The data from interviews were structured around three categories, namely, the activities, actors, and areas in the logistics system, so as to identify the causes of the unutilised capacity and corresponding mitigations.
4.1. Causes of Unutilised Capacity
To identify and conceptualise the causes of the unutilised capacity in the logistics system that created inefficiencies, the data were structured around the categories and system levels.
The activities refer to what causes unutilised capacity in the logistics system and thus increases the energy consumption. In general, unutilised capacity stems from how parcels and other shipments are handled during transport, in the warehouse, and during transhipment (see Table 3
Transport: The way in which the trucks are loaded is crucial to energy efficiency in transport, and is mostly limited by the goods and their characteristics, as it was explicitly stated by the representatives of companies D and F. Another restriction was that the goods may not be stacked above shoulder height because of the labour regulations (evidence came from company D, F, G, and H). Other causes of unutilised capacity that were discussed during the interviews were the empty running, hanging garments, and idle loading units at the wrong places (such as by companies D, F, and G). The most popular pickup times are during the mornings and the delivery times are during the afternoons, which overlaps with rush hours, and the drivers are already exposed to constant pressure to meet deadlines. Companies E, F, and G mentioned that the constant pressure of time and traffic congestion could decrease the capacity utilisation. Last-minute changes in routing because of, for instance, additional express deliveries, were explicitly mentioned by companies F and G as the cause of inefficiencies. Additionally, the ability to load shipments depended on the departure and arrival times. If times had to be strictly kept, then a unit might not have been loaded on a truck in time. In that case, a shipment might have to wait an entire day at a terminal until it was distributed, thereby creating unutilised capacity in the truck, which would have to leave without it. Company F pointed out that a high volume of parcels and groupage which are needed to fill the logistics system, because the margins for single shipments are so low that only large volumes make the logistics business profitable, lead to further problems. Filling one system with a sufficient volume of shipments often meant that the shipments were transferred from other systems. For instance, filling a truck might require taking products from a more energy-efficient system (e.g., rail), which would leave behind unutilised capacity. Moreover, over-ordering products increases the return trips. Imbalances in the volume flow and empty running were additional causes of unutilised capacity (from companies B, F, G, and H).
Warehousing: During the picking process in the warehouse, human errors could occur, as stated by companies D and E. Large volumes that suddenly need handling, incorrectly implemented automation, and dysfunctional information technology (IT) could also generate inflexibility and unutilised capacities in warehouses, as could the instances when standardisation was impossible (explicitly mentioned by companies B and D). However, the interviewees from companies F, G, and H indicated exactly the contrary—that, in some cases, the standardised processes were responsible for unutilised capacity.
Transhipment: The interviewees from companies F and H revealed that the consolidation of goods was often criticised by the shippers, who did not want to share the distribution capacity that is, after all, a factor of their competitiveness. Furthermore, information was often not sufficiently shared in either internal communications or communications among the different actors, as stressed by the interviewees from companies A and B. In particular, the information flow often lacked the details that were necessary for all of the actors and departments to meet their various interests, the result of which was unutilised capacity. The relationships among the different actors rarely occurred on an equal footing. As the interviews with companies F and G showed, collaboration often involved rules that were dictated by stronger, larger actors, whereas the weaker actors had no choice but to follow the lead. For example, a shipper might demand certain routes, loading specifications, and delivery times, which prompted unutilised capacities for the transport provider. The interviewees from companies F and D also revealed that the so-called ‘big players’ in logistics cannot collaborate because of the laws against cartelisation, which prevented the LSPs from forging a unified strategy with an environmental-friendly agenda and reducing energy consumption.
