Sustainability dimensions in goods movement

On the following page the social dimension of sustainability will be explained to you. After showing you the development of corporate social responsibility we are talking about the working conditions such as the dimensions and activities for companies.

Definitions of Corporate Social Responsibility (CSR)

According to Bowen (1953), the corporate social responsibility “refers to the obligation of businessmen to pursue those policies, to make those decisions, or to follow those lines of action which are desirable in terms of the objectives and values of our society.“

The European Commission (2001) states that Corporate social responsibility is basically a voluntary commitment by companies to work toward a better society and a cleaner environment.

CSR is closely linked to the already presented Ten principles of the United Nations Global Compact, which propose that companies should be required to make decisions not only on the basis of financial/economic factors, but also taking into account the social and environmental impact of their activities.

The following figure “Conceptual changes of Corporate Social Responsibility Concept over the years" shows the development of CSR from 1950 to 1990. Starting with a strong business and the obligation to follow the given policies, CSR has evolved and taken up more relevant criteria such as the expectations of the society, the multiplicity of interests, the public responsibility etc.

CSR for companies

CSR is a term used to describe what some consider to be a company's obligation to address the needs of all stakeholders in its business activities above and beyond legal requirements. The stakeholders of a company are all those who are influenced by, or can influence, a company’s decision and action. Stakeholders can be

• employees,
• customers,
• suppliers,
• community organizations,
• subsidiaries and affiliates,
• joint venture partners,
• local neighborhoods,
• investors, and shareholders (or a sole owner),
• financial and insurance institutions,
  
• and more...

Stakeholders are responsible for the value of companies. Over the last 20 years, their rates have become increasingly dependent on environmental and social standards, which are mostly formulated by environmental institutions.

Working conditions

Working conditions are an important pillar of the CSR standards, as companies could not operate successfully without their employees. For increasing the social sustainability of the companies, it is necessary to ensure better working conditions.

In the last years, the market conditions in logistics (Fast, Flexible, Cost-efficient and Heavy competitive pressure) lead to changing working conditions in industrialised countries:

• Long working times that are almost impossible to plan
• Outsourcing to third-party companies or bogus third-party companies
• Departure from normal working relationships
• Low pay
• Health and workplace conditions (heavy physical burden, working in noise and exhaust fumes, unhealthy way of life)
• Lack of balance between work and private life
• Job (dis)satisfaction
• Rising job requirements

Internal and external dimension of CSR in EU-green paper

Internal CSR dimension

• Human resource management
• Health and safety at work
• Adaptation to change
• Management of environmental impacts and natural resources

External CSR dimension

• Local communities
• Business partner, suppliers and consumers
• Human rights
• Global environmental concerns

On the following page the ecological dimension of sustainability will be explained to you. After showing you the consequences of climate change and GHG emissions on the world we are talking about the reporting standards for companies and explain you, how to calculate emissions from goods movement.

Transport and environment

The following figure „Share of different modes of transport in energy consumption and NO2 emissions” shows the different movables and their transport energy consumption in 2022 such as their Nitrogen dioxide (NO2) emissions in 2021 from road traffic. NO2 is a corrosive irritant that is released during combustion processes in systems and engines. It contributes to particulate matter pollution and can increase the risk of dying from cardiovascular diseases and also contributes to the over-fertilisation and acidification of soils.

Share of different modes of transport in energy consumption and NO2 emissions, Source: Umwelt Bundesamt 2023 (CC-BY-SA)

In Germany, 2.5 acres of new land was was taken up for transportation purposes each day in 2019. Every year, 111,420 tons of plastic microparticles are released by tire abrasion into the environment in Germany alone. In 2017, 13.2% of the population in Germany was affected by sound levels above 50 decibel (dB(A)). 50 dB(A)corresponds to a normal room volume and is just about comfortable for us. Outside the home, average noise levels above 55 dB(A) are likely to have an increasingly negative impact on our mental and social well-being.

Why is the focus on carbon dioxide (CO2) or equivalent balances?

The following figure “CO2 emissions worldwide 2021” shows the emissions in the sectors transport, buildings, other industrial combustion, power industry and other sector.
There is a linear dependence of CO2 on energy use (regardless of the kind of fuel). The anthropogenic CO2 is the GHG number 1. Greenhouse gases are a group of gases contributing to climate change and global warming and are explained to you below. Worldwide, 20 % of global CO2 emissions are caused by transport (passengers and goods). There exist policy steering parameter like the Kyoto Protocol. In a non-binding communiqué issued on June 7 2007, it was announced that the G8 nations would ‘aim to at least halve global CO2 emissions by 2050’.

