Businesses and their supply chains rapidly shifted as a result of the SARS-COVID-2 virus slowing the momentum previously established for sustainability initiatives.
Companies with documented sustainability policies measure their progress using Key Performance Indicators (KPIs). A number of these KPI’s apply to the transportation fleet for the supply of raw materials and the distribution of intermediate and finished products.
Some of the most important KPIs to track when considering sustainability are listed below. I The most important KPIs pertaining to transportation are bolded.
- Carbon Footprint
- Energy Consumption
- Product Recycling Rate
- Supplier Environmental Sustainability Index
- Supply Chain Miles
- Water Footprint
- Waste Reduction Rate
- Waste Recycling Rate
Some examples of sustainability impacts include: reducing the carbon footprint by acquiring fuel efficiency equipment, reducing supply chain miles through domestic sourcing, and reducing wasted cargo space by transporting full loads.
When COVID-19 hit, manufacturers and distributors had to adapt rapidly to a dramatic alteration in priorities including:
- The reduced demand for some products coupled with the increased need for other products.
- Reductions in output, waste, and energy use while employee safety measures were implemented.
- Reductions in commuting and business travel which reduced the carbon footprint.
- Cost containment measures which resulted in the postponement of some sustainability projects.
One of the most heavily impacted markets, the market for recycled plastics, provides us with an illustration.
The Recycled Polymer Markets Illustrates Some of these Impacts
Plastic is the third most recycled material in the world after steel and aluminum (paper is 4th). Polyethylene terephthalate (PET) is the most commonly recycled plastic. This ubiquitous product is used in fibers for clothing, containers for liquids and foods, thermoforming for manufacturing, and in combination with glass fiber for engineering resins. PET resin can be classified as the bottle, fiber, or film grade but bottle grade resin is the most common form. PET in its resin format is transported as a bulk liquid to be manufactured into plastic water or soda bottles and other food-grade packaging. (Stephens)
Increased demand for single-use plastics used in packaging due to the COVID-19 pandemic, has sparked a rise in polyethylene terephthalate (PET) production. Newly manufactured PET or “virgin PET” is produced from petroleum products while recycled (R-PET) is produced from consumer waste.
An Example of R-PET Reduced Demand as a Result of COVID-19
Reduced demand for R-PET resulted from changes in the supply chain after COVID-19 impacted the manufacturing and transportation of recycled post-consumer plastic.
The supply chain for R-PET is labor-intensive, requiring the collection and sorting of post-consumer plastic bottles, processing them into pellets, and converting the waste into new products. Lower oil, gas, and energy costs due to the pandemic resulted in a drop in virgin PET prices.
The R-PET industry also experienced reductions in output while employee safety measures were implemented. Alterations in waste stream collections and limitations on manufacturing labor due to the implementation of the COVID-19 mitigation measures such as social distancing requirements resulted in R-PET prices of nearly double the price of virgin PET. High material costs and an uncertain supply of R-PET induced some manufacturers to increase their sourcing of the virgin PET putting additional economic pressure on companies that manufacture from recycled products. (Beacham). While the sourcing of recycled materials is the more sustainable option long-term, the near-term impacts of COVID-19 contributed to making the use of R-PET a less economically viable option. Illustrative of a sustainability program put on hold to contain costs.
Commitment Remains Strong
Understandably, companies prioritized the immediate need for employee health and safety, and the health of their business, before long-term sustainability goals. For some companies, the acquisition of newer and more fuel-efficient transportation equipment has been deferred. Transportation companies sacrificed the ability to transport full truck-loads in order to rush critical medical supplies to hard-hit areas when supplies were low due to manufacturing and import delays. The global pandemic demonstrated that, when tested, a global far-reaching supply chain can be unreliable. Specifically, some international supply chains have broken down under the pressure of COVID-19 due to border closures. (Feber, Lindqvist, Nordigården) However, corporate commitment to sustainability remains strong, even though the implementation may have been slowed.
In addition, the COVID-19 crisis has reinvigorated public support for continued commitment to sustainability measures such as local sourcing of food and material goods. In addition, consumers are showing an increased interest in purchasing products from sustainable companies and have demonstrated a willingness to pay more for products produced in-line with their beliefs. (Mohan) Furthermore, companies that invest in sustainable initiatives are more attractive to investors due to their long-term focus and perceived stability. We expect companies to continue to invest in energy management and the development of sustainable supply chains once the immediate impacts of the pandemic subside. (Nastu)
New strategies and different supply chain methodologies are necessary to secure the long-term success of sustainability practices in the bulk liquid transportation industry. Part of the solution is to focus on improving domestic production to reduce supply chain miles and lessen the carbon footprint.
Matlack Leasing LLC is at the forefront of bulk liquid transportation equipment, offering tank trailers and tank chassis for lease. This includes our DOT 407 trailers suitable for the transport of PET in its resin form. Contact Matlack Leasing LLC to inquire about recent model year bulk liquid transportation equipment that has the potential to reduce maintenance costs and improve the reliability of your fleet.
- Knowledge@Wharton. “Oil Price Shock: What It Means for Producers and Consumers.” The Wharton School, University of Pennsylvania, 28 April 2020. Web. 30 June 2020 https://knowledge.wharton.upenn.edu/article/oil-price-shock-means-producers-consumers/
- Beacham, Will. “PODCAST: Can Chemicals Sustainability Agenda Survive the Pandemic?” ICIS Explore, 18 Mar. 2020, www.icis.com/explore/resources/news/2020/05/18/10508705/podcast-can-chemicals-sustainability-agenda-survive-the-pandemic.
- Nastu, Jennifer. “15 Experts Weigh in on How Covid-19 Affects ESG Initiatives.” Environment + Energy Leader, 8 July 2020, www.environmentalleader.com/2020/05/experts-weigh-in-how-covid-19-is-affecting-our-esg-initiatives-and-what-we-expect-tomorrow/
- Mohan, Anne Marie. “March/April Sustainability Update: COVID-19 Changes the Plastics Conversation, but CPGs Still Innovating.” Packaging World, 4 May 2020.
- Stephens, Luly. “US PET consumption expected to decline further on virus economic impact.” Independent Commodity Intelligence Services, 12 March 2020,
- Feber, Lingqvist, Nordigården. – “How the packaging industry can navigate the coronavirus pandemic” McKinsey & Company, 16 April 2020, https://www.icis.com/explore/resources/news/2020/03/12/10481883/us-pet-consumption-expected-to-decline-further-on-virus-economic-impact