The Role of Sustainable Shipping in a Circular Economy

Brandi Smith, Marketing Director

Climate change has become a defining issue of our time. Winter temperatures in the Arctic have risen by 3°C since 1990, sea levels are rising, coral reefs are dying and we are starting to see the life-threatening impact of climate change on health, through air pollution, heatwaves and risks to food security. These impacts are being felt globally, across regions and across industries.  

As a result of these impacts, a radical redesign of our economic system is underway. It’s better for business, society and the environment when implemented in efficient ways. It’s called the circular economy and its accelerating rapidly around the world. Not familiar with the concept? A circular economy is increasingly being recognized as a guiding principle for business model innovation. In practice, it reduces waste to a minimum. It’s based on sharing, leasing, reuse, repair, refurbishment and recycling in an (almost) closed loop, where products and the materials they contain are highly valued. It’s a sustainable and viable alternative to the dominant ‘take-make-consume-throw away’ linear model — a wasteful system that involves extracting raw materials to make new products without consideration for how materials can be reinserted into the value chain. With growing awareness of our finite natural resources, it’s becoming increasingly apparent we need to change the system — and fast. This is where the circular economy comes in.

Moving towards a circular economy delivers a series of opportunities and benefits from both an environmental and economical perspective, including:

  • Reduced greenhouse gas (GHG) emissions through better waste management and reduced use of resources such as energy, water, land and materials during the manufacturing process.
  • Enhanced security of raw material supplies by mitigating the risk associated with the supply of raw materials including price volatility, availability and import dependency.
  • Increased competitiveness by improved resource efficiency, which brings cost savings to businesses and, ultimately, having those cost reductions passed down to consumers.
  • Innovation as businesses seek new ways to redesign materials and products for circular use.
So, where does shipping and logistics come into play with all of this?

The logistics sector plays a crucial role in the circular economy. Production and user processes must be linked in order to create a system without waste or negative impact on the environment. The circular economy offers many opportunities for logistics companies to change their role, to innovate and to seize opportunities. Our CEO and Founder did just that with ShipperBee (you can see how he came up with our concept in his Future of Shipping blog).

We at ShipperBee believe that the circular economy’s ability to reduce GHG emissions goes beyond the manufacturing process when shipping mass-produced products. While items may continue to be manufactured in countries outside of North America and shipped by sea in containers, when it comes to land shipping and distribution a significant impact can be made with a more sustainable shipping partner at a regional level. This can be achieved with the removal of the hub-and-spoke distribution model used by large courier giants across North America.  

Traditionally, these large carriers send small trucks out in their serviced city centers to collect parcels from their regional distribution centers and local businesses. These carriers then send all of these packages by large truck to their more centralized distribution centers, which could be up to 250km away. These parcels are sorted by local geography, repacked onto a large truck and shipped out to their local destination, which in many cases is routed back in a similar direction as the package’s origin. The process then repeats in reverse where a small truck picks up packages from the regional distribution center and delivers them to the business or residence endpoint. Simply put, this process and these routes are extremely inefficient, cause significant environmental harm through GHG emissions, not to mention traffic congestion, noise on our streets and greater competition curb side.

Organizations are adjusting their business models from linear to circular processes and systems. Take the retail industry as an example. Consumer brands such as H&M Group have partnered with the Ellen MacArthur Foundation to research new approaches in the following areas:

  • Exploring solutions to create a closed loop for textiles, where unwanted clothes can be recycled into new ones.  
  • Setting sustainability targets for a circular fashion industry within planetary boundaries using a science-based approach.  
  • Applying circular economy principles to its sustainability strategies, both for commercial and non-commercial goods, such as packaging and shipping.

B2C examples such as H&M aren’t the only organizations taking steps to rethink their operations. B2B initiatives, partnerships and ecosystems are increasingly emerging as well. Whether its B2C or B2B-driven players, extensive changes throughout supply chains and the establishment of new ecosystem partnerships to truly succeed will be required. One of which is transforming shipping from being commoditized into a service capturing value beyond the movement of packages, particularly through the use of technology enabling us to show how different opportunities may arise for the shipping industry and to identify new insights. A good example of this would be microhubs and route optimization solutions designed to reduce the environmental impact of ground shipping.  

Take ShipperBee’s model. We support regional shipping in a way that removes hub-and-spoke distribution from the shipping equation. We’ve setup what we call “Hives,” or what would be considered microhubs, at gas and convenience locations across cities and regions. Our local drivers — such as students, retirees or stay-at-home parents — pick up parcels at local businesses and deliver them to the first Hive. Our commuter drivers pick up parcels at the Hives located at a gas and convenience store closest to their home and deliver them to a Hive closest to their office. This process continues like a baton in a relay until the parcel reaches a Hive closest to its end point destination. A local driver then delivers the parcel to the end recipient, whether a business or residence (check out our ‘How It Works’ infographic here). There are no back and forth routes with large trucks to get packages to their recipient. Instead, we’re focusing delivery at a regional level using people who are already in transit or situated close to the start point or end point.  

This new shipping approach is creating a significant reduction in GHG emissions. Our studies have shown that our model reduces carbon emissions associated with the delivery for every parcel we ship by up to 73.1% because we are using people already in transit and removing hub-and-spoke distribution from our process.  

Our sustainable shipping model supports the environmental approach for circular economy focused organizations. Whether it’s product shipments or returns, ShipperBee is helping to reduce the impact parcel delivery has on the planet.

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