CO2 emissions worldwide in 2021, Source: Crippa et al. 2021 (CC-BY-SA)

The logistics sector is highly dependent on fossil fuels and has a high growth rate. In total, Logistics accounts for 10-11% of global CO2 emissions, where

• the Transport of goods accounts for approx. 8%
• the Storage and terminals accounts for approx. 1-2%
• while the accounts for Administration and IT are unknown.

The consumption of resources and the resulting emissions and immissions lead to an increase in temperature. This ongoing temperature changes have an impact on several aspects e.g. weather, water, food and the ecosystem. The following figure “Consequences of climate change” shows, how different temperature changes are impacting the weather, water, food, ecosystem, social and the gross domestic products. An increase of just 1 degree will threaten water supplies through melting glaciers and results in a crop yield decline in developing countries, a severe and irreversible damage to ecosystems, a first refugee movements (‘climate refugees’) and a reduction in GDP in developing countries. From a 2 degree increase, there will also be an increase in extreme weather events, a water shortage for up to one billion people and the extinction of many animal species. At the UN Climate Change Conference (COP21) in Paris 2015, 196 parties adopted a legally binding international treaty on climate change. It was adopted by 196 parties at the UN Climate Change Conference (COP21) in Paris, France, on 12 December 2015. The goal is to hold “the increase in the global average temperature to well below 2°C above pre-industrial levels” and pursue efforts “to limit the temperature increase to 1.5°C above pre-industrial levels.” (United Nations 2015)

Consequences of climate change, Source: Stern (2006) (CC-BY-SA)

Definitions of Greenhouse gas

When talking about emissions, climate change and global warming, the three terms GHG, GWP and CO2e are often used, which are defined according to the ISO 14083 as follows:

The following figure “Greenhouse Gases - Originator, Gases and GWP” shows you the different greenhouse gases like carbon dioxide, methane, nitrous oxide and f-gases, its formula, GWP (in 100 years) in CO2eq and primary source. Furthermore, the graphs provide information about the originators of the gases and the distribution of the gases.  19,1 % of the GHG emissions originate from transport. From the GHG, 88% are CO2, 6,1 % Methane, 4,1 Nitrous oxide and 1,7 % F-gases.

Greenhouse Gases - Originator, Gases and GWP, Sources: GHG Protocol 2016, Umwelt Bundesamt 2020 (CC-BY-SA)

Legislation

As already mentioned on the previous pages, the EU has issued important legislations for the past and coming years to ensure a standard for sustainable behaviour. The following figure “Legislations: Affected companies and relevance for SMEs” (small and medium-sized enterprises) shows you four important legislations (Regulations and Directives) for Germany and Europe and the companies affected. While the LkSG (Lieferkettensorgfaltspflichtengesetz) is a German regulation, the EU taxonomy as well as the CSRD (Corporate Sustainability Reporting Directive) and the CSDDD (Corporate Sustainability Due Diligence Directive) are EU directives that are defining goals, EU countries must achieve.

The four legislations are explained in detail below.

Legislations: Area of application, core aspects, affected companies and relevance for SMEs, Source: Own figure (CC-BY-SA)

LkSG

EU taxonomy

The EU taxonomy regulation (EU) 2020/852 is a classification tool for corporate activities and their contribution to sustainability and a reference point for investors to assess the sustainability of companies. It is a mandatory reporting since 2022 and is established for benchmarks and values. The objectives are more investments in sustainable technologies and companies and to encourage companies to act "greener”. The scope of application is large capital market-oriented companies with more than 250 employees that are not financial companies and have a net sales of 50 million € or a balance sheet of more than 25 million €. Furthermore, it also applies to listed SMEs and other companies. The EU taxonomy should provide criticism of the classification of individual activities (e.g. gas and nuclear energy).

The EU taxonomy has the following six envirnomental goals:

1. Prevention of climate change
2. Adaptation to climate change
3. Sustainable use and protection of water and marine resources
4. Transition to a circular economy
5. Pollution prevention and control
6. Protection and restoration of biodiversity and ecosystems

CSDDD

The CSDDD obliges large European and foreign companies throughout the EU to comply with certain environmental and human rights standards in their supply and value chains. It is build on the LkSG, but extends the environmental due diligence obligations and also includes chemical-related obligations and obligations to protect biodiversity, endangered species and specially protected areas and seas. In addition, companies must draw up and implement a plan to minimise their impact on climate change. To this end, companies must ensure that their business model and strategy are compatible with limiting global warming to 1.5 degrees and the transition to a sustainable economy.