The system levels under the category of Actors encompassed the causes that were directly because of the LSPs, shippers, or end-consumers, if not a combination of those parties. These causes are referred to as ‘who’ is responsible for the unutilised capacity in logistics and, in particular, road freight transport (Table 4
Logistic service provider: LSPs continuously expand their service offerings and often provide an over-delivery of services, as stressed by the companies F and G. For example, the LSPs delivered the products in express deliveries when the express deliveries were unnecessary, offered services at unprofitable prices, and pursued volumes that they needed to fill the system, all to maintain or strengthen their market share. However, an interviewee from company F emphasised that, since the prices do not often reflect the real costs, the services are often offered in excess of the customer demands, meaning that unnecessary capacities are created. In short, the LSPs’ top priority was often to fulfil the customers’ demands regardless of the energy consumption and its consequences (evidence from companies F, G, and H). For example, whereas small shippers contracted standardised services, larger ones wanted to influence the logistics process by, for instance, specifying certain routes. In response, LSPs had to adapt their own logistics processes and resources, which often produced inefficient solutions. Companies F and G mentioned that large LSPs tend to offer a broad range of services, but cannot compete in terms of the price and efficiency with the smaller actors that offer niche services, but by trying to keep their dominant market share unutilised capacity is generated. When an LSP outsourced transport to a transport provider, it also delegated all of the responsibility for the fill rates and fuel consumption to the transport provider (evidence came from companies A, B, F, and G). Eschewing responsibility, being inflexible in making changes in transported volumes, and being unable or unwilling to mix groupage and parcels in the same vehicles (as mentioned by companies B and F) created further unutilised capacity in the system.
Shipper: Among the actors, the shippers cause unutilised capacity because of the imposing requirements (as mentioned by companies F, G, and D), for example, for delivery and pickup timeframes that LSPs and transport providers could not meet during rush hours or because of congestion. If delivery timeframes were not met, then the LSPs often had to return to the point of delivery after agreeing to a new delivery time. Another cause, which was mentioned by the same three companies, was inflexible delivery timeframes among the different shippers at the same location. For example, although the different shops in a mall all received goods from the same LSP, because some shops wanted to receive deliveries one hour before opening and others during business hours, the LSP had to make several trips to the same address. Moreover, unutilised capacity was created, as mentioned by four of the companies (D, E, F, and G), since the customers preferred to receive goods as early as possible and to post the deliveries as late as possible. This made it impossible to deliver and collect the parcels at once. Furthermore, shippers, as commented on by companies B and F, often over-ordered to ensure enough capacity in the case of high demand; however, it often remained unutilised.
End-consumer: The behaviour of the end-consumers drives the energy consumption in transport, although the end-consumers are often unaware or dismissive of their impact on fuel consumption, as mentioned by companies F and G. Furthermore, the same interviewees explained that, although products might contain information about their organic origins, they do not contain information about their GHG footprint that is related to transport. The end-consumers are often unaware of the consequences of their product choices, relative to GHG emissions. Furthermore, the sales campaigns that offered ‘free’ home deliveries, shipments without declared surcharges for delivery, and packages including retour papers, encouraged end-consumers to order and return more goods (evidence from companies D, E, and F). The interviewees from companies D and F explained that, because of the increased demand for express deliveries and the increased expectations about the exact delivery times, as well as a high failure rate of unattended home deliveries, the end-consumers were responsible for a great deal of energy consumption in the last mile of the supply chain. Almost all nine of the interviewees highlighted that end-consumers almost always preferred the fastest, most-convenient logistics solution.
4.1.3. Areas in Logistics System
The areas in the logistics system describe where the unused capacity originated, particularly in the context of in- and out-bound logistics, last-mile distribution, and reverse logistics (see Table 5
Inbound and outbound logistics: A major cause of unutilised capacity in the supply chain, as stated by companies A, B, C, D, and F, is the steady demand for short lead times and just-in-time deliveries. The interviewees mentioned that the end-consumers increasingly requested express deliveries, which affects the whole supply chain. Furthermore, companies D and G mentioned that shippers therefore had to order smaller batches and could not fill truck loads, which precluded any economy of scale. The just-in-time deliveries are fuel intensive, given the high number of small shipments that are involved, and the vehicles often cannot be loaded to their full capacity. Such just-in-time deliveries originated from the existence of smaller warehouses and the inability or unwillingness of shippers tie up capital in products.
Last mile: With e-commerce, many small parcels were sent to end-consumers’ homes instead of in full pallets to the retailers (evidence from C, D, F, and G). The steady growth in the abundance of such parcels has increased demands for transport and, in turn, the total fuel consumption and traffic congestion in the last mile. In e-commerce, the standardised boxes that are used for packaging were often unnecessarily large and thus generated unutilised capacity, as explained by the interviewee from company G. Another cause occurred when big trucks delivered goods to the point of consumption. Even with high fill rates, the chain imbalances caused the vehicles to be not fully utilised once they dropped off shipments during milk rounds. Narrow delivery timeframes also increased the unutilised capacities and increased the failure rates of the home deliveries even further, as pointed out by companies D, E, and G.
