attention to such differentiations.)Likewise, the models and measures described and discussed in the followingbase their approach on a common denominator, which we are describing in thesummary as a new paradigm of sustainability. This paradigm illustrates in twelvepoints which characteristics of the current manner of conceptualizing andoperating logistics will be put to the test and to what extent that profile is expectedto change.Target Groups of This BookThis book is primarily directed at decision-makers in the fields of logistics andsupply chain management. To the extent that we critically examine superiorbusiness models as to their sustainability, we would like to address the topmanagement level of companies as well (which, by the way, should also support
  8. 8. 8 1 Basicsthe partly essential changes to logistics systems). But at the same time we have awatchful eye on political decision-makers. Politics contributes significantly todesigning the future framework conditions of our logistics systems and istherefore also in its full scope the subject of prognoses and advice (and the lattermakes politicians part of our target group). The importance of political decisionsfor the system adjustments to be discussed here results from the fact that suchdecisions will profoundly change the cost structure of our economy, determine thecapacities of our traffic infrastructure and try to influence its usage. Suchintervention is risky if logistics continue to be a sort of black box for politicians.All we have so far asked of logistics is for it to enable the global division oflabor and the exploitation of locational advantages, at reasonable costs. As theheart and nerve center of globalization, however, it is going to have to make aclear contribution to preserving our endangered mobility in the long term and toprotecting the endangered environment; not only in order to do its share inreaching ambitious political goals, but also to maintain its own functionality underchanging framework conditions and not to be villainized for the detrimental sideeffects of an uncontrolled economic growth, which are becoming morepronounced day by day.Merely preventing the latter out of a defensive position is not the purpose ofour book, however; instead we aim to take action and suggest ways to makelogistics a guide, a fundamental co-creator, and perhaps even a trend setter androle model in the restructuring of our economy. We want to give an example ofwhat can be reached simply by changing one’s course of thinking, and we want tocontribute to the development of an informed public; something we cannot dowithout. That is not quite so easy insofar as you can only improve a system whenyou have a thorough in-depth knowledge of it. Even though we strive to use easilyunderstandable language in the following, sometimes some basic knowledge oflogistics is required. It is convenient that this is a discipline where the mostimportant guiding principles can largely be understood by using one’s commonsense.The term “green logistics” is not sufficient to grasp and describe the objectiveof our work. The authors of this book hold that logistics is going to have toreinvent itself, also with respect to the growing congestion of our main arterialroads and the conceivable increase in the price of fossil fuels, which cannot bereplaced in the short term. In doing so, it will probably have to bid farewell tosome achievements, which, under different circumstances, were once qualified asgroundbreaking, modern and advanced. Whenever there is a change in theconditions surrounding a decision, the decisions themselves are also going to haveto change.We all are forced to redefine any and all logistical tasks and problems, becauseeach process and network architecture has to meet yet another requirement fromnow on: the sustainability criterion. Occasionally we can get closer to thatobjective by tapping existing resources in existing systems (e.g. by reducing theshare of airfreight in procurement logistics by stabilizing processes andaccordingly oriented supplier management). But if we examine previously unusedareas for thinking under different aspects, the redefinition of problems will lead
  9. 9. 1.1 Initial Situation and Objective 9again and again to a devaluation of existing systems and a reshuffling of cards incompetition.Logistics and Supply Chain ManagementIn our work we primarily talk about logistics rather than supply chainmanagement. That choice of words does not narrow down our subject. It is simplyour term of choice to use the clearer, more selective word. In 1997, Bechtel andJayaram listed 50 different SCM definitions and classified them in 5 differentschools of thought (Bechtel & Jayaram 1997). Sometime later, Mentzer et al.(2001) stated in a survey article “that there remains considerable confusion as toits meaning.” That notion has not changed much to this day. “Despite twenty yearsof ongoing research… there is no consensus on what SCM really is,” is thesobered conclusion offered by Kotzab and Friis (2006, p. 70). One of theconsequences of that confusion is that SCM can be seen as a subset oflogistics just as well as vice versa (logistics as a subset of supply chainmanagement) without contradicting any defined state of scientific knowledge oreven empirical findings. (The latter would not be possible, if only because themany distinctions do not reflect any observation of several real phenomena; theyshould instead be understood as ideal organizational patterns that might constitutea recommendation.)The term “supply chain management” places a special focus on cross-companycoordination of logistical activities. It no doubt makes sense to adopt that kind offocus, because it mirrors the requirements of globalization. However, even beforethe term “SCM” came up, there was no prohibition of thinking at that point inlogistics, hence no naming problems. The term SCM becomes problematic when itis associated with an image of supply chains that can be streamlined in theirentirety (“from sheep to shop”) and, from there, with the expectation to transfercompetition to a higher level. Bretzke (2009 and 2010, p. 22 et seq.) states indetail why that image of supply chains as clearly delimitable systems of a higherlevel is not sustainable for a number of reasons; anyone who wishes to learn morecan refer to that publication. Here, we are taking the liberty of dealing withproblems pertaining to cross-company coordination within supply chains underthe heading of “logistics,” using the term “supply chain management” only tomake a special point from that angle of logistics in individual cases.Naturally, that angle is required quite frequently. An especially graphicexample is the task (to be discussed in detail later) of assigning a “carbonfootprint” to a product across all value-added steps. In doing so, one also reachesthe limits of the concept of a supply chain as an economic unit that can bedesigned in its entirety. In real life, many companies are “at the same time part ofseveral, often very different supply chains. They are like crossroads, traversed bypaths leading from very different primary products to very different end productsand thus also end customers.” (Bretzke 2010, p. 29 [direct translation from theGerman original]). That makes it harder to conduct proper and complete supplychain mapping, which is the basis for any carbon footprinting. Such a process mapalso includes the suppliers’ suppliers and raises the questions as to who issupposed to make decisions about the measuring and evaluation methods that are
  10. 10. 10 1 Basicsused to create a carbon footprint. We will deal with that question in more detaillater in Chapter 2.1.2 and will also seize the chance to use the term “supply chainmanagement.” That does not imply a reference to a different, much less a new,object of study.Logistics and TrafficThe performance of systems is generally determined by their bottlenecks. Thatimplies that an economy with a high degree of division of labor and productionfacilities spread around the globe cannot grow faster than allowed by its trafficinfrastructure, which can only be expanded to a limited extent. Traffic (when it isflowing) is the beating heart of our economy. Therefore, the main topics of thisbook include reducing the transport intensity of our economy and decouplingtraffic growth and economic growth. It is insufficient to regard the task ofharmonizing supply and demand of traffic infrastructure as a problem of transportpolicy the way we have in the past; that does not tackle the more in-depth causesof the transport intensity in our economy, which is partly due to the companies’business models, but simply takes those causes for granted and accepts them. Wehave to choose a different approach. And we can – if we manage to rephrase someparamount questions, dig deeper, and think outside the box.Traffic infrastructure can be viewed as a sort of “external production factor” oflogistics; naturally, logistics does not have unlimited access and can influence itscapacity only indirectly due to the competition