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A Shipper’s Guide to Building a Sustainable Supply Chain Six Essentials for Partnering with a Green Third-Party Logistics Provider

CONTENTS

THE SUPPLY CHAIN’S INFLUENCE ON SUSTAINABILITY

SUSTAINABLE SUPPLY CHAINS: THE BROADER BUSINESS STRATEGY

EVALUATING 3PLS FOR ENVIRONMENTALLY SUSTAINABLE PRACTICES

WAREHOUSE SUSTAINABILITY

TRANSPORTATION OPTIMIZATION

ALTERNATIVE FUELS AND ENERGY

WAREHOUSE AUTOMATION AND ROBOTICS TECHNOLOGIES

SUSTAINABILITY IN PACKAGING

CERTIFICATIONS AND STANDARDS

LANGHAM LOGISTICS Langham Logistics is a woman-owned thirdparty logistics (3PL) company providing custom cold chain solutions in warehousing, distribution, and transportation for the life sciences and pharmaceutical industries. We take time to understand our clients and their unique supply chain challenges. We are experts at navigating bottlenecks in managing raw materials, APIs, and finished products. We offer value-added services such as business continuity, supplier-direct IQIs (incoming quality inspections), small pack kitting, and more. Our ability to be nimble and utilize our critical thinking skills provides our customers with supply chain visibility and analytics, so our business feels like an extension of their own.

Top-tier mechanical refrigeration systems/HVAC first class qualified to ISPE standards Fully independent HVAC and Refrigeration systems (by storage location) Emergency backup power generators Separate inbound receipt and storage areas Independent systems with full redundancy GMP Audited QMS and electronic records retention Brand new warehouses designed with state-of-the-art sustainable materials and technology

Our sustainable buildings use energy-efficient design, consuming on average half the kilowatt-hours (kWh) of electricity per square foot each year than the average US cold chain warehouse, utilizing IMP (insulated metal panels) in all temperature zones, high volume low-speed fans, an isolated dock, refrigerated vestibule, and more!

Our cycle counting drones scan inventory up to 10x faster than traditional methods while taking flyby pictures, bringing ultimate visibility to our clients. Put away and pickers are sent to the correct locations when fulfilling orders. These provide a unique competitive advantage to our customers with the capability to do spot inventory checks and ad hoc cycle counting.

Supply chain sustainability has transitioned from a feel-good initiative to a future-proofing business strategy. Firms around the world are moving from talk to action when it comes to ecofriendly practices. According to McKinsey, seven of the nine most common environmental, social, and governance (ESG) business initiatives now include significant supply chain components. “Going green” is more than just a trend. Supply chain sustainability has emerged as a long-term priority for investment and innovation. The transition is positive for any organization’s triple bottom line: people, planet, and profits. Sustainable practices reduce a company’s environmental footprint while also curbing costs associated with waste and resource consumption. 1

Research also correlates a sustainable supply chain with increasing revenue, attracting investors, and boosting corporate reputation. But shippers cannot attain these benefits alone. Logistics partners—equally invested in supply chain sustainability— represent a key link for achieving environmental goals. Is your company looking to put more “eco” into its economics?

A Shipper’s Guide to Building a Sustainable Supply Chain serves as a resource to help companies: • Define logistics sustainability within the broader environmental movement • Understand the market forces making sustainable supply chains a corporate priority • Evaluate 3PLs for green practices that support supply chain sustainability Third-party logistics providers working as sustainability partners broaden the meaning of a “green” initiative—from saving money to saving the planet. With their help, the supply chain can deliver ESG advances with every shipment.