You can find more information on the CSDDD here and the directive here.

CSRD

There are also more product-related sustainability policies and regulations, that are listed below:

GHG Protocol scopes and emissions across the value chain

The following figure “Illustration of the Greenhouse Gas Protocol” shows the Scopes 1, 2 and 3 of emissions and the indirect and direct effects (CO2 (carbon dioxide), CH4 (methane), N2O (nitrous oxide), HFCs (hydrofluorocarbon), PFCs (perfluorcarbon) and SF6 (sulfur hexafluoride)). Scope 1 emissions are covering emissions controlled or owned by a company e.g. burning fuel in the fleet of company vehicles. Scope 2 emissions are indirectly generated emissions resulting from the use of purchased electricity, steam, heat or cooling. Scope 3 emissions include all other indirect emissions caused by a company's activities in its value chain that are not produced by a company itself. This includes in the upstream activities e.g. upstream transport and distribution, waste generated in operations, business travel or other purchased goods and services. The downstream activities for scope 3 emissions include the downstream transport and distribution, the processing and utilisation of products sold, the end-of-life treatment of products sold or franchises and other investments.

Illustration of the Greenhouse Gas Protocol, Source: GHG Protocol 2011 (CC-BY-SA)

According to the GHG Protocol (2004) and the International Organization for Standardization (ISO) 14083, the General GHG Accounting and Reporting principles for companies are as follows:

The ISO 14083 contributes to the carbon footprint of products (ISO 14067) and companies (ISO 14064) as well as to the life cycle assessment (ISO 14040 and ISO 14044). An isolated application of the standards is not intended. It illustrates interaction with other ISO standards in the ISO 14040 and ISO 14060 series and uses a product purchased online as an example. The GHG emissions intensity per tonne-kilometer (tkm) calculated according to ISO 14083 can be used as primary or secondary data for GHG quantification projects and the data would need to be adjusted or modified for this purpose to reflect GHG emissions on a whole life basis.

For the GHG inventory of a company, the ISO 14064-1 can be used. One component here is emissions from transportation. For calculating the emissions from transportations, the different steps of the product need to be taken into account. For calculating the carbon footprint of a product, the ISO 14067 can be used. In order to calculate the GHG emissions from the transport chain, the ISO 14083 is used. The Principles and framework for LCA in ISO 14040/44 are taken into account the ISO 14083 and ISO 14067. The results from the ISO 14067 and ISO 14083 are included in the GHG inventory and report, transport chain GHG report and Carbon Footprint of Products (CFP) study, which are used for the GHG statement. The GHG statements can be verified and validated by using the ISO 14064-3, which builds upon the ISO 14065 (General principles and requirements for bodies validating and verifying environmental information).

According to ISO 14083, reporting must take place at least once a year. The levels of reporting contain the overall organisation (e.g. company or group) such as the transport and hub services. The following figure “Reporting contents in accordance with ISO 14083 for organisations/transport and hub services" shows you the duties and optional reporting contents of the organisation and the transport and hub services in detail.

Reporting contents in accordance with ISO 14083 for organisations/transport and hub services, Source: ISO 14083 2022 (CC-BY-SA)

Transport chain-related GHG emissions considered in ISO 14083

Greenhouse gas emissions from the following categories are taken into account in ISO 14083:

In order to quantify the GHG emissions of the transport chain, the transport chain must be divided into successive Transport Chain Elements (TCE). The TCEs reflect the associated vehicle types, tube capacities and hubs that transport, handle or transfer freight and/or passengers as part of the overall transport chain. The transport chains can be divide into five TCEs, which are required for the greenhouse gas calculation. The TCE 1 and TCE 5 are representing road services, while the TCE 2, 3 and 4 are part of the shipping services. TCE 3 stands for transport by ship, while TCE 2 and 4 include transshipment activities.  The transport chain starts from the Freight consignor and ends at at Freight consignee.

TCEs can represent the following elements of the transport chain: 

• Transport:

• Transshipment between two TCE
  
• Hubs and terminals
  
• Empty runs due to subsequent transport

In order to quantify the GHG emissions, information needs to be exchanged between the participants in the transport chain.