for its usage: individual trafficbased on passenger cars. Any book about logistics and sustainability would beinsufficient for at least two reasons if it regarded, and dealt with, this trafficinfrastructure as a mere restriction. On the one hand, by changing its process andsystem architectures logistics will be able to make its own contribution toincreasing the capacity of traffic infrastructure and (re-)fluidizing the flow oftraffic. A major part of this work is dedicated to the resolution of that task.Transport policy, on the other hand, is not only responsible for maintaining andexpanding traffic routes and junctions but also attempts to influence the demandfor infrastructure capacity by means of various measures and quite obviouslyneeds the support of logistics expertise in the development and assessment of itsmeasures. (Just think of the chronic overestimation of the possibilities to transfertraffic from roads to rails; a concept that can by now be classified as a classicgrand delusion of German traffic/transportation policy.) Therefore we cannotavoid dealing with some areas of political action. Telematics and road pricing arejust two example approaches.Environmental protection is another obvious reason for this book to deal largelywith the question of transport intensity in a modern economy. According to theInternational Energy Agency (IEA), the transport sector accounts for 30% of thecarbon emissions in OECD countries, with 23% allotted to the road transportsegment (OECD 2008, p. 6 et seq.). Readers can find very comprehensive datamaterial in the International Transport Forum’s study about “Greenhouse GasReduction Strategies in the Transport Sector” (ITF 2008). It is conceivable thatfreight traffic’s share in pollution will significantly increase over the next20 years; ceteris paribus, traffic will continually grow faster than global GDP, and
  11. 11. 1.2 What Does “Sustainability” Mean? 11decarbonization is especially difficult. The European Commission even predicts a50% traffic share in global greenhouse gas emissions by 2050 (said the Director-General of Energy and Transport in a speech at the Logistics Forum Duisburg on17 March 2011).More recently, logistics has gained more profile and renown by turning awayfrom the operation-related topics (transport, handling, warehousing), which it usedto be about almost exclusively at the beginning, and turning towards superordinateissues dealing with cross-company coordination of demand, capacities, andprocesses. Now the whole topic of sustainability is forcing logistics to go back tothe roots and look at questions pertaining to the organization of transport again,and in more detail, from an altered perspective. In doing so, however, our questfor the drivers of the transport intensity in our economy will lead us back to moreabstract questions of a superordinate system design.As hinted above, our analysis would be insufficient if it saw sustainability as asort of synonym of environmental protection. This book is about much more thanjust “green logistics,” and in more than one way: firstly, because our sustainableeconomy is not only threatened by barely fixable damage to the environment butalso by congested traffic routes (in this, our analyses are completely independentof the predictions and admonitions of the climatologists); and secondly, becausenot only logistics systems must be put to the test with respect to sustainability butalso entire business models (at a higher management level). That is why we haveto do some preparatory work and agree on another, slightly different definition ofsustainability – also because that term, which is meanwhile grossly overused, ishighly suggestive, which makes it appear entirely self-evident and can thereforelead to premature agreement with the apparently obvious. As a result, everybodyis too quick to use the term, so that a commitment to sustainability remainsfrequently without effect, despite the economic topicality of the concept. Wecannot afford to work with such terminological arbitrariness.1.2 What Does “Sustainability” Mean?We will adopt a multi-tier approach in this chapter. The first step is to develop acompact, workable definition of the term “sustainability,” which is still oscillatingtoo much at the moment. The second step is then to define the reference systemswhich we are using for the term in this book. Finally, the third step will be todiscuss central content issues about the idea of a sustainable economy with thehelp of the concept of “external costs,” which has been developed in the field ofwelfare economics and is the foundation of any economic policy dealing with theissue of sustainability. The sum total may appear to be a relatively elaborate wayof defining a term. But if there is no clarity even in these basic questions, anyadditional considerations about sustainable logistics will be suspended in limbo. Italso makes no sense for so many people to make a commitment to sustainabilitywhen each one of them has a different idea of what it actually means (if they thinkabout definitions at all).One important trigger of the current sustainability debate was the 1972 report“The Limits to Growth,” published by the Club of Rome. The first world climate
  12. 12. 12 1 Basicsconference was held in 1979 in Geneva. The 1987 Brundtland report “OurCommon Future” was yet another milestone. The first agreement that measures forclimate protection had to be taken was reached in Rio de Janeiro in 1992. Thatincluded a Framework Convention on Climate Change (FCCC) which has beenbinding under international law since 1994. The provisions include a “stabilizationof greenhouse gas concentrations in the atmosphere at a level that would preventdangerous anthropogenic interference with the climate system” (Article 2). In1997, the protocol known as Kyoto Protocol named the first reduction objectives.More recently, the discussion was revived by the American almost-president AlGore in his globally acknowledged documentary, “An Unconvenient Truth.”Al Gore went on to receive the Nobel Peace Prize for his commitment toenvironmental protection.1.2.1 A System-Theoretical Definition of SustainabilityThe confusing debate about the term sustainability arises not so much from a lackof definition suggestions, but rather from a vast number of approaches, whichstand in unclear relation to each other and therefore have to be sorted out. Anespecially clear indicator of that confusion is the frequent use of the attribute“green” – as if it was a giant leap towards the preservation of creation if managersin procurement logistics talked of “green procurement” now. However, whereassustainability can only reasonably be understood as a specified status of a system(the financial system, nursing care insurance, or, indeed, logistics), green is merelya color that can be used to paint many things. We will approach clarification bygoing back in history.As attested by the world climate summits in Copenhagen (2009), Cancún(2010) and Durban (2011), the issue of sustainability – driven by climatologists’urgent admonitions – has finally entered center stage in international politics andis dealt with on the highest level. But even as early as 1713, the Saxonian miningadministrator Hanns von Carlowitz called for sustainable use of forests in histreatise “Sylvicultura oeconomica – Naturmäßige Anweisung zur wildenBaumzucht” [English: “Sylvicultura oeconomica – Instructions for the naturalgrowing of wild trees”]. His idea of sustainability, inspired by the Yahwisticcreation account of Genesis (2:15), was intriguing in its simplicity: the number offelled trees must not exceed the number of the trees that grow afterwards.Otherwise “the land will not remain the same” (in: Grober 2010, p. 116 [directtranslation from the German original]). Herr von Carlowitz would turn over in hisgrave if he knew that currently a forest area the size of Germany disappears off theface of the earth every two years. Since forests have the ability to store rainwater,to prevent soil erosion, to preserve biodiversity, and to absorb CO2, that problemis not only of a silvicultural nature. Photosynthesis is another service provided bytrees. It can be dangerous to overlook such “services” provided by forests: sometime ago, the inhabitants of the Easter Islands learned that the hard way when theydestroyed the foundations of their civilization by cutting down their forests. (Morethan 1,000 inhabitants of Haiti, where 98% of the forests were cut down forfirewood, were killed or lost their homes due to mudslides after a hurricane. The
