Circular economy in logistics and transportation

Monday, April 5, 2021

In a world with increasing ease of purchase, where products are more disposable every day and the culture of waste is increasingly notorious in people’s way of life. UN specialists suggest the CIRCULAR ECONOMY as a method of sustainable economic growth and development. But how would this UN-proposed Economy affect the global supply chain?

The transport and logistics sector is one of the most relevant to capitalize on the Circular Economy.

The circular economy offers a scenario of multiple solutions for economic development addressing climate change, loss of biodiversity, increased waste and pollution, while ensuring economic growth and development.

The design of the use of renewable energy and materials makes the circular economy revolutionize the way we produce and consume. The model is based on three principles: eliminate waste and pollution; maintain products and materials in use, and regenerate natural systems.

A circular economy aims to always keep products, components and materials at their highest levels of use and distinguishes between biological cycles and technical cycles of what is produced.

The different business models of Circular Economy involve different ways of using the materials, components or products. For this, additional logistics processes are necessary to carry out these reincorporations of products and materials back into the supply chain and return flows (reverse logistics). Its efficiency with the management of the supply chain, the manufacturing, repair, remanufacturing and recycling processes will play the main role to be able to carry out the proposed model.

Good logistical coordination in the circular economy model will bring us closer to more “smart” cities and to a more conscious society in managing its resources.

Trends such as e-commerce, autonomous transport trends, as well as the increase in reverse logistics will mean that transit functions must be redesigned in cities. In this transition, it is worth highlighting the importance of thinking about the logistics of the last mile and the last metro in cities, to deliver materials to their final destination.

Some initiatives to consider, which have been an example for current logistics processes that took into account the circular economy, are:

• B2B (Business to Business) concepts such as Green City Distribution, Binnenstadservice, and Cargohopper in the Netherlands
• DHL reverse logistics B2C (Business to Consumer) concepts
• New systems based on collaboration between distributors by location of the destination (same street / neighborhood / district), by sector / product, or between transport companies. Digitization is a good lever to shape those collaborations.

Some of the companies that are already using the circular economy as of 2020 are:

AB InBev

To show that innovation in the circular economy is not limited to small new technology startups, the world’s largest brewery wants 100% of its products to be sold in returnable packaging or made mostly from recycled material by 2025.

HYLA Mobile

HYLA Mobile works with many of the world’s leading manufacturers and service providers to reconvert and reuse discarded mobile devices and their components. It is estimated that more than 50 million devices have been reused

Close the Loop

This Australian company has spent more than a decade recovering value from old printer cartridges and soft plastics. This innovation turns these materials into roads.

Walmart Mexico

The retail chain achieved savings of 207 million pesos thanks to reverse logistics in its operations in Mexico and prevented its transport units from traveling empty more than 33 million kilometers for the collection of cardboard and sand