The Supply Chain’s Influence on Sustainability The growing push for sustainability has companies rethinking every aspect of their business. Successfully balancing profitability, operating efficiency, and social responsibility is complex. The supply chain offers a powerful place to maximize efforts due to its far-reaching impact beyond the four walls of any facility. McKinsey reports that the typical consumer company’s supply chain generates far higher social and environmental costs than direct operations. The supply chain accounts for more than 80% of greenhouse gas (GHG) emissions and 90% of a company’s impact on air, land, water, biodiversity, and geological resources. Companies focused on supply chain sustainability strategically implement processes designed to minimize these environmental impacts. Their business decisions factor in the implications of waste, emissions, fuel consumption, water usage, and other ecological concerns. 2

Supply chain logistics specifically plays a major role in the sustainability initiatives of some of the world’s biggest brands: Ikea Home furnishings company IKEA discovered that 4.3% of its supply chain climate footprint came from product transportation. In response, the company is collaborating with carriers and distribution centers to better utilize equipment and transport more goods per shipment. The company is also phasing out fossil fuels as it transitions to cleaner alternatives and electrification. 3

Nestlé The world’s largest food and beverage company is transforming its supply chain from how it sources raw materials to delivery of the final product. Policies like ‘no vehicle leaves empty,’ shared refrigerated warehouses, and shifting transportation from road to ocean or rail support the company’s goal of a 20% reduction in GHG emissions by 2025.

Walmart Under Project Gigaton™, Walmart uses artificial intelligence to match customer orders with store locations rather than relying solely on fulfillment centers. The strategy is reducing fuel consumption, GHG emissions, and shipment packaging through private and partner transportation networks.

Sustainable Supply Chains: The Broader Business Strategy

Cost Reduction

Reducing a company’s environmental footprint represents corporate social responsibility. Yet adopting green practices also offers a sound business strategy with a significant financial upside.

According to EY, potential cost savings rank as a top motivator for improving supply chain sustainability. Reducing the use of water, fuels, raw materials, and packaging all correlate to decreased operating expenses. How efficiently a company uses resources—including its logistics partners—correlates to better financial performance. Sustainable logistics practices help reduce GHGs and transportation costs by improving a business’s operating efficiency.

Top-line Growth

Risk Management

Consumers increasingly exercise their values through their wallets. SimonKucher’s 2021 Global Sustainability Study reports that 50% of consumers rank sustainability as a top five value driver. The research shows that 85% of consumers have become greener in their buying. As a result, a company’s sustainability efforts now play a larger role in influencing purchasing decisions and serving as a key brand differentiator.

Sustainable supply chains help mitigate some of the greatest pending threats to companies. EY reports that 55% of surveyed supply chain executives anticipate better operational risk management by 2025 because of their ESG initiatives. More than 80% say they already have or will experience greater efficiency and productivity within three years. Transparency around sustainable practices also helps with reputation management and keeps companies ahead of environmental regulations. The improvements translate to stock price, which is why more institutional and personal investors are gravitating toward companies focused on ESG.

This shift in consumer preferences translates to top-line growth for companies. McKinsey found that nearly 70% of consumers surveyed on purchases across multiple industries would pay an additional 5% more for green products.

Within the next five years, 54% of supply chain executives responding to the survey expect an increased share price or comparable indicator of shareholder value because of their sustainability efforts.

The link between sustainability and value creation is considerable. Companies exploring the supply chain as the newest frontier for lessening their environmental impact are reaping the rewards of their investments. That paves the way for all organizations to follow in their footsteps.

Evaluating 3PLs for Environmentally Sustainable Practices Few businesses have direct control over their supply chain from start to finish, especially when it comes to warehousing and transportation. Therefore, logistics partners play a vital role in supply chain sustainability from network optimization to inventory storage and product delivery. With more companies factoring in downstream supplier performance on upstream environmental metrics, 3PLs are becoming a go-to resource for building greener supply chains. While logistics partners can affect sustainability in many areas, companies looking for partners capable of balancing environmental and efficiency goals should begin by assessing six key areas:

1. Warehousing 2. Transportation 3. Alternative and renewable fuels 4. Technology 5. Packaging 6. Certifications Logistics providers with a commitment to sustainability may not yet excel in every area. However, they will have ecofriendly practices in place, consistently measure their performance, and have a roadmap for future initiatives to reduce their environmental impact.