  13. 13. 1.2 What Does “Sustainability” Mean? 13neighboring Dominican Republic, which had preserved its rainforests, countedonly 25 fatalities.)Due to these “services,” we are currently making a dramatic discovery: a forestis worth more when it stands than when it is cut down, and those services benefitpeople other than the owners of the forests to a great extent, usually without thosepeople having to pay extra for them. In this context, economists often talk about“external effects,” a thinking category which we will come back to many timesduring the course of this treatise. “On a global average, forests store approx.13,000 tons of carbon per square kilometer” (Sinn 2008, p. 434 [direct translationfrom the German original]). According to Radermacher (2010, p. 7), the emissionreduction objectives that would be necessary to prevent global warming are“realistically impossible” without a forced global reforestation program withannual costs of $50-100 million (between 2013 and 2072). If we cannot manage toa sufficient extent to block the sources, we have to compensate for that by raisingthe absorptive capacity of the carbon sinks. In that respect, reforestation is asupplement to the CCS technology (carbon dioxide capture and storage), whichwe are going to talk about later.The idea that Herr von Carlowitz had can also be applied to other resources,such as the problem of overfishing the oceans. According to the FAO, tuna stocksin the Western Atlantic Ocean went down by 80% between 1970 and 1993 (Daly& Farley 2004, p. 118). That example also shows that Herr von Carlowitz’s ideanot to bite the hand that feeds you is not evident enough for all reasonably wisepeople to adhere to it. The consequence is that the government must intervene inorder to ensure sustainability. Overfishing is a consequence of the fact that allfishermen would have fared better if they had limited their haul to a sustainableamount; however, in one single year, every individual fisherman did better whenhe caught more and did not leave this catch to the competition. Fish belong tonobody until they are caught. Therefore, it was impossible for the idea of doingwithout a haul to invest in future fishing opportunities to arise. (By the way, this isnot only about overfishing but also about its detrimental side effects: Ott andDöring (2002, p. 262) state that significant external costs arise due to by-catchinginferior fish, destroying marine habitats, and by-catching and throwing back non-target species.)In the context of political economics, the complex of problems associated withcommon goods has first been treated elaborately by Hardin (1968). Daly & Farley(2004, p. 161) have renamed the “Tragedy of the Commons” (the title of Hardin’spessimistic book), calling it “the open access problem,” because “in many cases,communities have developed institutions that prevent individuals within thecommunity from overexploiting the resource.” Elinor Ostrom was awarded theNobel Prize for examining such arrangements in depth (Ostrom 1999). However,arrangements of that kind can probably only be built in local areas, where theaffected people can discuss their problems immediately. Taking into account thatsustainability is a global problem, leaving this problem to those who are affectedby it (“the community”) seems to be overly optimistic. As we will explain in moredetail later on, we are confronted with failing market mechanisms which, in turn,make political interventions indispensable.
  14. 14. 14 1 BasicsOn occasion – and that is something we should really think about – violation ofthe sustainability rule simply stems from the fact that certain causalities thatthreaten our own livelihood and interconnected interdependencies have not beenfigured out. Such dangers become even more imminent if more time passesbetween human intervention in nature and its involuntary side effects. Forinstance, irrigation systems in ancient Mesopotamia led to gradual degradation ofthe soil and eventually forced the first adjustment onto the farmers: replacingwheat with barley, which is more tolerant to salt, until the cultivation of crops hadto be discontinued entirely. However, future generations will not take such lack ofknowledge as an excuse. “There will come a time,” said Seneca 2000 years ago,“when [we] will be amazed that we did not know things that are so plain to [us].”Worse, even: we do not use what we know. “Our ignorance is not so vast as ourfailure to use what we know” (said geophysicist W. King Hubbert, who, in 1949,predicted the oil peak, which would later be named after him). Methodologicallyspeaking, we need to state the following: obviously, the term sustainability mustbe coupled to prognoses about the consequences of human action under futureframework conditions (which, in turn, also need to be predicted).If you connect the idea of resource stability in the future with the idea ofintergenerational justice, you end up with a much-cited definition contained in theaforementioned Brundtland Report: “Sustainable development is development thatmeets the needs of the present without comprising the ability of future generationsto meet their own needs” (WCED 1987, p. 43). That definition links the idea ofpreserving options for action with the preservation of capacities and adds a moralcomponent to the basic idea of preserving resources, thereby increasing thepressure on the current generation to commit themselves to sustainability andreconsider their own behavior.The idea of intergenerational justice refers to a potential conflict within arelationship that is barely ever announced publicly. It is also similar to a basicproblem which economic science and organizational theory have dealt with in theso-called area of “New Institutional Economics” under the name of “principal-agent-relationship” (cf. Brousseau and Glachant (2008) for a publicationcontaining more detailed contributions). That theory mainly deals with problemswhich may result in the delegation of decision-making competence. Interestinglyenough, followers of that theory have a name for problems that may result from anundetected self-interest of the people in charge: “moral hazard.” Even though thistheory usually seeks its reference problems in economic organizations, its resultscan also be applied to the problem of sustainability.An agent equipped with the relevant authorization to act (in this analogy: ourgeneration with its economic and political leaders) has made a commitment to actin the interest of his principals (i.e. our children and grandchildren); however,since those principals have insufficient control, he has the chance to maximize hisown utility function in an opportunistic way, undetected, rather to do the same forthem. In contrast to the typical case of application of this theory, though, theobligation to pursue the interests of others is not of a contractual but rather of amoral nature. We should act in such a way as if we had a mandate by ourdescendants to preserve resources. After all, the birth of our descendants is still
  15. 15. 1.2 What Does “Sustainability” Mean? 15pending, so they cannot safeguard their interests in a contract. The principal-agentconflict resulting from a combination of insufficient surveillance possibilities anddiverging self-interest is carried to the extreme here.That is why one question always remains: are we our children’s advocates, orare we taking advantage of the fact we are living now and exhausting our leeway?John developed a much-discussed justice theory as a theory of social fairness,describing circumstances where non-opportunistic behavior is in everysophisticated individual’s own interest, thus making it a matter of common sense.Renowned exponents of the sustainability postulate, such as Radermacher as aleading figure in the Club of Rome and the Global Marshall Plan Initiative, invokeRawls’ theory and use it as their legitimization foundation. But the theoretical-abstract possibility developed by Rawls to establish fairness without appealing tomorals (a theory that reminds one of Immanuel Kant’s categorical imperative) is athought experiment that does not help us in practice. After all, in contrast to theinitial situation constructed by Rawls (uncertainty about the time and location ofone’s birth), people are permanently tempted by opportunism while distributingscarce resources across generations. It will barely do to prevent them fromyielding to that temptation by explaining to them that according to a famousprofessor’s theory it is not sensible to excessively capitalize the happenstance hourof our own birth. (For further reading, cf. Rawls (1979) and Radermacher (2011).)Conclusion: when talking about sustainability, we cannot help but considerquestions of morality. At the latest, this becomes evident in the setting of thediscount interest rate (which we will discuss later), with which people aim toconvert future economic damage which affects our descendants to equivalentcurrent values. But the Native American saying we quoted in the preface,according to which we did not inherit the earth from our fathers but only borrowedit from our children, shows that this realization does not necessarily require anycomplex economic or socio-philosophical theories. There is no more graphic,more emphatic, or more direct way to express a behavioral maxim.Intergenerational justice is a necessary aspect of sustainability, which – in lightof such an elusive concept – provides us with tangible limitations to our actions.However, these limitations are often not strict enough, to the extent that even nowwe repeatedly harm our own interests. Overfishing of the oceans is an existence-threatening problem, even for the current generation’s fishermen. And by allowingour traffic routes to become overburdened, we are creating problems not only forour descendants but for ourselves as well. Therefore, the terminologicalequivalence of sustainability and intergenerational justice that is applied inliterature more than once with reference to the Brundtland Report is simply toonarrow, despite all its power.We looked a little closer at the very important aspect of intergenerationaljustice because it is often seen as part of sustainability. (Ever since the BrundtlandReport cited above, sustainability has been defined again and again by theintergenerational justice term.) But not always do people clearly understand thestrong implications of that demand. In many parts of the world, especially in theindustrialized West, people are living beyond their means even today, to the extentthat they use up resources which their descendants would then lack in order to try
