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Second-life garments and smartphones produce 55-75% less emissions than new items made from virgin materials.

Source: DHL

Relevance to the Future of Logistics

Rise of Recommerce

Industrial sectors, especially retail, are witnessing the rise of recommerce (also known as reverse commerce), in which previously owned products, new or used, are sold and shipped to buyers who then repair, reuse, recycle, and/or resell them, extending the life span of the product. Currently, it is estimated that the recommerce and resell market is growing 11 times faster than traditional retail and that, by 2030, recommerce and resell will reach a market size of 84 billion USD, double the size of fast fashion.

The rise of recommerce has implications for those in logistics, especially as more retail giants join in. Instead of traditional return logistics, including costly cross-border returns, recommerce supply chains typically forward return shipments to in-country repair, recycle, and/or resell channels, alleviating the original retailer's freight and storage costs and related requirements. With recommerce, supply chains will overall see greater supply chain localization, particularly after the first purchase of a product.

This means that supply chains can facilitate sustainability efforts not only by extending the life of a product but also by avoiding the emissions that would have resulted from manufacturing a comparable new product including the associated logistics costs.

Zero Waste in Logistics

The aim of zero waste programs is to protect the environment and human health by preventing any waste from entering the soil, water, or air. This is often seen as a key component for a fully sustainable future.

There are many opportunities for the logistics industry to support companies to work towards a zero-waste goal through the lens of Circularity. In the realm of packaging, an initiative called The Loop Alliance showcases coordination between large manufacturers, retailers, service providers, and non-governmental organizations to redesign packaging and synchronize the required supply chains to produce, clean, return, and refill containers for both in-store and e-commerce channels. Regarding transportation, ongoing improvement in carbon capture technology is enabling emissions to be filtered out more effectively from vehicle tailpipes. The collected carbon dioxide can then be sold to greenhouses, carbonated water producers, and other businesses for use as raw material.

But also, for example, the electrification of ground operations, the investment in carbon neutral buildings as well as the conversion of warehouse operations to avoid waste are measures that logistics companies have to take in order to integrate a holistic zero waste approach into their operations.

As supply chain organizations pursue zero waste using Circularity principles, they can achieve significant waste reduction and, at the same time, minimize direct and indirect costs associated with waste.

Circular Supply Chains

As more companies around the world join the circular economy to reduce waste and save costs, they will be reexamining and redesigning their supply chains to conform with Circularity principals. For organizations in logistics, from those handling storage to those delivering in the last mile, this can mean sizeable shifts in operations. To clarify, warehouses and transport vehicles will still exist, but logistics providers may see increased demand for value-adding services for products and materials they currently do not carry.

For example, last-mile courier vans may integrate more in the broader returns market, not only dropping off e-commerce packages, but also picking up depleted toner cartridges, batteries and gas cylinders from homes to then deliver to refill sites. Warehouses may see a greater throughput of secondary raw materials like fabric scrap or reprocessed lubricants and may need to reconfigure facility floorspace and operations to unload, store, and load more of these products.

Additionally, in the electronics industry, 57.4 million metric tons of e-waste were produced in 2021, with only about 20% of e-waste recycled through formal channels. This means there is a huge opportunity for better hardware return logistics – especially with the growing use of sensors, robots, and other technologies – and more parts repair, reuse, and recycling.

Overall, the logistics industry needs to anticipate and prepare for the global and local supply chain changes and value-adding opportunities that circularity will bring.

Challenges

Most products are not currently designed for reuse and recycling limiting their ability to achieve circularity principles.
The inhibition threshold for end customers to change their own lifestyle and actively participate in circularity is high.
Coordinated visibility and transparency of products and their components is crucial for redirecting waste as raw materials, but data is currently severely limited, hampering attempts to close loops across supply chains.
Technologies to capture waste products and recycle materials are advancing but are still technically immature.
Smart, affordable, and convenient return solutions are not available everywhere, so recycling can be more expensive than using primary raw materials.

This trend should be MODERATELY monitored, with some use cases applicable today.

Outlook

The logistics industry is the backbone of Circularity. While it will require the coordination of thousands of players and many years for all supply chains in all industries to conform to the trend’s principles, individual companies, especially those in the fashion and consumer electronics market, are pursuing Circularity goals using visibility and recycling technologies. This gradual development gives logistics organizations the opportunity to adapt and shift operations accordingly to meet the sustainability needs of customers while also reducing costs and waste in their own processes.

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