Energy Management in Logistics Activities

Abstract

The paper deal with the problem of reducing costs in the logistics channel, taking into the account a set of measures of energy management. Logistics of freight distribution comprises a number of activities for physical transfer of goods, such as handling, storage, transportation, each of them requiring at least one type of energy expense. The main objective of the study is to reveal the most important actions in order to reduce the energy costs in supply chain, presenting also some specific indicators for energy efficiency for different activities across the logistics channel.

Headnote

Abstract

The paper deal with the problem of reducing costs in the logistics channel, taking into the account a set of measures of energy management. Logistics of freight distribution comprises a number of activities for physical transfer of goods, such as handling, storage, transportation, each of them requiring at least one type of energy expense. The main objective of the study is to reveal the most important actions in order to reduce the energy costs in supply chain, presenting also some specific indicators for energy efficiency for different activities across the logistics channel.

Keywords: logistics, energy, management, supply chain

JEL Classification: R41, M21

Introduction

The problem of the costs generated by the distribution of goods is one of the concerns of any producer of goods. The expansion of the distribution area has determined, over time, the development of a new field, distribution logistics, whose activities can be partly or fully transferred, outsourced to specialized companies in distribution services. As a result, also the concerns for optimization of costs have been spread to these companies, in some cases, these taking over the entire set of activities in supply chain: transportation, material handling, and storage.

Each of these involves, in a greater or lesser extent, one or more types of energy. For optimizing the distribution of goods, important changes have been produced, in the last years, in the management of these activities. Whether we talk about fuel, natural gas, whether is electricity, the growing costs of energy, make the share of energy costs to be an important component of logistic costs.

The automation of some processes, such as the packaging, material handling, the use of some technological equipments, replacing in an increasingly measure the manual work, has determined a growth of electricity consumption. On the other hands, globalization has determined an extension of the transport activities, longer driving distances generating increases in fuel consumption.

Consequently, it is necessary to find solutions to diminish the energy costs, costs that are by no means negligible, given that, in some fields, these are similar as value or even surpass those necessary to product the traded goods. Thus, in order to reduce them it is required a set of measures for energy management.

1. Literature review

The current concerns of those working in the logistics fields to reduce the logistics cost have not remained without echo in research. A series of studies highlight the components of these costs, treating the possibilities to reduce some of them or globally, the possibilities of the optimization of costs in the entire supply chain [Barami, 2000], [Bartolacci, 2004], [Binsbergen & Visser, 2001], [Manumen, 2000], [IEEE, 1996].

The problem of energy management can be found in all sectors of the economy. Consequently, studies, research publications treat the problem of reducing energy consumption [American, 2008], [Kennerdy et. al, 2006 ], [IEA, 2009]. More recent studies have focused on reducing energy costs in supply chain [Banerjee, 2005], [IEA, 2010], [Valeri et. al, 2012].

There are also, in this respect, some research projects at European level which aimed to increase energy efficiency or energy management. One of these is RAILENERGY (FP6) "Energy efficiency in the railway system" that highlights ways in which savings higher than 7 % can be obtained in the European railway system. Another project, also in rail transport, MERLIN (FP7) "Management of energy in railway system" estimates an overall reduction of the energy consumption of 10%.

2. Driving energy costs in supply chain

The measures to reduce energy consumption in the logistic channel are taken in order to reduce operating costs. Their effect is, however, quite limited by the facilities, the existent equipments. The most significant effects can be identified when the measures of reduction the energy costs are taken in the design stage of the supply chain.

On the one hand, technological progress allows the application of solutions based on more advanced, more energy efficient in order to reduce the energy consumptions. These solutions are, most of the time, expensive, due to the supposed investments.

On the other hand, the energy management can suppose also the adoption of some solutions based on the consumption monitoring and the organization of the activities in a manner that reduce the energy consumption.