Reverse logistics: The return of unwanted or damaged products, and the recycling of products at the end of their lifetimes, required additional transport and handling of goods. Often, reverse flows were poorly integrated with flows towards the end-consumers, as explained by companies D and H. Furthermore, the interviewees from companies D and F pointed out that with e-commerce, in particular, the returns represented unprofitable business, for they were often free of charge for the end-consumers and were exploited by the end-consumers who merely wanted to test products. Even when the returns posed a small fee for the end-consumers, they rarely covered the real cost for the retailers. In short, return policies that favoured the end-consumers tended to create redundant transport and unutilised capacity.
4.1.4. Additional Cause
Cost was seen as an overlapping cause across all of the three categories. During the interviews, two insights were highlighted (first and foremost stressed by companies D, F, G, and H), as follows: that energy was not the crucial cost driver when it came to transport, and that the LSPs often did not correctly calculate prices, which is an unprofitable practice that ultimately harms them and encouraged the customers to over-order and use transport in excess. Interviewees generally indicated that, given the low cost of fossil fuels, energy was not the crucial factor when trying to keep the total costs low. Instead, the costs are driven by time, administration fees, salaries, the handling of goods, and the range of product assortments. As a result, detours and low fill rates are widely tolerated. At the same time, company F pointed out that LSPs offer round prices, which means that average prices are applied across Sweden, although the remote areas are more expensive to reach. Normally, the deliveries to urban areas are balanced against the prices for remote areas. However, if an LSP was chosen only for deliveries to remote locations and not to urban areas, while the deliveries in urban areas were performed by niche actors that offered lower prices than the LSP, then the LSP would have lost business and profit. The pricing model of LSPs, therefore, did not reflect the real costs. Additionally, the end-consumers did not see the costs of transport, which were often hidden in the product prices and appeared to them as being free of charge, despite the reality. As a result, the end-consumers over-ordered products and transport services and thus created unutilised capacity.
4.2. Mitigations of Unutilised Capacity
The mitigations of unutilised capacity were derived from the empirical data. Linking the causes of unutilised capacity with mitigations can increase the energy efficiency and reduce the GHG emissions from road freight transport and logistics, as detailed in the following subsections.
summarises the mitigations concerning the activities in the logistics system, meaning what could be done to utilise capacity.
Transport: The interviewees from companies F and G suggested delivering products during periods with less traffic congestion, such as during off-peak delivery times, a behaviour which could be encouraged through incentives. Additionally, companies E, F, and G mentioned that routing could easily be calculated with the right software, and real-time tracking could show the available capacity in vehicles. Also, consolidation, which was explicitly mentioned by companies B, F, and G, should be encouraged by retailers, for consolidation, in addition to saving energy, can reduce the number of trucks arriving at terminals and, thus, congestion. By combining heavy and light goods on trucks, better fill rates and better prices could be secured for the LSPs. The interviewee from company F gave the example that, in a best case, 80 percent of the weight, but only 20 percent of the volume should be placed on the bottom, whereas 20 percent of the weight but 80 percent of volume should be placed on top. The product designs and sizes could be altered to better fit on pallets. As such, pallets should be high enough—for example, double-stacked pallets directly fitted into one truck—and thus use the entire height (a suggestion from companies B, C, D, F, and G).
Warehousing: The interviewees mentioned several mitigations for handling and loading. Firstly, it was recommended to work with standardised, foldable, stackable boxes for delivering products from the distribution centres to stores, where the boxes could be folded and stacked so as to minimise the use of space until they were returned (suggested by companies F and D). Secondly, companies D and G mentioned that to expedite handling, products should be labelled with prices and packed in store-ready batches before their delivery to the distribution centres. Thirdly, alternatives for hanging garments that prevent wrinkling and use less space, should be considered (advice from company D). Fourthly, company E suggested that human error when picking orders could be reduced or even eliminated with systems such as the picking-by-bag system, which is controlled via an IT component, and further training. The system adds product sizes and weights and can thus tell the pickers which products fit together in a given number of bags. Above all, the mission of maximising the capacity utilisation should span the entire product flow, from developing products that fil the standardised boxes exactly to ensuring a good pallet fit (suggested by companies B, D, and H).