  16. 16. 16 1 Basicsand satisfy their needs at the same level; even more so with the growing numberof people from the current generation in densely populated emerging countrieswho are striving to achieve the lifestyle, and consequently the consumption level,of their western role models. (We will repeatedly deal with the question of equaldistribution of resources that we hinted at here, which is very unevenly done thesedays.)“The world society is presently on a non-sustainable course,” is the rightfuldiagnosis of Diamond (2005, p. 498), and the authors of the history bestsellerabout “The Limits to Growth” estimate in their 30-year update that even by themost recent turn of the millennium we already used up 1.2 times as much as ourplanet can sustain, i.e. we are living as if there were 1.2 earths at our disposal (cf.Meadows et al. 2004, preface). In light of the explanations that we have hithertogiven, this is a clear sign that our generation is acting in an opportunistic mannertowards our own descendants. Bearing in mind the WCED definition ofsustainability as intergenerational justice, this means that it can no longer be amatter of maintaining the status quo for our descendants. Even now we keep usingup resources that should not even be ours.Preservation of resources is clearly a necessary component of any definition of“sustainability,” but does it suffice to cover the entire term? We only have toconsider the worldwide oil reserves to know that there are limits to thishypothesis, which is focused on stock preservation. Due to the finite supply offossil fuels, oil production in itself can never be “sustainable.” Due to thedepletability of these resources, substitutes would have to be included, but windand solar power are not generated from any finite resources the depletion of whichwe would have to worry about. Finally: if we talk about sustainable transportpolicy, we are talking about maintaining a certain degree of mobility but certainlynot about stock preservation.Therefore we need both a more general and a more concrete definition ofsustainability, which on the one hand includes the issue of “stock preservation”without cutting the term down to include only the rather static elements, andwhich can also be applied to subsystems such as logistics. On the other hand,however, that definition should be applicable to other economic sectors, too, inorder to provide common ground to support cross-sector discussions. With regardto the “services” provided by forests as mentioned above, we build on the abilityof systems to maintain their functionality under different framework conditions.Generally, the definition of “sustainable” initially suits systems which areoriented in such a way towards a permanently changed or changing range offramework conditions that they do not have to be adapted any further should theseconditions continue to exist, i.e. they can reach or subsist in the desired state(“sustainable” means “able to be maintained”). The word “status,” which doesindeed sound static, also includes the abilities and capabilities of systems, such asthe ability of traffic systems to meet the public’s mobility needs. According to thisdefinition, all systems which threaten to miss their own objectives due to unmadeadjustments are not sustainable.By anchoring sustainability to the desired degree to which goals agreed bysociety are to be reached, we overcome the vulnerability of the stock preservation
  17. 17. 1.2 What Does “Sustainability” Mean? 17idea, which, after all, implies that the respective status quo is worth preserving(see above). Moreover, that anchoring process clearly goes beyond anyevolutionary quasi-Darwinist survival criterion. It is not only about self-preservation of the human species, but about the survival of a world that is worthliving in.Since that definition of sustainability is new, we have to check it morethoroughly against other definitions used in technical literature. The first thing wedo is to refer back to the requirements of intergenerational justice. If thisrequirement is seen as an element of the “desired state,” both definitions ofsustainability will be formally compatible, the advantage for the one suggestedhere being that it is more comprehensive. As we said before, however, thisadditional interpretation contains a non-trivial moral dimension. That dimensionemerges clearly at the end of the day when we realize that we, the currently living,need to handle our resources with more care in order to bequeath the same scopeof action to our descendants. In that case, the “desired status” would include areduction of our own claims and demands. That means that the definitionintroduced above needs to be more precise.Hence we have to ask ourselves the following question: if all other measuresdid not lead to our original goal, is it still possible to save sustainability by makingconcessions as far as the “desired state” is concerned? As we will see later, this isonly possible to a limited extent. There are quite a few authors who believe that amore modest consumer behavior, which experts also refer to as “sufficiency” (e.g.von Weizsäcker et al. 2009, p. 14), is key to achieving sustainability. That can bejustified by pointing out the fact, e.g. the irrefutable evidence that our economy, aspart of a finite system, cannot grow indefinitely. The use of resources, which isdistributed extremely unequally across the globe, can also provide the rightarguments for the demand for sufficiency. Radermacher (2007, p. 111 [directtranslation from the German original]) states, for example, “If the current annualpaper consumption of a Chinese person rose from 30 kg to the average Americanvalue of 300 kg, China would need twice as much paper every year than is beingproduced worldwide.”Basically, that is true for many resources which are becoming scarcer by thehour. According to the 1991 UN Statistical Yearbook, energy consumption percapita in North America was at 17.8 kg (39.2 lbs) oil equivalent as opposed to2.23 kg (4.92 lbs) in the rest of the world. “If all mankind lived their lives theAmerican way, we would need five globes. In contrast, if we all lived like peoplein India, we would have room for twice as many people in the world” (vonWeizsäcker et al. 2009, p. 21 [direct translation from the German original]). If weexpand the demand for justice between generations by the demand for justicewithin a generation, the immediate conclusion would be that not only Americanswould have to lower their standards of living significantly (if the internationalcommunity does not grant them the chance to ransom themselves in such a waythat by reinvesting that money in a different place an equivalent volume ofharmful substances can be taken off the table).Sometimes, however, the association with sufficiency is not only the idea ofsacrifice but also the idea of enriching human life. The central argument states that