Moreover, the implementation of some energy management programs, in different fields of activity led to different results depending on the type of the chosen strategy. By applying am aggressive energy management it can be seen a reduction by 5 - 15 % in energy consumption, while relatively low investments can determine even a 30 % reduction [Gadola et. al, 2005]. Given that, however, their long payback, this solution is applied, generally, when the investments are determined also by other considerations.

In the case of existent companies, an energy audit offers indications on the energy consumption and on the way is used the energy, being able to provide solutions to increase the energy efficiency. The costs of such an audit can be recovered is 6 months by the energy savings that can be identified with this occasion. In such an audit there will be analyzed the energy costs, based on the invoices, identifying the energy fluctuations for at least 12 previous months. Then, it will be analyzed the consumptions of each category of receptors, for each of the activities of the logistics channel.

The activity in the logistics chain which has the most important share is the transport activity. Thus, the transport presents an important potential for reducing energy cost in freight distribution.

More, a report made in EU regarding the tendencies of energy efficiency in transports reveals that transport has exhibited the most rapid growth in energy consumption of all sectors within the EU, and accounted for 33% of final energy consumption in the EU in 2009 (up from 31% in 2000). Road transport accounted for 81% of total EU transport consumption, and of this about 60% was accounted for by cars [ADEME, 2012].

In selecting the means of transport, it will be considered the efficient vehicles. For these, for example, in the case of the cars, there will take into account their performance such as engine type, lightning, characteristics of tires, air conditioned, each of them influencing the vehicle efficiency. The use of microprocessors for ignition, carburetor and fuel injection systems offers the possibility of the improvement of the efficiency of internal combustion engines. Automatic transmissions can contribute, also, to the reduction of the consumption.

One of the easiest steps to put into practice is the choice of most economical fuel or energy source. In this context, it can consider using of bio fuels as an alternative mobile energy. In the case of investments in transport means it will choose vehicles with lowest consumption.

The replacement of road transport with other transport modes, such as rail or water transport, or the use of multimodal transport, sometimes leads even to the reconfiguration of supply chain. But these can offer the advantage of a lower energy consumption that can determine a considerable reduction in transport costs.

Unfortunately, in Romanian, the poor condition of the railway infrastructure, but also the inability of both the governors and the managers of the public companies in the sector, determines that, at least for the short terms, the alternative of rail freight not to be a viable alternative in the configuration of logistic chains.

On the other hand, another energy-efficient transport mode, the river transport is too little valued on the inland waters, due to the lack of facilities on these rivers.

Among the measures to reduce the energy consumption in distribution network are those aimed the routes optimization, based on some routing algorithms. The design of the transport routes through some specialized routing programs determines not only reductions of times for planning of activities, but also reductions of fuel consumption by the selection of the shortest routes or, according the traffic conditions, those which suppose the lowest consumption. The use of information and communication technologies in distribution logistics could determine also significant reductions of energy costs, thus contributing to energy conservation.

The design of the distribution network, by a properly location of distribution centers will help to reduce the energy costs. In addition, the appropriate choice of transport vehicles and those for freight delivery, allows the reduction of the number of traveled kilometers, with direct effects on fuel consumption. Of course, in practice, there are a series of limitations and constraints, such as delivery times, size of the vehicles with access in some delivery areas, vehicle capacity limits, service times of drivers and driving times of vehicles according to the legislation. Thus, in urban deliveries, use of urban logistics platforms, placed on the outskirts of the towns and vehicles routing with windows times leads to more efficient distribution.

Consolidation of the shipments, use of some distribution networks based on freight consolidation in some grouping centers, transport in large capacity vehicles, followed by the deconsolidation in deconsolidation centers and their delivery to final points can determine important reduction of fuel consumption.

In this direction, commercial carriers, being able to maintain a high load factor, are more energy efficient than the small companies or the companies that transport goods by their own vehicles. In expressing the energy efficiency, transport companies use a set of indicators such as consumption per tone-kilometers, vehicle, kilometers, or shipped parcel, energy savings as result of energy management measures.