Transhipment: It is important that the shippers would not over-order unnecessary volumes, as mentioned by companies D and F. Regarding the improved information flow, interviewees from companies B, E, and F suggested using platforms and IT, which could help both the internal and external information flow. Additionally, company B recommended improving the internal information flow by concentrating logistics-related knowledge at the shippers in one division instead of spreading it across several divisions. That way, one division is responsible for sourcing the transport work and contract management, which helps concentrate all of the knowledge and discover the synergies. Collaboration is another way to utilise the untapped capacity. For example, the interviewees from companies F and H suggested that the unutilised capacity in trucks could be sold to other companies in an online marketplace. Companies D and F also suggested that the political system should encourage collaboration, which it has mainly hindered to date. That way, companies could create common strategies with environmental-friendly agendas.
summarises the results regarding the mitigations that the various actors could implement to take advantage of unutilised capacity.
Logistics service provider: The transport was outsourced from the retailers to the LSPs, who could deliver products more energy-efficiently than the retailers could with their own solutions (suggested by companies D, F, G, and H). Economies of scale could be achieved, which were mentioned by company F and G, when one transport operator served several shippers, especially in a given region. Company G recommended that IT systems should be implemented to facilitate the booking process. Another suggestion to decrease the emissions directly involved using electric cars for parcel and mail distribution in urban areas (suggested by companies D, E, F, and G).
Shipper: Since the GHG emissions are of great concern to the market, keeping them low is a critical objective. Companies F, D, and G proposed that, in order to raise awareness of and gauge the extent to which the emissions targets are met, all of the emissions from transport during the year should be reported to the shippers, and followed up, and the decreased emissions should be rewarded. As the interviews with companies F and G revealed, the shippers should allow a greater flexibility in terms of the time slots and delivery timeframes, and be more willing to discuss and develop environmental-friendly solutions together. Companies B and D said that in order to ensure the fulfilment of the emissions targets, clear criteria for the LSP should be set in the tendering process, concerning fuel consumption, quality, product safety, and employee safety, so the LSP has clear performance expectations.
End-consumer: The interviewees from companies E, D, F, and G stated that the end-consumers must be made aware of how their behaviour affected the environment; they suggested educating end-consumers about their behaviour’s impact and making information of the CO2 footprint from transport available to the end-consumers. Furthermore, they also proposed educating the end-consumers on the hidden cost of transport, by making that cost visible. For example, although home deliveries were often free for the end-consumers, they needed to recognise that last-mile transport has its price.
4.2.3. Areas in Logistics System
As summarised in Table 8
, this category presents where in the logistics system certain mitigations could be implemented in order to utilise unutilised capacity.
In- and out-bound logistics: Capacity utilisation can be improved by decreasing the demands on the short lead times and on the high speeds in the supply chain, that is, reducing the just-in-time deliveries (suggested by companies B, D, F, and G). Speed is often triggered by an increased demand for express deliveries from the end-consumers. They need to become aware that express deliveries are costly and created unutilised capacity, and they should pay a higher price for them.
Last mile: The interviewees from companies D and G noted that standard-sized packaging, although typically appreciated, often includes too much air and should be replaced in certain cases with customised packaging that wraps items as tightly as possible. Additionally, an interviewee from company F suggested disconnecting delivery from the end-consumers by not having deliverers and end-consumers meet at points of reception, but instead delivering goods to pickup points. By relocating the points of reception from the front door to the pickup points, large commercial vehicles do not have to drive the extra leg, and energy consumption could be reduced. Additionally, tracking systems and apps, as mentioned by companies E and G, could make delivery arrivals visible to the end-consumers so as to minimise unsuccessful home deliveries. Company E suggested that the delivery timeframes should depend on the proximity to the distribution centre and increase with distance. For example, one-hour delivery timeframes could be allowed only in city centres and close to distribution centres, two-hour timeframes farther away from city centres, and three-hour deliveries could be allowed if the consumer lives even beyond a certain point. Furthermore, redundant transport could be decreased by avoiding one hub in the supply chain, as proposed by company F.
Reverse logistics: In order to avoid redundant transport from returns in e-commerce, interviewees from companies D, F, and G proposed that end-consumers should have to pay for the service so as to discourage their overuse. Companies G and H recommended that returned products from e-commerce should not be returned to the manufacturers; instead, the LSPs should relabel and re-shelve them for direct sale.
4.2.4. Additional Mitigation
Another important mitigation that was mentioned by all of the interviewees, which stretched across all of the categories, was the adaption of the cost structure of the LSPs. Since fuel prices do not reflect the damage that is caused to the environment, the prices for transport should be revaluated. In addition, because LSPs often offer unprofitable prices, a new cost structure that better reflects the real costs should be devised.