• Vol 11, No 2 (2020)
  • Industrial Engineering

A Comparative Analysis of Carbon Emissions from Transportation and Logistics of the Consumer Goods Industry in Southeast Asia

Andri Mubarak, Irvanu Rahman

Corresponding email: andrimubarak@ui.ac.id


Cite this article as:
Mubarak, A., Rahman, I., 2020. A Comparative Analysis of Carbon Emissions from Transportation and Logistics of the Consumer Goods Industry in Southeast Asia. International Journal of Technology. Volume 11(2), pp. 333-341
39
Downloads
Andri Mubarak Department of Industrial Engineering, Faculty of Engineering, Universitas Indonesia, Kampus UI Depok, Depok 16424, Indonesia
Irvanu Rahman Department of Industrial Engineering, Faculty of Engineering, Universitas Indonesia, Kampus UI Depok, Depok 16424, Indonesia
Email to Corresponding Author

Abstract
image

This research continues previous work that developed a framework for calculating carbon dioxide (CO2) emissions specifically for countries in Southeast Asia. The purpose of the present research is to comparatively analyze carbon emissions produced by the transportation and logistics activities of a consumer goods company with factories in Indonesia, Vietnam, Thailand, and the Philippines to better understand the factors driving CO2 emissions generated by the factories. Several steps were conducted for this research: calculating the carbon emissions from the factories in each country, comparing the results, and analyzing the impacts of several factors on the carbon emissions. The factors are the production numbers of each operating factory, the source of emissions related to the distance traveled, and the ratio of road and sea transportation used by the company. This research used three scenarios: data from (1) 2015 and (2) 2018 and (3) the optimal scenario considering the optimal distribution network.

 

CO2 emissions; Consumer goods industry; Green logistics in Southeast Asia; Transportation and logistics; Supply chain management

Introduction

The issue of greenhouse gas (GHG) emissions is increasingly the concern of political leaders, business executives, and environmentalists alike, as they contribute to the GHG effect by increasing the heat in the atmosphere, ultimately leading to global warming (United Nations Evironment Program [UNEP], 2003). The initiative to reduce GHG emissions has also become an integral part of the sustainable development goals as global warming and GHG emissions are significant challenges faced by all countries. Rising levels of GHG emissions is a major driver of harmful climate change. Reducing such emissions while preserving economic growth and social welfare is a challenge all countries face (Berawi, 2016).

Transport and logistics, as parts of the operational activities of companies, can have significant impacts not only on their competitive advantages but also on their environmental sustainability. One activity that requires close attention is how companies manage their consumptions of fuel to reduce carbon dioxide (CO2) emissions from their transport and logistic activities. Handling emissions wisely can improve their environmental impacts.

The Intergovernmental Panel on Climate Change (IPCC) (Sims et al., 2014) explained that  transport  is a primary  source  of  emissions,  contributing  around  23% of  global CO2.

Of all forms of transportation, road transportation makes the largest contribution to these emissions. The World Economic Forum (2009) also released data regarding the number of global carbon emissions created by logistics and transportation, showing that 5.5% of global carbon emissions are generated solely from logistics and transportation. In 2015, the IPCC stated that road transportation was a dominant contributor to freight transport emissions, releasing more than 1,700 million tons of CO2 emissions.

Southeast Asia, where economic growth has been increasing at an average rate of 5% per year (Diaconu, as cited in Maxim, 2014), will continue to become an attractive place due to its competitive advantages. Southeast Asia has more than 600 million people under the age of 30, indicating the region’s passion for new technology and the new industrial revolution (The ASEAN, 2019). Indeed, Southeast Asia is an exciting region for global manufacturing companies (Rao, 2004). From the perspective of transportation and logistics, the challenges for a company in this region are its geography, uneven population distribution, and excessive CO2 emissions.

Many studies have researched sustainable supply chains and logistics. Building on this literature, this study aims to understand the initiative of a company in Southeast Asia to adopt sustainable supply chain and logistics as their strategy, which faces two great challenges. The first is the problem of measuring CO2 emissions as the basis for a sustainable supply chain and logistics strategy. Several researchers have attempted to calculate CO2 emissions in this region, including Mubarak and Zainal (2018), who developed a framework to calculate COemissions specifically in Southeast Asia. The second is that the region is dominated by the sea despite many companies still using road transportation as the main mode for distributing products (Tham and Siew, 2018).

Only a few studies, however, have tried to calculate CO2 emissions in Southeast Asia. If companies want to calculate their own CO2 emissions, they are forced to refer to methodology developed for the other countries with different characteristics than those in Southeast Asia. Thus, this research implements the framework developed by previous research for factories in Indonesia, Vietnam, Thailand, and the Philippines.

To study the drivers of carbon emissions of operating factories throughout Southeast Asia, this research examines factory production numbers, distance traveled, and the ratio of road and sea transportation used by companies in daily business operations. This calculation and comparison of CO2 emissions should help companies in Southeast Asia calculate their CO2 emissions and better understand the emissions of each of their factories. These calculations may form bases for companies to generate further environmental initiatives based on the characteristics of the countries in which they operate. 