Approach for the quantification of GHG emissions

If you want to quantify the GHG emissions, you can follow this five steps approach.

Step 1: Definition of the system boundaries

The figure "Definition of system boundaries of GHG emission quantification"  supports you in defining the system boundaries. It shows, which processes are included, e.g. all processes of the vehicle operation, all operational processes of the hub and all energy sources used. For this, you need to consider the entire life cycle of the energy sources used (combustion and/or loss processes at the level of the vehicle or lifting equipment and all processes for providing energy). Processes like the production of refrigerants, the generated waste or the storage of goods are not included. GHG emissions from processes, that use ICT facilities and from (re)packaging as well as black carbon emissions (black material emitted from coal-fired power plants, gas and diesel engines and other sources that burn fossil fuel, which comprises a particulate matters (PM) also) from transportation processes can be included.

Definition of system boundaries of GHG emission quantification, Source: ISO 14083 2022 (CC-BY-SA)

• SB1: TTW (tank to wheel): direct vehicle emissions
• SB2: WTW (well to wheel): including energy supply chain
• SB3: includes maintenance and service of vehicles and infrastructure
• SB4: includes production and scrapping of freight vehicles
• SB5: includes administration, IT and personnel

The following figure "Included processes for WTW and TTW ” illustrates the different system boundaries of Well-to-Wheel and Tank-to-Wheel. With the Well-to-Wheel approach the entire chain from the fuel extraction to driving is being investigated taking into account the oil well, the refinery and the power generation but also the TTW emissions. Tank-to-Wheel focuses at the chain of effects from the energy absorbed to the conversion into kinetic energy in motor vehicles. The last measuring device before the final energy is transferred to the vehicle is usually installed in the filling station/charging station.

Included processes for WTW and TTW , Source: McKinnon und Alan 2018 (CC-BY-SA)

Step 2: Determination of consumption and transport data 

When determining the consumption and transport data, different data categories can be used. The following figure “Different data categories” shows you the categories primary data, secondary data (program data and detailed modelling) and default data and their priority of use. Ideally, primary data is used to calculate GHG emissions, especially for scope 1 reporting of own emissions. Ideally, scope 3 emissions are also calculated using primary data. However, as this is not always available, secondary data (e.g. from green freight programmes for scope 3 reporting or from detailed models) can also be used. Only if neither primary nor secondary data is available, default data (e.g. from ISO standards) should be used.

Different data categories, Source: ISO 14083 2022, GLEC 2019 (CC-BY-SA)

The following figure “Shares of WTT and TTW in WTW” shows the shares of well to tank (WTT) from fuel production and distribution and TTW from fuel combustion in the WTW (fuel life cycle emissions).  It can be stated that the calculated emissions when burning 100% biodiesel are only from the fuel production and distribution (WTT). When using diesel, only around 16 % of the emissions are generated during production and distribution, while around 84 % are generated during fuel combustion. The figure shows why it is important to consider not only the TTW but also the WTT emissions, as this is the only way to map the entire fuel life cycle emissions.

Shares of WTT and TTW in WTW, Source: GLEC Framework 2019 (CC-BY-SA)

The emission factors or GHG intensity values are calculated for both electricity and fuel by dividing the kg CO2e by the kWh of electricity or kg of fuel and are given in g CO2e/MJ oder kg CO2e/kg. In the case of freight transport, the CO2e per tonne-kilometer or equivalent units and for freight throughput at the hub the CO2e per metric ton are used. Furthermore, the following denominators are commonly used in the logistics industry:

Calculation of emission factors/intensity value, Source: ISO 14083 2022 (CC-BY-SA)

Step 4: Calculation of GHG emissions

Once the system boundaries have been defined and the consumption and transport data as well as the emission factors have been determined, the greenhouse gas emissions can be calculated. For this purpose carbon calculators can be used .

You can find many online carbon calculators online. They are developed by national or local governments, NGOs or consulting firms.