  18. 18. 18 1 Basicsif we are modest in consumption, it gives us more time for other, more valuablehuman action, especially on a personal level. Jackson (2009, p. 148 et seq.), one ofthe many protagonists of the idea of a sustainable lifestyle characterized bysimplicity, refers to the philosopher Kate Soper when he gives us the graphicimage of an “alternative hedonism.” Miegel (2010) uses an entire book to reasonwhy sacrificing (conventionally measured) growth harbors the chance to find amore fulfilled life. If we leave out the philosophical questions of an appropriatelifestyle, sufficiency seems to be a kind of “modeling clay” here, methodicallyspeaking, which can be used for compensation if our efforts in the field ofimproved resource efficiency alone are not enough to reach our goal.The reference to the desired status is important to the extent that nature is goingto survive us, no matter what we do, even if it will be barely inhabitable; it willforce us to adopt an entirely different, undesired settlement structure, or will findstability in a new balance without us. (The consequence of a non-sustainableeconomy is not necessarily a complete breakdown.) No matter which referencesystems are associated with the demand for sustainability: that demand is alwaysan expression of human goals and preferences and/or reflects target states whichare not pursued by these systems themselves but in which we want to put thesystems. The only thing that is certain is Darwin’s insight that anything that isagainst nature will not last for long.Since we are called upon to live in harmony with nature, there are limits to theoption of bringing about sustainability by simply making concessions with regardto the desired state, as could “theoretically” be derived from the definitionprovided above. We can (and, at the end of the day, we will probably have to)sacrifice permanent growth in consumption in order to decelerate and limit theprogression of climate change. In this context, however, “sufficiency” seems to bemore of a means than an end. In any case, raising the two-degree limit woulddefinitely not be compatible with the concept of sustainability, at least not ifsustainability is to go hand in hand with intergenerational justice. We must onlywish and strive for what our children and grandchildren would want as well. Usingterms we will discuss in more detail later on, we can also state: sustainabilitymeans that prevention takes precedence over containment and reparation.The Problem of Depending on PredictionsThe definition presented here includes the suspense of dynamics and durabilityand does not see sustainability as something static, because it also includeschanging constellations of conditions (e.g. simply transferring traffic to the rails isnot sustainable in itself if that measure will clearly meet its capacity limits withcontinuing growth of freight traffic). Anyone who, upon hearing this system-theoretically inspired definition, feels spontaneously reminded of orienting oursocial security systems towards the conditions in an overaging society has reallyunderstood what it means, and at the same time understands that any estimation ofthe sustainability of any system depends on prognoses (such as assumptions aboutthe development of the age structure within the population). That lends anirreversible uncertainty to estimations of the sustainability of a system. Forinstance, in the 19th century, the British economist Thomas Malthus strictly
  19. 19. 1.2 What Does “Sustainability” Mean? 19negated the sustainability (without actually using the term) of the economy of histime and predicted sickness, misery, and death to a population that was growingout of proportion; all that because he had no way of knowing about the advancesin productivity that would be made in agriculture due to artificial fertilizer andagricultural machines.Misjudging a risk can be worse than missing out on a chance. A highlyillustrative example of that is the debate about the sustainability of civil use ofatomic energy. In such contexts, “sustainability” can often be translated as“disaster prevention” (e.g. by trying to make a building earthquake-proof). In thatcase, there is a danger of violating the rule of sustainability due to a misjudgmentof risks. Even events deemed improbable are possible; in an ex ante view, theseevents (called “residual risks”) are tucked away in the outermost corner of theprobability distribution. However, this is where Murphy’s Law applies: “Whatevercan go wrong, will go wrong.” The first question is merely: when? And the secondquestion (in view of the costs associated with it) is: to what degree is iteconomically prudent to provide even for the improbable to happen? This questionis especially relevant for people with a skeptical attitude towards climate change,but who still consider this scenario to be somewhat likely. (In Chapter 3.1.2, wewill develop a decision model representing this situation.) Incidentally, evenradical climate change skeptics cannot get along without forecasts, as it remainsunclear what the consequences of a “business-as-usual strategy” would be.Quite obviously we cannot help but include issues of economic justifiability inthe sustainability discussion. In doing so, the term sustainability is being chargedwith the complex problems of assessing and managing risks, which makes itblurry at the edges. But it also gains in meaning when we look at it from thatperspective. We know from systems theory that systems can only survive in adynamic, and therefore uncertain, environment if they have reserves which can beactivated and used for stabilization should any unexpected events occur. In thatrespect, sustainability has to do with redundancy. Basically, this transcends ournotion of sustainability to the extent that it is focused on foreseeable changes indetermining conditions. On the other hand, most of the natural disasters whichmankind has suffered in recent times (e.g. severe earthquakes and tsunamis) haveonly caused trouble for a limited time and did not lead to a long-lastingdestabilization of our systems. These dangers are our main concern when talkingabout “sustainability.”The most recent financial crisis has shown us in an exceptionally graphic wayhow difficult it can be to assess sustainability. The crisis was not predicted by theabsolute majority of economists (including what are known as the “five wise men”of the German Council of Economic Experts installed by the Germangovernment), even though the aggressive granting of loans to less well-offhouseholds and the interlacing of these loans into financial constructs that evenmany bankers could no longer understand, but which were nevertheless tradedworldwide, carried the seed of the crisis. The simple reason was that everyoneinvolved negligently assumed that real estate prices would continue to risepermanently, so they distributed money that was really only available in a bubblewhich was decoupled from the real economy. It is clearly not sustainable for banks
  20. 20. 20 1 Basicsto disconnect from the value-adding economy, recklessly accepting risks in doingso, and to make phantom profits with artificial products the content of which manybankers did not even understand themselves at the end of the day. The failure ofthose products then backfires on the real economy, forces crisis upon the publicbudgets of entire nations, and thus encumbers future generations existentially.(The costs of saving a single German bank in 2008 were significantly higher thanthe worldwide expenditure of all 22 donor countries for development aid in theprevious year.) We can, however, draw our lessons from this in order to sharpenour understanding of sustainability: systems which harbor clear effects of self-reinforcement and destabilization (such as exaggerated bonus schemes forinvestment bankers that depend on short-term success) are not sustainable per se.Sustainability as a Regulative Guiding Principle“Sustainability” signalizes something similar to a dynamic equilibrium and cantherefore be associated with “stability,” “harmony,” “robustness” and, above all,“longevity.” There is one more aspect that is paramount to successful managementof sustainability, especially with respect to political action; an aspect whichunderlines the challenge that is connected with the term.The pursuit of sustainability in the sense of the definition presented hererequires us also to be fully aware of the side effects of our actions at all times. Thestrict limits imposed on the use of sulfur in fuel for ships is a good example ofthat, as are other restrictions targeted at reducing emissions of nitric oxide. In viewof the resulting rise in transport costs, ship owners expect marine transport alongthe Baltic rim to be transferred back to the roads to a significant degree even today(see also the German magazine DVZ, No. 27, 2011). Such interdependencies,which not always become visible, are often the reason why we fall victim to theside effects of our actions that we did not take into consideration. Other sideeffects of the kind mentioned here include supporting a traffic-intensive settlementstructure by means of a commuting allowance, or moving trucks to toll-free roads.A less transparent example is the increase in the number of express-freightshipments and extra tours caused by eliminating buffers and time reserves fromsupply chains, thus increasing their vulnerability.In reality, we will practically never reach a real equilibrium for three reasons:o we will never be able to fully anticipate future framework conditions and thenew adjustment requirements resulting from them (that is why the only possiblesituation is a sort of “dynamic equilibrium,” which is why sustainability hassomething to do with learning);o in a complex, highly interdependent world, we are simply overwhelmed bythe task of constantly keeping all possible side effects of our actions in mind;ando as we are going to explain later, we lack the measuring instruments needed todetermine in a sufficiently precise, reliable way whether we have reached thatgoal, especially when it comes to qualifying entrepreneurial measures (whichmakes learning all the harder).