1. Warehouse Sustainability According to the U.S. Department of Energy, commercial buildings account for 35% of the energy consumed in the United States. With more than 500 million square feet of warehouse space currently under construction and an estimated 6,700 new facilities expected in the U.S. in 2023, that number could

grow even higher. Now consider the additional impact of waste, GHG emissions, land usage, and water consumption of those existing and new buildings.

Design

up versus out by leveraging multi-story shelving. By optimizing available interior space, the warehouse reduces the work required for material handling, storage, picking and packing, and employee movement.

Sustainable warehouses use design to create efficiencies. Their layout works to minimize the exterior green space required. This often includes building 7

Warehouses and distribution centers represent a prime opportunity to improve supply chain sustainability.

Building Materials Recycled or renewable building materials require less energy to produce and create fewer GHGs. Non-toxic materials such as specialized paints, sealants, and wood products free of volatile organic compounds (VOCs) improve interior air quality by not releasing the chemicals present in traditional construction products. Sustainable materials also prevent heat loss, helping keep buildings cooler in the summer and warmer in the winter. This reduces the need for energy-intensive HVAC systems. The simple act of applying reflective paint to a warehouse roof or adding insulation can significantly reduce a warehouse’s environmental footprint.

Lighting The largest energy user in the warehouse is lighting. LED bulbs produce less heat and last longer than standard fluorescent lighting. Occupancy sensors increase lighting efficiency by turning off or dimming lights when portions of the warehouse go unused. Sustainable warehouses can further reduce light bulb energy consumption by installing skylights or daylighting tubes to bring natural light indoors.

Ventilation Sustainable ventilation systems minimize the energy needed to remove hot air.

They take advantage of colder night air to reduce temperatures naturally. Destratification fans create energy savings by continuously circulating air from ceiling to floor to reduce heating and cooling needs.

Refrigeration Commercial refrigeration accounts for 28% of all hydrofluorocarbons (HFCs) in the U.S. according to the Environmental Protection Agency (EPA). HFC refrigerants create greenhouse gasses thousands of times higher than CO2. Transitioning to natural refrigerants—including carbon dioxide, ammonia, and propane—decreases energy and water consumption while also reducing refrigeration’s GHG emissions. Hydrofluoroolefins (HFOs) are appearing in more warehouse refrigeration systems. HFOs are nontoxic and break down in the atmosphere in days rather than years. Their use has prevented more than 200 million metric tons of GHG emissions—equivalent to the emissions of 42 million cars. Beyond the types of refrigerants used, regular maintenance matters. Cleaning coils and condensers keeps equipment running efficiently. Data monitoring systems can detect leaks, spikes in energy usage, and open doors. Staff training and procedures to minimize temperature excursions also improve supply chain sustainability. 8

2. Transportation Optimization When it comes to transportation management, reducing freight costs can also mean a lower environmental impact. Transportation comprises up to 60% of all supply chain operating costs. Partnering with a 3PL to optimize, or re-optimize, a transportation network offers cost-saving opportunities as well as sustainability benefits from reduced fuel usage, less idling, and fewer empty miles.

Transportation Modes Moving freight by truck or airplane is far less sustainable than using ocean or rail transport. While container ships burn fossil fuel, they haul vast amounts of freight, making them the most efficient mode of transport. Over-the-road hauling can emit more than 100 times as much CO2 9

as ships carrying the same amount of freight, according to the Massachusetts Institute of Technology (MIT). Data from the EPA shows moving cargo by rail rather than truck lowers GHG emissions by up to an average of 75%. Managing a shipper’s network must go beyond getting from point A to B in the fastest or cheapest manner. Logistics providers skilled in sustainable network optimization process vast amounts of internal and external data to create multi-modal transportation solutions. The analysis balances several critical factors, including service expectations, length of haul, freight origin and destination, cost, and environmental impact.