• A few examples:
  • CarbonCare Asia Ltd.: https://www.carboncareasia.com/eng/Carbon_Solutions/Carbon_Calculators.php
  • Carbon Footprint Ltd.: https://www.carbonfootprint.com/calculator.aspx
  • Hong Kong Environment Bureau: https://www.carboncalculator.gov.hk/en
  • The Nature Conservancy, USA: https://www.nature.org/en-us/get-involved/how-to-help/carbon-footprint-calculator/
  • The Resurgence Trust: https://www.resurgence.org/resources/carbon-calculator.html
  • USEPA: https://www3.epa.gov/carbon-footprint-calculator/
  • WWF, UK: https://footprint.wwf.org.uk

EcoTransIT World

Another carbon calculator is the EcoTransIT World. It is a very useful tool to calculate emissions caused from logistics activities, like transport, handling and storage. It is based on IPCC  Assessment Reports about knowledge on climate change, its causes, potential impacts and response options and the ISO 14083 and the real data of companies. The figure "Structure of EcoTransIT" shows the different components of the tool. As a user, you need to insert the transport details (gross weight in tonnes or as TEU) and also other data like origins, destinations, waypoints, the mode of transport and a transport description. EcoTransIT is then doing the calculation by using automatic transport parameters from proven sources. It then gives the results for the different emissions for WTT and TTW.

The system covers the following information:

Structure of EcoTransIT, Source: EcoTransIT (CC-BY-SA)

After calculating the emissions, the results must be documented in step 5.

PDCA–Cycle (Plan Do Check Act)

PDCA-Cycle - Plan Do Check Act for environmental reporting, Source: Own figure (CC-BY-SA)

Calculate the ecological and social impact

To evaluate whether a certain measure will be more ecologically friendly than another, you can use the following method to calculate CO2-emissions resulting from transport. The following figure "Determining ecological and social impacts and resource consumption and approaches for reducing transport-related environmental impacts" shows, how to calculate the ecological and social impact and resource consumption and how this consumption might be reduced.

• the transport distance,
• the transported quantities (weight, volume) as well as
• the choice of the means of transport and
• its capacity utilisation.

• the vehicle technology (e.g. type of means of transport, size, engine power, fuel used or traction type/energy mix and upstream chains),
• the operation (e.g. speed, driving behaviour, altitude) and
• the environmental and surrounding conditions (e.g. topography, flow conditions, weather).

For designing a more environmental friendly product lifecycle, transportation is only one lever (keyword "local sourcing"). The sustainability of the freight transport depends mainly on the factors transport volume (weight, volume), transport distance, used mode(s), used concrete vessels and the degree of utilisation (load factor). To design a more environmentally friendly product life cycle in the area of transportation we should avoid transports (increase capacity utilization), shift transports (from road to rail), reduce speed (slow steaming), increase fuel quality (carbonization content in heavy fuel oil), etc.  Both the shipper and the carrier can contribute to making transport more environmentally friendly with their decisions. The shipper can primarily influence the transport volume and distance, while the carrier can primarily influence the used mode and vessel as well as the load factor. The used mode of transport and load factor can also be influenced by the shipper if the shipper specifies which mode of transport is to be used and if the transport is only carried out when a sufficiently high load is available.

Guidance for companies on reducing freight transport-related GHG emissions, Source: Flämig 2009 (CC-BY-SA)

Sources

Bundesministerium für Umwelt, Naturschutz, nukleare Sicherheit und Verbraucherschutz (2024) Europäische Lieferkettenrichtlinie (CSDDD). URL: https://www.bmuv.de/themen/nachhaltigkeit/wirtschaft/lieferketten/europaeische-lieferkettenrichtlinie-csddd (last access: 06.06.2024)

Bundestag (2021): Act on Corporate Due Diligence Obligations in Supply Chains. URL: https://www.bmas.de/SharedDocs/Downloads/DE/Internationales/act-corporate-due-diligence-obligations-supply-chains.pdf?__blob=publicationFile&v=4 (last access: 06.06.2024)

Crippa, M., Guizzardi, D., Solazzo, E., Muntean, M., Schaaf, E., Monforti-Ferrario, F., Banja, M., Olivier, J.G.J., Grassi, G., Rossi, S., Vignati, E. (2021): GHG emissions of all world countries - 2021 Report, EUR 30831 EN, Publications Office of the European Union, Luxembourg, 2021, ISBN 978-92-76-41547-3

Deutschlandfunk (2022): Worum es bei der EU-Taxonomie geht https://www.deutschlandfunk.de/taxonomie-104.html (last access: 06.06.2024)

DIN EN ISO 14001:2015-11 (2015): Environmental management systems - Requirements with guidance for use

DIN EN ISO 14040:2021-02 (2021): Environmental management - Life cycle assessment - Principles and framework

DIN EN ISO 14044:2021-02  (2021): Environmental management - Life cycle assessment - Requirements and guidelines

DIN ISO 14083:2023-03 (2023): Treibhausgase - Quantifizierung und Berichterstattung über Treibhausgasemissionen von Transportvorgängen

EcoTransIT (2024): EcoTransIT World. URL: https://www.ecotransit.org/en/ (last access 24.05.2024).