  21. 21. 1.2 What Does “Sustainability” Mean? 21The very definition of the pivotal target state according to our definition ofsustainability is anything but trivial, meaning that we will only achieve enclosedspaces of acceptable solutions by pragmatic positing, and we have only argumentsbut no evidence for its adequacy. Is a global warming by 2° Celsius still tolerable,or could we also tolerate 3° (and if so: who of us, where, and how)? To whichextent are we prepared to accept a rising of the sea level and a loss of biodiversity?(According to the German federal government (2009), even today approx. 150animal and plant species become extinct every day, including many precioushealing plants.) But above all: how can we determine such limit values when thereis still so much uncertainty about the necessary measures, their costs, and theconsequences to be expected? Are such objectives not simply requirements to theproblem at hand dictated by the environment but rather the result of the first stepin the solution itself, which could, in turn, be made into a new problem at anytime? This complexity, which we mention only briefly, forces us to have a closerlook at measuring problems at the beginning of our analysis of the fields of actionin logistics, and dedicate an entire chapter (2.1) to them.What we can indeed state even now is that sustainability cannot be seen as afinal status description, but must rather be understood as a regulative guidingidea. A signpost for a path that will only emerge once we walk on it, and whichcan help us on the way to steer our course and adapt our speed, meaning to allowus to reasonably assess whether the measures adopted so far and their predictedeffects are sufficient (i.e. “sustainable”) or not, to the best of our knowledge. Weare facing a highly challenging process of social learning, discovery, andconsensus-finding. Our striving for sustainability will never be over. And we havea special responsibility, which arises from the fact that we cannot simplifysustainability into a “steady state” in the bio-cybernetic sense, meaning that wemust not simply assume that our ecosystem will follow the example ofhomeostasis and will return to its previous balanced state once a disturbance hasbeen removed. Put in more concrete terms: insufficient or belated measures maylead to irreversible damage.Sustainability as Resource EfficiencyTo conclude this section on the implications of the sustainability concept, we haveto set our definition apart from yet another term and make it more specific one lasttime. It is a widespread idea that “sustainability” can be translated as the idea of amore efficient use of scarce resources (especially non-entropic, available energy).The key variable here is “energy efficiency,” which is defined as the relationbetween a certain production output and the amount of energy needed to generatesaid output. The inverse variable is called “energy intensity.”The advantage of this concept is that it also contains to-the-point instructionsregarding what needs to be done in the future in view of a growing worldpopulation and growing prosperity in the emerging markets: use the resources thatare available to such an extent that the earth’s carrying capacity is not overstrainedand we do not pillage our planet to the disadvantage of our descendants. In theirbook “Factor Five,” von Weizsäcker et al. (2009) make a particularly strong casefor the idea of an “efficiency revolution” (with the number five being the
  22. 22. 22 1 Basicsequivalent of an 80% saving of resources). Interestingly enough, the authors alsotie the topic of “sustainability” to the use of land (by way of several conversions).The result is that in order to preserve the “regenerative capacity” of the earth, eachperson worldwide can have an “ecologically productive area of five acres” (ibid.,p. 21 [direct translation from the German original]). It is quite apparent that, inthis context, we must look for the key to sustainability in this context mainly in thefield of technological innovations. Nevertheless, von Weizsäcker et al. ratherdeliver a list of measures that can promote sustainability than a definition of theterm which should transcendent the level of methods.A further disadvantage of that perspective is its one-sided focus on the inputside of the human economy. (Efficiency is regarded as the “fifth fuel.”) However,when it comes to sustainability, we always have to consider the output side aswell, because there are also limited capacities. While the input side is all aboutresponsibly handling scarce resources (fully compliant with the ideas of vonCarlowitz) and not only preserving these resources but also to broadening theirreach by means of an efficiency increase, the output side is primarily about notletting stocks (such as the accumulation of greenhouse gases in the atmosphereand waste dumps) get out of proportion. Of course, these two sides are closelyconnected to the extent that an economical use of resources will always result in areduction of harmful substances and waste. However, the chain of causality ismore complex with many of the concepts developed in this book, and if you lookcloser, it becomes clear that it will not do to set sustainability equal to efficiency.That is primarily due to the fact that logistics is about producing core services,not about physical transformation. A simple example of how to relieve sinks ofsome burden without having to look for the lever directly at the handling ofsources is avoiding traffic jams by means of burden-oriented “road pricing” (cf.Chapter 2.3.2 for more details). In contrast to the development of fuel-savingengines or ecologically clean fuels, fuel can in this case be saved by making trafficflow freely once again. The greenhouse gas emissions thus avoided are a welcomeadditional effect in the attempt to maintain mobility. After all, an efficiencyrevolution in automobile construction is of little use when all the energy-savingcars are permanently stuck in traffic. In order to prevent that situation fromarising, we need revolutions in a different place: in the (re-)designing of logisticssystems.Even the most important lever for the reduction of emissions in the freighttraffic area, i.e. replacing airfreight with sea-freight transport in transcontinentaltrade, makes its impact at the sink level with unchanged efficiency profiles and/orresource use of the carriers at hand. Measures to improve the utilization of thedeployed means of transport, which are at the center of our analysis, take a sort ofinterim position here: they raise the usage efficiency of the deployed capacities(hence also of the traffic infrastructure) but are not tied to technologicalinnovations. The reference to a more efficient use of energy and scarce naturalresources aimed at by von Weizsäcker et al. is an indirect reference at best: at theend of the day, we will need fewer trucks, and that means that – among otherthings – less iron ore needs to be mined from the earth.
