Volume 3 Issue 1.indd - Parsons Brinckerhoff

Freight and Goods Movement: the Changing Environment
By Mike Zachary
The world as we know it is rapidly changing before our eyes.
In terms of cargo, freight and goods movement, this cliché
has never been more appropriate. With the downturn of the
economy and shrinking supply chains, the rationalization of
assets, both landside and vessel deployment, is becoming
commonplace. With an estimated 11 percent of the world’s
container fleet capacity being laid up and containerized
cargo down an estimated 28 percent globally, one would
think that shippers, carriers and ports would seek ways to
reduce costs and shorten delays, not add to them. But they
are not.
The bottom line is that, as infrastructure and goods
movement specialists, we must not only understand the
impact of freight’s carbon footprint but we must be ahead
of the legislative policies in order to assist ports, shippers
and carriers in predicting and preparing for the resultant
changes in costs, service reliability, and infrastructure
capacity and funding requirements. Will these policies
result in additional costs to move freight through the
supply chain? Yes. Will supply chains react to the increased
costs by strategically redeploying their supply chain’s
distribution network? Absolutely!
The movement of freight rests on a three-legged concept
of the “3 P’s”- governmental (not just the U.S. government)
policies affecting global trade; the logistical processes
and procedures used to purchase, move and pay for the
goods being moved; and the physical practices applied
to the actual touching of the cargo as it moves from the
factory at the point of origin through the supply chain to
its final destination. Each of the “P’s” are interrelated with
the two other “P’s” to the extent an effect on one cannot
help but affect the other two. That is what is happening
in today’s world of global trade. The world’s governments,
realizing that the global climate change and greenhouse
gas (GHG) effects must now be considered as part of the
transportation of goods, are creating policies without
regard to the increase in costs to the supply chain. Instead,
they are focused on “greening them up”.
Parsons Brinckerhoff (PB) has been in goods movement
consulting for many years but, just recently, the company
has put a much stronger emphasis on freight and the
associated transportation aspects of moving freight.
Greg Kelly, National Transportation Director, authorized
the creation of the “Freight 8”, which recently convened
in New York to review PB’s global logistics and modal
aspects of goods movement to determine the current
and future strengths, weaknesses, and capacities of the
world’s strategic supply chain and distribution networks.
One of the key points of emphasis apparent was how
freight’s carbon footprint affects global climate change
and the need to address the issue, which will in turn create
a ripple effect through all aspects of our lives, including as
consumers in the world economy.
One of the biggest policy impacts will occur from a global
policy called “cap and trade”. Presently the U.S. does not
have a cap and trade policy but the rest of the world has
created a policy that has been successfully implemented.
President Obama has made it clear that his administration
will develop a national policy on cap and trade that will
mimic, but not match, the current EU cap and trade policy.
What is “cap and trade”? Kimberly Farley, a senior member
of PB’s Environmental TEC and a leading member of the
Freight 8, does an outstanding job of defining the global
policy with the following (simplified for this effort):
The “cap” is a legal limit on the quantity of GHG allowed to
be emitted each year. The idea is that each year the limit is
lessened, until we have reached our targets. The idea behind
“trading” is that companies will be able to swap permission
to emit GHG amongst themselves, creating a market for
pollution permits. The theory is that if we allow such trading,
we will put a price on pollution that will travel throughout
the economy, motivating corporations and the public to find
ways to trim GHGs. An offset is a GHG emission reduction or
carbon sequestration project that can meet the requirements
of a cap and trade scheme. Companies unable to meet their
permitted allowances could purchase or “trade” allowances
from other companies or other aspects of their production
and distribution networks.
It is the latter point of trading and/or selling credits on the
free market that has the greatest impact on current and
future infrastructure and capacities in the global goods
movement market.
19 Vol. 3 • Issue 1 |