On the following page the economic dimension of sustainability will be explained to you. After showing you different providers of transport and logistics services, the transaction cost theory and the resource dependence theory will be explained.

Types of logistics service providers

Providers of logistics management and coordinating services, Source: Own figure (CC-BY-SA)

A Forwarder (2PL) coordinates physical services of transport operators and other core logistics in integrated service package.

A Third-party logistics provider (3PL) operates large logistics networks by combining own and third-party logistics services and combines single services into customer-specific contract logistics service packages. Examples are door-to-door Supply Chains (SCs), complex storage tasks and value added services as well as third-party Supply Chain Management (SCM)

A Fourth-party logistics provider (4PL) combines logistics services of 2PLs and 3PLs and provides related IT services. He acts on the logistics market without own physical assets.

A Lead logistics provider (LLP) integrates 3PL and 4PL services into LLP services and achieves additional added value by realizing process harmonization and providing a Supply Chain spanning IT-platform. Examples are the coordination of LSPs and suppliers in supply networks, merge-in-transit services, increased consolidation effects in awarding transport volumes to logistics providers, transparency and event-based disruption management.

Close and Long-Term Shipper-Logistics Service Provider Relationships

The LSPs described above offer their services to shippers. “Shippers are business firms […] that utilize carriers for the transportation of goods from origin to destination locations.”  Examples for shippers are e.g.  cargo owners, firms who initiate the transport or to whom delivery is to be made and a shippers’ association. The contractual relationships between shippers and LSP vary and both short-term and long-term contracts are used. The following figure “Close and Long-Term Shipper-LSP Relationships” shows, what a long-term relationship means for the shipper and the LSP. It shows the responsibilities of the shipper (demands and procures transport and logistics services) and the LSP (offers and pursued transport and logistics services (physical or management)) and highlights, that this relationship is characterised by long-term contracts, a high degree of outsourced logistics services to LSP, mutuality and trust such as a high level of information exchange. While this agreement can lead to operational benefits, it is complex to realize and difficult to understand those kind of relationships.

Close and Long-Term Shipper-LSP Relationships, Source: Own figure (CC-BY-SA)

The shipper and LSP have a commercial/contractual relationship and exchange information, cargo and/or financial flows. During the high level of information exchange both operational and strategic data are exchanged. At the operational level, data on the timing of tasks, performance and demand forecast is shared, at the strategic level, data on the freight rate development and market conditions is shared.

Causal model to explore shipper-LSP relationships

To understand the relationship between shippers and LSPs, a theoretical framework based on organisational theories can be used. This framework utilises transaction cost economics(TCE) and resource dependency theory (RDT). The following figure, "Causal model for analysing shipper-LSP relationships", shows how the two approaches can help determine the likelihood of close and long-term relationships between shippers and LSPs. Information on transaction uncertainty, asset specificity of transactions and transaction frequency is required from transaction cost theory, while results on interdependence and power imbalance are used from resource dependence theory.

Causal model for analysing shipper-LSP relationships, Source: Own figure (CC-BY-SA)

Transaction Cost Economics (TCE)

The TCE determines the most economical type of exchange relationship for each type of inter-firm exchange. The transaction cost theory by Williamson is defined as follows:

• “A transaction occurs when a good or service is transferred across a technologically separable interface” (Williamson, 1981, p. 552)
• TCE is widely used to determine ideal governance structures, that is, “the institutional framework in which the integrity of a transaction is […] is decided” (Williamson, 1996, p. 11)
• “The overall object of the exercise essentially comes down to this: for each abstract description of a transaction, identify the most economical governance structure.” (Williamson, 1979, pp. 234-245)

Components of resource dependence theory, Source: Herz (2015) (CC-BY-SA)

RDT Governance modes

There are different strategies to regulate relations with your partners. You should “Choose the least-constraining device to govern relations with your exchange partners that will allow you to minimize uncertainty and dependence and maximize your autonomy.” (Davis & Cobb 2006, p. 24). Some tactics forego direct involvement of those who exert dependence, so that organizations adapt to their environment (sourcing diversification, increase firm size). Other strategies directly target the nature of the inter-organizational relationship between dependent  parties in order to manage interdependencies and reduce power imbalances and to improve control over strategic resources (alliances, joint ventures, mergers).

