A 4-Step Action Plan to Reduce Energy Costs in Cold Chain Logistics

The UN predicts the world to have 2.3 billion people by 2050, and 85% of them will be living in developing countries. This means that food production needs to go up by 70%, and the role of cold chain logistics becomes even more crucial. The sector is currently demonstrating a CAGR of 7.8%, which means that the cold chain market will be USD 340.3 bn by 2025. Following closely is the cold chain logistics market which is growing at 7.9% CAGR and is expected to be USD 463.73 bn by 2029.

Despite such enticing numbers, 62% of the shippers struggle with proper handling, 38% struggle with regulatory compliances, and 38% find it hard to manage the last mile efficiently. Further, 21% of the shippers face technology investment and maintenance costs to be crucial challenges in cold supply chains. Also, the refrigeration and air conditioning sector accounts for 17% of global electricity consumption, and for some developing countries, this percentage is even more than 40% of total national electricity demand.

Energy consumption and sustainable operations continue to be crucial pain points for cold supply chain managers as the conflict between reducing energy consumption objectives (which further reduces cost and emission) and preserving product quality persists.

Here, we share a 4-step action plan to overcome this and many other operational conflicts and challenges and reduce the energy consumption costs in cold chain logistics.

4 Steps to Build Energy-Efficient Cold Supply Chains 

Break Operational Silos

Currently, businesses struggle with siloed operations and communications. While they hire multiple carrier partners or work with the leading cold chain logistics service providers, they fail to analyze and compare the perfect combination of services and carrier partners. This leads to cost bleeds owing to lesser control over contracts, billings, and efficient orchestration.

Having a highly integrated end-to-end logistics management and orchestration platform with unified communication and collaboration capabilities can not only help break the silos but also unlock 65% of person-hours savings. Some other advantages include a reduction in freight costs, and operational costs, ultimately leading to a reduction in energy costs.

Leverage AI for Fuel-Efficient Route Planning and Optimization

As discussed above, the Last Mile continues to be a challenge for cold chain logistics efficiency. Manual routing or static route planning leaves optimization pockets hidden in the Last Mile operations. Further, the inability to route shipments and carriers in real-time as per the traffic or weather conditions also escalates the energy consumption costs.

Leveraging AI-powered smart route planning and optimization platforms that perform dynamic routing, re-routing, and smart hand-offs can change this scenario entirely. Such platforms also send automated alerts for driver deviations from system-suggested behavior or routes to ensure tighter control over on-road movements. Such automated alerts also help curb empty miles, vehicle idling, etc., thereby reducing fuel wastage.

Track and Monitor Shipments in Real-Time

Lack of real-time shipment movements can lead to blindness in many crucial spots, such as ETAs, hand-offs, etc., which not only breach the SLAs but also amplify the fuel costs. A temperature-controlled carrier consumes energy even when it is parked, or the driver is taking some rest or signing documents. 

Investing in solutions that offer digital document lockers and real-time tracking capabilities helps cold supply chain managers to orchestrate highly efficient on-road operations and timely hand-offs. Leveraging gamification for the incentivization of highly productive drivers and SLA adherence is yet another way to boost efficiency and curb fuel consumption.

Optimize for Vehicle Capacity

While the majority of businesses optimize the routes, legacy systems inhibit them from choosing multiple custom constraints for supply chain optimization, such as vehicle capacity, shipment volume, weight, size, vehicle make, etc. Hence, the carriers are sometimes carrying partial loads while the costs are set for full loads. 

Smart supply chain management platforms can help managers optimize for all the above-mentioned and many more constraints to ensure highly fuel-efficient operations and curb emissions, operational costs, etc. as well.

Cold supply chains are one of the high-revenue generating sectors, which is also marred by emissions and energy consumption numbers. Investing in smart end-to-end supply chain management and logistics orchestration platforms can help businesses reduce ETA SLA breaches by 37%, increase deliveries per driver by 14%, and reduce freight costs by 10%. 

As the world moves towards sustainable operations and every stakeholder, from investors to end consumers, favors brands with ESG initiatives, leveraging the right automation for diverse and multi-tier optimization is the right way forward for minimizing energy consumption and emissions.