  23. 23. 1.2 What Does “Sustainability” Mean? 23The following diagram (Figure 1.1) is a detailed breakdown of the way fromthe input to the output level to the dimension of individual production companies.The diagram illustrates how the throughput of a production process at the inputlevel “devours” goods such as materials and energy (for the sake of simplicity,human workforce is classified as a special form of energy input). In contrast tomaterials, carriers of energy do not, or (in the chemical industry, for example) notcompletely, go into the end products. The transformation process itself is subjectto the established laws of thermodynamics, according to which highly availableenergy is converted into energy that is no longer available. “The economy is thusan ordered system for transforming low-entropy raw material and energy intohigh-entropy waste and unavailable energy, providing humans with a ‘psychicflux’ of satisfaction on the process” (Daly/Farley 2004, p. 70).Recycling can be understood as an attempt to prolong this process oftransforming available energy into no longer available (“highly entropic”) energy.We are thus trying to act more responsibly within the confines of the two-sidedboundaries posed by nature’s limited abilities to regenerate resources and absorbwaste and greenhouse gases. Nevertheless, we must not use recycling as a cover-up for past wrongs: “...the longer that cars, buildings, machinery and otherdurables remain in service, the fewer materials are required to compensate forloss, wear and obsolescence”(Ayres & Kneese 2012, p. 371). Therefore we willdedicate an entire chapter (2.2.3) to recycling.In order to be put into practice, physical transformation requires a certaininfrastructure with enabling and supporting resources which does not impact theprocess directly. In Figure 1.1, we have not only measured the result of thattransformation at the output level in terms of quantity but also depicted it inperformance indicators such as costs or throughput time. Process results canassume the character of target values and side effects (noise or increased risk ofaccidents in transport). Systematically, they correspond to what we are going tocall “control variable” (using an analogy from cybernetics) in the section aboutmeasuring sustainability (Chapter 2.1.2). They provide the decision-makers withfeedback about the achievements (or setbacks) in the pursuit of the given goals.An especially important “key performance indicator” at the technical developmentlevel is energy efficiency, which, as input-output relation, measures the use ofenergy of every production unit created. That key figure is connected to the actualoutput size, i.e. the volume of uselessly wasted entropic energy that was releasedback into the environment. (A classic example for poor energy efficiency is thelight bulb, which releases 95% of its used energy back into its surroundings in theform of heat.)Even before the sustainability debate took off, economizing input goods wasalways the way to go for economic reasons. This new requirement now puts usunder much more pressure to make more of our finite resources (for example byproducing less waste and clippings or increasing the recycling rate). Economy andecology are both heading in the same direction. In general, this does not mean thatany improvement of resource efficiency in the narrow sense (that is, measuredagainst its internal interest rate or payback period) is automatically also“economic.” From a management angle, it is paramount that new metrics become
  24. 24. 24 1 Basicsmore relevant at the output level. First and foremost, those are the emissions perperformance unit; as a causal precursor, however, also measures that can controlthose (in the context at hand, especially an improvement in the utilization of ourmeans of transport). In the diagram below, transport processes are marked as sub-processes by a darker shade. They supply and dispose of production and arecharacterized by the fact that they do not process any material and need carriers ofenergy only as fuel (that is, they do not change oil into plastic, for instance).Fig. 1.1 Extended input-output relationsBack at the macro level, by way of conclusion, we have to admit that withrespect to the input-output differentiation we are prisoners of a two-sided scarcity.We must see our economy as “an open subsystem of the larger earth system”(Daly & Farley 2004, p. 15), and this larger system is “finite, nongrowing andmaterially closed” (ibid.). Therefore it is doubtful even in case of a mightyrevolution in efficiency whether our economy will be able to continue to grow inthe long term if the population keeps growing. (The original subtitle of the citedbook by von Weizsäcker et al. is, “The Formula for Sustainable Growth”[translated from German].) Renowned authors such as Jackson (2009) and Miegel(2010) do not believe this to be the case. We, however, state the following: it isimperative and paramount to increase efficiency in order to achieve sustainability.But on the one hand, we cannot use this as the starting point for all conceivablemeasures to promote sustainability (which is why those two terms cannot beconsidered equal), and on the other hand, it is doubtful whether we can reach ourgoal simply by increasing efficiency. As a result, it becomes obvious thattechnological progress is another issue where the evaluation of sustainability isconnected with forecasts and laden with uncertainty.Input levelThroughput level (processes)Infrastructure level (networks,equipment, accounting system…)WastewaterHarmful emissionsCostsThroughput times…..Utilization of themeans of transportWaste, defective goods…..Energy efficiencyOutput level(performance)Materials InformationEnergy
  25. 25. 1.2 What Does “Sustainability” Mean? 25In this context, an afterthought about viewing the input side is still necessary.One problem that we encounter again and again in our pursuit of an “efficiencyrevolution” is that certain measures such as the invention of low-exhaust enginesor indirect resource conservation, e.g. improved vehicle utilization, promise ussignificant relief in the short term but could be compensated for by constantlygrowing freight traffic after a few years and be “devoured,” as it were. Even well-utilized electric delivery vans waste energy when they are stuck in traffic, becausethe economy needs too many of them, and for the same reason they can bringmobility itself to a standstill if they stop.Radermacher (2010, p. 22 et seq. [direct translation from the German original])generalizes this situation as a “boomerang effect” in this context. “The productsper unit are becoming cleaner and cleaner, but the number of units still growsfaster than we are getting cleaner per unit.” What is true for the limited capacitiesfor storing harmful substances on the output side of production is also true forusing resources and materials on the input side. “It is true that we can nowproduce 12 aluminum cans from the same material it once took to produce one,but we still use more aluminum than ever before” (Daly & Farley 2004, p. 63). Asimilar effect can be observed in a long-term observation of the demand fortransport, the successive price reduction of which has made globalization possiblein the first place. The only thing that can stop such “rebound effects” is probably asignificant increase in price. Within the transportation sector, such increases areeasier to access than in the field of industrial products such as mobile phones,seeing as there are no comparable economies of scale in this sector.On the other hand, such feedback effects can be especially drastic in the case oftransport, because a growing demand is up against limited infrastructurecapacities. Since heavy electric trucks are barely conceivable, we are threatenedby a scenario in which the efficiency increase we gain from designing andbuilding more economical engines is lost again by wasting energy in traffic jams.We will take this insight as our motivation to now turn to the question of thereference systems for sustainability we want to explore, one of them being thetraffic system (hence also the topic of “mobility”).1.2.2 Sustainability Reference SystemsWhile the definition of sustainability devised here, which is based on the keyprinciples of systems theory and cybernetics, is plausible, it is of a highly formalnature and thus does not shed light on which specific systems have to be renderedpermanently functional and how the target achievement could be assessed. Withregard to ecological preservation and when focusing on climate change, theanswer to that seems to be comparatively easy. We can classify human behavior assustainable when it prevents global warming from crossing the threshold value of2 °C. On the one hand, however, there are other critical variables within the fieldof environmental protection that play a key role here (e.g. the preservation ofbiodiversity), and, on the other hand, there are other reference systems which mustbe transformed into a sustainable state.