Conclusion

This research builds on previous work on a framework to calculate the carbon emissions of transportation and logistics activity in Southeast Asia. The last study discussed the ideal framework to calculate CO2 emissions specifically for this region because most of the methods developed by researchers in the United States and Europe do not apply there. In this research, the focus is implementing this framework to calculate the CO2 emissions of the company PT. XYZ to compare the CO2 emissions produced by its operating factories in Indonesia, Vietnam, Thailand, and the Philippines. The comparative analysis, which considered production numbers, distance traveled, ratio of road and sea transportation, and transshipment centers in three scenarios, deepens our understanding of CO2 emissions by revealing several differences and similarities between operating factories. The differences are mostly related to facility size, which positively correlates with carbon emissions produced: The greater the production, the more distance traveled by the company to distribute their products due to greater energy consumption. Regarding similarity, the operating factories all mainly depend on road transportation despite being surrounded by thousands of islands that can be connected by sea transportation.

This research can be built upon by analyzing the impact of shifting road transportation to sea transportation on CO2 emissions. Integrating these findings with financial aspects would also be an interesting next step, as companies need to understand how their sustainable supply chain and logistics strategies impact on their financial situations.

References

Bacallan, J., 2000. Greening the Supply Chain. Business and Environment, Volume 6(5), pp. 11–12

Binh, N., Tuan, V., 2016. Greenhouse Gas Emission from Freight Transport—Accounting for the Rice Supply Chain in Vietnam. Procedia CIRP, Volume 40, pp. 46–49

Berawi, M.A., 2016. Accelerating Sustainable Infrastructure Development: Assuring Wellbeing and Ensuring Environmental Sustainability. International Journal of Technology, Volume 7(4), pp. 527–529

Diaconu, L., 2014. The Foreign Direct Investments in South-East Asia during the Last Two Decades. Procedia Economics and Finance, Volume 15, pp. 903–908

IPCC, 2001. Climate Change 2001: Impacts, Adaptation, and Vulnerability. Cambridge University Press

IPCC, 2014. Climate Change 2014 Part A: Global and Sectoral Aspects. In: Climate Change 2014: Impacts, Adaptation, and Vulnerability. Contribution of Working Group II to the Fifth Assessment Report of the Intergovernmental Panel on Climate Change

Mariano, E.B., Gobbo, J.A., Camioto, F.C., Rebelatto, D.A.N., 2017. CO2 Emissions and Logistics Performance: A Composite Index Proposal. Journal of Cleaner Production, Volume 163, pp. 166–178

Mubarak, A., Zainal, F., 2018. Development of a Framework for the Calculation of CO2 Emissions in Transport and Logistics in Southeast Asia. International Journal of Technology, Volume 9(4), pp. 787–796

Padfield, R., Papargyropoulou, E., Preece, C., 2012. A Preliminary Assessment of Greenhouse Gas Emission Trends in the Production and Consumption of Food in Malaysia. International Journal of Technology, Volume 3(1), pp. 55–56

Rao, P., 2002. Greening the Supply Chain: A New Initiative in Southeast Asia. International Journal of Operations & Production Management, Volume 22(6), 632–655

Rao, P., 2004. Greening Production: A Southeast Asian Experience. International Journal of Operations & Production Management, Volume 24(3), pp. 289–320

Rao, P., Holt, D., 2005. Do Green Supply Chains Lead to Competitiveness and Economic Performance? International Journal of Logistics Systems and Management, Volume 25(9), pp. 898–916

Svensson, G., 2007. Aspects of Sustainable Supply Chain Management (SSCM): Conceptual Framework and Empirical Example. Supply Chain Management, Volume 12(4), pp. 262–266

Sims, R., Schaeffer, R., Soares Moreira Cesar Borba, B., Schaeffer, R., Creutzig, F., Cruz-Núñez, X., Dimitriu, D., Figueroa Meza, M.J., Fulton, L., Kobayashi, S., Lah, O., McKinnon, A., Newman, P., Ouyang, M., Schauer, J.J., Sperling, D., Tiwari, G., Sokona, Y., Farahani, E., Kadner, K., Seyboth, A., Adler, I., Baum, S., Brunner, P., Eickemeir, B., Kriemann, J., Savolainen, S., Schlomer, C., von Stechow, T., Zwickel, Minx, J., 2014. Climate Change 2014: Mitigation of Climate Change. IPCC Fifth Assessment Report, Working Group III Chapter 8: Transport

Tham, Siew, Y., 2018. Trends in Southeast Asia. C. T. Tan (ed.); Issue 1. ISEAS Publishing. http://bookshop.iseas.edu.sg

The ASEAN, 2019. Investing in ASEAN 2019. 2020. Jakarta: Allurentis

The UNEP. 2003. How Will Global Warming Affect My World? Geneva: The United Nations Environment Programme

The World Economic Forum, 2009. Supply Chain Decarbonization. Geneva: The World Economic Forum

World Bank Group, 2019. The Digital Economy in Southeast Asia: Strengthening the Foundations for Future Growth. Washington: International Bank for Reconstruction and Development/The World Bank