Certainly, the encouraging the use of locally made products can be one of the measures to reduce the number of trips, but in the conditions of a free global market, it is difficult to maintain long-term financial support of such type of measures by the governments.

In some countries, companies that perform transport services are stimulated by the governments, through different reduced taxation schemes, to invest in more energy efficient vehicles. The application of an annual fee differentiated according the fuel consumption or registration taxes related to CO2 emissions / fuel consumption are the most common forms used by EU member states.

On the other hand, the state support can also come by subsides of some fractions of the energy audits or tax incentives for the introduction of energy management, in the forms of grants or tax deductions.

There can, also, financially support transport licenses for those transport companies that applies measures of efficient fleet management. The introduction of some efficiency standards for new buildings or equipments, as well as the necessity to obtain energy certificates for buildings can stimulate the actors in logistics chain towards applying measures of energy management.

Increasing the energy efficiency in transports can be achieved also by the driving manner. Therefore, one of the solutions to optimize consumption can be also the training the drivers in order to drive in a economic manner. Thus, it may establish measures of education, information and training, such as good practices guides, portals with information regarding the benefits of the economic driving, training programs.

In road transport, the minimum fuel consumption is at 90 km/h, driving at the higher speeds leading to increased consumption [Haydock, et. al, 2012]. Installation on the vehicles of some devices enables drivers to adapt their driving manner, keeping the optimum speed and reducing idle time. In air transport, fuel consumption is influenced by the height of the flight, speed, as well as the trajectory conditions. In railway traction, it can be reduced the energy consumption by reusing braking power.

Energy management is not limited only to the arcs of logistics networks, offering an important potential to reduce the energy consumption also in the nodes of the networks. In this respect, it is necessary to be analyzed the energy consumption for offices, warehouses or logistic centers (figure 1).

The operation of the logistic centers is ensured by electricity and thermal energy. Electricity generally holds the largest share and can reach up to 60 - 80 % of the total energy consumption, contributing to ensuring the lighting and functioning of all electrical equipments, such as conveyors, electrical driven forklift trucks, robotic truck unloading technologies, automatic guided vehicles, IT equipments, motors, ventilation equipments, air conditioning and heating.

The lighting offers an important potential to reduce the energy consumption, in some cases it can reach up 50 % of the electricity consumption of the building. A first set of measures is to eliminate the unnecessary consumption due to the excessive lighting in certain spaces such as corridors, auxiliary spaces in office buildings or storage areas in warehouses. For this, it is necessary to identify the lamps, their running schedule, powers and even to measure their enlighten level. Measured level is compared with lighting standard for different categories of spaces and in the cases of a greater number of lighting fixtures there will give up some of them. Their proper orientation and placement, even supplemented by the use of some reflective surfaces can provide a suitable lighting and a lower consumption.

During the day, the use of natural light can lead to reduction of electricity consumption. In the design of logistics centers it is necessary to consider the optimal location of the windows in order to ensure as much as possible the daylight. The placement of light sensors helps ensure proper lighting in work areas, electric lighting being switched or dimmed according the daylight levels.

In addition, the commissioning of motion sensors in spaces where the permanent lighting is not necessary induces a lower consumption of electric energy. But the use of the occupancy sensors knows some limitations, for example in the case of the metal halides lighting that present a delay between the moment of turning off and the moment of the restarting. The replacement of the incandescent bulbs with fluorescent bulbs requires an investment, but its recovery can be done in a relatively short period by the savings determined by the lower electricity consumption. The use of energy-efficient light emitting diodes can lead to significant reduction in lighting costs. They present the advantage of a higher number of operating hours, around 100,000 hours compared with incandescent lamps which guarantee an average of 1,000 operating hours. New types of lamps can lead to electricity savings up to 80 %.