  26. 26. 26 1 BasicsRegarding the question “What to sustain?” numerous references to the “Three-Pillar Model” can be found all across the literature. This model, which is oftenattributed to a seminal work of Elkington (1998), also formed the basis for a reporton “The protection of humans and the environment” published by the so-called“Enquete Commission” (a study committee) of the 13th German Parliament. Withregard to sustainability issues, the model emphasizes the equal weight of the threepillars “economy,” “ecology” and “social security and equilibrium” (occasionallyreferred to as “people, planet and profit”). While there are several valid reasonscorroborating this assumption, the number of measurement-related problems andconflicting goals an application of this model adds to the sustainability issue hasled to a lot of empty talk in everyday politics. And that is why Gößling-Reisemann(2008, p. 267 et seq.) is right when referring to these sustainability-related fieldsof action as an “intricate tangle of social, economic and ecological dimensions”and a “jumble that is hard to disentangle.”If the three pillars were to be regarded as equal, it would be necessary toevaluate each of the measures suggested and developed in order to reducegreenhouse gas emissions in two steps: after identifying the related costs, onewould have to ask whether the same investment could yield higher marginal socialbenefits in other areas (when it comes to fighting malaria or feeding the poor, forexample). In this case, it would become obvious that treating the three pillars asequal would be a hollow postulation masking the necessity to prioritize theallocation of scarce funds. It was hard to find any other authors pursuing the sameapproach, even among those who declare themselves supporters of the three-pillarmodel in the introductory chapters of their respective works. This could raisesuspicion as to whether some of these commitments mean no more than paying lipservice, i.e. people praising a good idea but making their own case rightafterwards.Although we, as logistics experts, do not seek to explore the issue of a fairdistribution of resources and wealth in greater detail for pragmatic reasons, wewould still like to briefly point out that – in this respect – the world as it is now isfar from sustainable. To support that claim, we would like to cite two quotations:“While the average income ratio of the richest country compared to the poorestcountry in the world was still at 9 to 1 at the end of the 19th century, this gapfurther increased, and, by the end of the 20th century, amounted to 60 to 1”(Schirm 2007, as quoted by Becker et al. 2007, p. 93 [direct translation from theGerman original]). A similar divide also exists within the richer nations: “Thefinancial wealth of the top 1 per cent of American households exceeds thecombined wealth of the bottom 95 per cent of households, reflecting a significantincrease in the last twenty years” (Steger 2009, p. 109). Seeing as the degradationof solidarity and cohesion thereby caused threatens the sustainability of society asa whole, this phenomenon gives rise to more than just moral questions.As early as the 17th century (when the world’s population still amounted toonly 700 million people), the English philosopher and Enlightenment thinker JohnLocke coined a requirement which was later refined by the economic sciences andcame to play a significant role in this field of study under the name of “Paretooptimality.” He demanded that “enough, and as good” be left for others when
  27. 27. 1.2 What Does “Sustainability” Mean? 27appropriating the earth. Using the criteria set out in our own definition presentedat the beginning, a highly asymmetrical distribution of resources can only beregarded “sustainable” if a) this represents the desired state, and if b) this state canbe sustained in the long run in spite of the potential for social disruption it bears.But using resources at the expense of third parties is definitely not “Paretooptimal,” as this criterion, which, by the way, implicitly protects existingownership rights, is only met if certain individuals are better off as a result ofcertain measures taken without causing a loss of prosperity for others.Going beyond issues related to income distribution and transferring this idea tothe problem presented by external effects, we see that there is yet another violationof the Pareto criterion. All experts agree that the poorest of the poor on our planetwill be particularly affected by climate change – all the more because they lack thefunds required to take preemptive measures.Regardless of their political weight, we do not seek to investigate questionsrelating to social justice any further in this book, as they hardly tend to result inspecific requirements for the design of sustainable logistics systems. But whensimplifying matters in such a way, one should be aware of the consequences. Forinstance, this means excluding interactions and potential conflicts between therespective goals of the reference systems “environmental protection” and“economic prosperity”. The implications of such conflicts could be that while areturn to smaller-scale business structures triggered by state intervention such asthe introduction of ecotaxes, for example, might bring along significant emission-reducing effects in the transport sector, this could also lead to a redistribution oflabor and income at the expense of the poorer countries.Importing beans from Kenya creates more harmful emissions than buying themfrom local farmers in Europe. However, importing the beans can help to fightglobal poverty and allows the families of the Kenyan farmers to lead a moredignified life. This adds another layer of complexity to the ethical problem ofintergenerational justice: “What ethical system can justify a concern for the well-being of those yet to be born, while not caring for the well-being of those alivetoday?” (Daly & Farley 2004, p. 389). When exploring procurement strategiesmainly from an ecobalance perspective as we do in the following, this aspect willinevitably be lost, and that is why we would like to at least briefly mention it at thebeginning of this book. Of course, taking one pillar out of the three-pillar modelconstitutes a harsh simplification. But we do not aspire to save the world but seekto focus on the question of how logistics can contribute to make it possible for usto live our lives in a way as to match the supporting capacities of the earth as longas possible and, if possible, satisfy our mobility needs without major restrictions.While the focus we have opted for helps us reduce complexity, it does notrestrict companies that want to become fully sustainable with regard tomultidimensional target functions. Organizations such as the Global ReportingInitiative (GRI) are right in calling upon them to step up their social commitmentto improve people’s living standards, with standardized reporting frameworkssupporting them in this endeavor. (Bayer AG, for example, used the GRISustainability Reporting Guidelines as the basis for its 70-page sustainabilityreport for 2010. These guidelines are available on the following website:
  28. 28. 28 1 Basicswww.globalreporting.org.) To the extent that companies use projects to bringabout such a transformation, the logistics experts are assigned the respectivesubtasks and subprojects which fall into their specialist field. In the case of schoolor hospital construction projects in developing countries, for example, theircontribution, if any, would be relatively small.If, in this context, we exclude all issues pertaining to making living conditionsmore humane, especially with regard to the fair distribution of resources, the mostimportant remaining sustainability criterion for the reference system “economy” isthe preservation of as many jobs as possible. Environmental protection measuresshould not give rise to an increase in unemployment rates. Regardless of whetherthis constitutes a real and justified cause of concern, it is a major source ofpreoccupation and seen as one of the potential political consequences of suchmeasures. Urged by oil industry lobbyists, the Republican members of theCalifornian Senate, for example, called for a suspension of all measures targeted atenvironmental protection until unemployment rates were to fall to levels of below5.5 per cent and remained under this threshold for more than one year.Whether such a “full employment” restriction is to be put on the same levelwith the call for economic growth is a rather complex and highly controversialissue that we cannot pursue any further at this point, although it is an issue thatwill come up again and again when exploring some of the issues we intend toinvestigate later in this book. The internalization of external costs for example,which we will outline in greater detail later on, is one of the fields that this issuetends to turn into a tightrope walk. We do not want to join the ranks of the criticsof growth here, but we have to agree with theorists such as Daly and Farley(2004), who state that in the long run the economic endeavors of mankind mustnot exceed the supporting capacities of our planet, which rules out the possibilityof infinite growth. “No subsystem of a finite system can grow indefinitely, inphysical terms” (Jackson 2009, p. 14).A popular attempt to break free from this predicament is to try and redefine theterms “prosperity” and “growth” in a way as to include non-economic prosperityfactors that currently do not figure into standard GDP calculations. This wouldmake it possible to offset a potential stagnation of the economy triggered by strictenvironmental policies against advantages of a different kind (including thebenefit of living in an unpolluted environment). The bottom line would still be anincrease in quality of life. We do not intend to pursue such an approach, as itmasks the conflicts existing between economy and ecology by making them partof an expanded target function. As a result, these issues would no longer besubject to pointed discussions. Nobody would be able to say what ecology costs.But that is exactly what we need to know to allow for responsible policy-making.(We will investigate the conflict between economy and ecology in greater detail inthe final chapter of this book.)Instead of exploring the issues related to a fair distribution of resources in aseparate section, we would like to focus on mobility in the traffic sector as anindependent, third reference system for sustainability. (Readers who are of theopinion that the term “system” with regard to the sustainability reference objectsdefined and delineated here constitutes a problem, could also call them fields of

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