Location and Accessibility Matter – Spatial Concentration of Services Creates Lock-In for Shippers

Spatial Concentration of Services Creates Lock-In for Shippers, Source: Own figure (CC-BY-SA)

The shipper-LSP exchange is influenced by the site specific nature of the logistics services pursued, and hence depended on the spatial organization of the supply network as a whole. So in all cases shippers improved SC efficiency and flexibility by keeping flows consolidated as long as possible and by utilizing the close proximity between LSP-operated logistics facilities, seaports and additional logistics sites.

Summary

Sources:

Drees & Heugens (2013). Synthesizing and extending resource dependence theory: A meta-analysis. Journal of Management, 39(6), 1666–1698. https://doi.org/10.1177/0149206312471391

Herz (2015): Understanding close and long-term relationships between shippers and logistics service providers: A case-based analysis of their determinants and their implications for transaction cost economics and resource dependence theory. Dissertation.

Langley, John, JR.; Capgemini (2014): 2014 Third-party logistics study: The State of Logistics Outsourcing. Results and Findings of the 18th Annual Study. Available online at http://www.capgemini.com/resource-file-access/resource/pdf/3pl_study_report_web_version.pdf (last access 23.12.2014).

Marasco, Alessandra (2008): Third-party logistics: A literature review. In International Journal of Production Economics 113 (1), pp. 127–147.

Talley, W.K. (2009): Port Economics (1st ed.). Routledge. https://doi.org/10.4324/9780203880067

Teece, David J. (1986): Transactions cost economics and the multinational enterprise: An Assessment. In Journal of Economic Behavior & Organization 7 (1), pp. 21–45

United States Congress (1984): Shipping Act of 1984 - An Act to improve the international ocean commerce transportation system of the United States. STAT. 67 Public Law 98-237

Williamson, Oliver E. (1979): Transaction-Cost Economics: The Governance of Contractual Relations. In Journal of Law and Economics 22 (2), pp. 233–261.

Williamson, Oliver E. (1981): The Economics of Organization: The Transaction Cost Approach. In American Journal of Sociology 87 (3), pp. 548–577.

Williamson, Oliver E. (1996): The Mechanisms of Governance. 1st ed. New York: Oxford University Press.

Walker & Weber (1984): A Transaction Cost Approach to Make-or-Buy Decisions. Administrative Science Quarterly, Vol. 29, No. 3. (Sep., 1984), pp. 373-391.

Check your knowledge on the economic dimension with the following quiz.

The following page explains you why logistics needs to become more sustainable and what measures can be taken to make the elements and relationships of the conceptual system model of transport and traffic more sustainable.

The survival of companies from an economic perspective depends on a variety of framework conditions. From the marketing side, it is primarily the customer who determine the future of the companies. Hence, companies are analyzing what influences customers in their purchasing decisions and figuring out their sustainability mindset. At the same time, however, the political framework conditions are placing even greater demands on companies to operate in a sustainable manner. Competitors are also adapting to this, so that their activities also represent benchmarks for the own company. Benchmarks of companies are also used by financiers and insurers of the companies, which are becoming increasingly important.

Sustainability in the Conceptual System Model of Transport and Traffic

In order to make the goods movement more sustainable, different measures can be taken by different stakeholders. The following figure “Measures to improve the sustainability of goods movement” shows, which different measures can make the elements and relations more sustainable, thereby increasing the sustainability of the entire system.

Sources

Antonio Marco (2024): Neue Trends in der internationalen Logistik: Herausforderungen und Chancen. URL: https://antoniomarco.com/news/de/neue-trends-in-der-internationalen-logistik-herausforderungen-und-chancen/ (last access 27.05.2024).

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You can test your knowledge of measures for a more sustainable transport chain by answering the following questions.

In this chapter you should have learnt that the

• Social dimension is important

• Ecological dimension is important

• Economic dimension is important

• there are different measures to make goods movement more sustainable

Transport avoiding requires a rethinking in trade and industry. Transport can be avoided by:

Traffic avoiding starts with optimising the use of modes of transport. Traffic can be avoided by:

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