Energy bill may include in addition to the real consumption additional amounts due to reactive power consumption as result of a long functioning of transformers at loads much lower than rated load. As a result it needs to improve the power factor by installing capacitor batteries. The high costs of the procurement, installation and use of these however require a comparative analysis with the costs of reactive power consumption.

Material handling equipments also offer the possibility of reducing energy consumption through intelligent steering, brake systems with retrieving energy, variable- speed control, smart programming for fully automated systems or even the use of hydrogen fuel cells. Making timely of the planned revisions, preventive maintenance performed on the equipment also has effects on consumption. In the selection of the new material handling systems it will be taken into account as a selecting criterion the energy consumption.

Potential to reduce energy consumption shows also the air-conditioning, ventilation and heating equipments. Costs with thermal energy are also determined by the supply of hot water. In a first step, it will be identified their types, consumption of energy, their status, schedule and their mode of their operation. It will then identify any losses which they have in their service.

Certainly, the ideal is that, primarily, the office buildings, warehouses to be designed taking account the energy efficiency, ensuring them the structure, insulation of walls, appropriate waterproofing, energy efficient installations, the orientation of the buildings to allow coolness in the summer. In this way, energy losses are minimized.

In the case of existing storage facilities, renovation of the buildings can lead to a reduction in energy consumption by 30%, but investments involve a relatively long duration of amortization. Moreover, in many cases, warehouses are hired, which makes this measure should not be considered the best.

In office buildings or warehouses that do not have any special temperature conditions, it may be interrupted the heating or cooling, during the periods when are not employees in these spaces. It can be choose the alternative of using radiant heaters only where workers work and also occupancy sensors that can significantly reduce the costs of heating. In the case of outdated heating equipments, with a low degree of automation, replacing them with more efficient models can lead to substantial energy savings, leading to a rapid return on investment in new equipment

An alternative for heating may be the heat pumps, which have the advantage by changing the operation mode they can be used for cooling or freezing. But investment is quite high and payback can even reach up to 10 years.

To avoid losses it is necessary to perform the maintenance of the equipments. Also, in heated or air conditioner it will target the minimization of the air infiltration through the opening of the doors. Using ceiling fans allow, for example, in addition to improving air circulation during the summer also lower temperatures, thus without requiring costly equipment for air conditioning or being able to reduce their number of hours of functioning.

In offices there can be obtained reductions in electricity consumption through the purchase and use of computers and office equipment with low consumption. But the Replacement of the existing devices before their complete amortization is economically justified only in certain particular situations. But savings can be achieved by taking some very simple measures such as closing the office equipment when employees do not need them or turning them in standby mode.

In order to measure the energy efficiency in the nodes of logistics networks there can be used a series of indicators like total energy consumption, electricity, fuel or natural gas consumption, energy costs, energy consumption or energy costs per activity or shipped parcel,

Conclusions

Energy consumption in the supply chain depends primarily on supply chain configuration, modes of transport, speed and traveled distances, warehouse facilities, handling equipment.

First, the use of an energy management system by the companies involved in logistics activities offers the possibility to identify the energy consumption, energy costs and their optimization means.

Significant potential to reduce energy costs in supply chain provide the transport activities. By acquisition of vehicles with low consumption or shifting from road to rail, sea or multimodal transport there can be achieved important fuel savings and thus, reductions in transport costs. Besides these measures involving investments, companies can reduce fuel costs by reducing the number of trips, driving distances. Freight deliveries have to deal also with infrastructure capacity problems, which result in bottlenecks and congestion, generating implications for energy consumption. In these situations, especially in urban deliveries, the use intelligent transport systems or logistics management systems can help to reduce transportation costs.

In warehouses, in order to optimize the consumption of the equipments, an energy- efficient electrical lighting design, the use of control devices, consumption monitoring of heating, cooling, ventilation, freezing, can reduce consumption up to 20 % and investments are not very high, being able to recover them soon enough.

In the case of new distribution network, the proper design of the entire logistics network can offer an important potential to reduce the energy consumption.

References

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