Load Efficiency U.S. Department of Transportation highway data shows that one of every four trucks on the road is empty, two are mostly empty, and one is 51% or more full by weight. Those empty trucks generate billions of dieselguzzling miles. Research published in Transport Topics found that up to 35% of the estimated 175 billion miles trucks drive in the U.S. annually are without freight, which is bad for the environment and the budget. Improving overall load efficiency is key to a more sustainable supply chain. Green logistics partner strategies to improve load efficiency may include: • Creating freight pool points • Designing hub and spoke distribution models based on consumer proximity

• Redesigning loading processes to use more vertical trailer/container space • Reducing packaging • Developing multi-stop solutions • Leveraging fuel-efficient vehicles for smaller loads and final-mile deliveries

Disruption Planning Supply chain disruptions are not a matter of if but when. McKinsey research indicates companies can expect supply chain disruptions exceeding a month to occur every 3.7 years. Port closures, weather-related infrastructure damage, global health emergencies, regulatory changes—the list goes on. Even volume increases can significantly affect a freight network. Skilled logistics partners use data and technology to plan for disruptions by establishing sustainable contingency plans that minimize shipper

• Sharing cargo space between multiple shippers

3. Alternative Fuels and Energy Battery-electric vehicles (BEVs) and alternative fuels are still relatively new to the logistics industry. Limited range, lack of infrastructure, and higher costs have restricted their adoption—but that will not be the case for long.

What once seemed like a future novelty is hitting the fast lane today. Sustainable logistics partners are capitalizing on these green innovations within their transportation networks and warehouse operations.

Analysts predict that transport vehicles using alternative sources of energy will comprise 15% of the market by 2030.

Battery-Electric Vehicles

In 2019, less than 2,000 Class 8 BEVs were on the road. That number may increase up to 2,600% by 2025. Many of the largest carriers in North America have BEV trucks on order as they work to become zero-emission fleets. Other smaller transport vehicles are fully electric today. BEVs generate major cost savings on fuel and maintenance. They have a smaller carbon footprint than fossil-fuel vehicles and lower GHG emissions, even when accounting for their manufacturing.

Alternative Fuels Multiple alternative fuels—including propane, hydrogen, and biodiesel—are making their way to the market. Nearly 200,000 trucks on the road today use compressed natural gas (CNG) which reduces tailpipe GHG emissions by up to 20% compared to traditional fuels.

According to the American Transportation Research Institute (ATRI), 8.2% of carriers used some form of alternative fuel in at least one truck in 2022.

The number is increasing steadily year over year. Electric and alternative fuels also take hold in warehouses and distribution centers for powering yard trucks, forklifts, and other onpremise equipment.

Renewable Energy The large scale and continuous operations of warehouses make them significant energy consumers. Transitioning to renewable energy sources like solar, wind, and geothermal can fulfill a large portion of a facility’s energy requirements.

According to research center Environment America, warehouses could produce 176% of their annual electricity use by fully building out their rooftop solar potential. In fact, the solar capacity of U.S. warehouse rooftops is enough to power more than 19 million homes and is equivalent to removing 24

Warehouse Automation and Robotics Technologies

Estimates show that 90% of warehouses primarily rely on manual processes performed by humans. This creates space and energy inefficiencies. The more a warehouse relies on people to operate the facility, the more energy it consumes. By turning to technology, third-party logistics partners can increase throughput while decreasing their environmental footprint.

Automation Warehouse automation reduces operating costs, improves quality and productivity, and eliminates process waste. These technologies also benefit the environment in a significant way by reducing space requirements, energy consumption, and wasted resources. For example, conveyor systems minimize product damage during transport and allow for more efficient sorting and recycling processes. Put-to-Light (PTL) is a paperless order-fulfillment technology guiding employees using lights and alphanumeric displays. Automated pallet shuttles (APS) leverage a high-density compact storage system to transport 13

and place loads into the rack, reducing the need for fossil-fueled forklifts.

Artificial Intelligence (AI) Warehouses are just beginning to tap into the vast possibilities of AI for sustainability. Strategic use of AI includes advanced algorithms that make decreasing inventory space and staff work possible through dynamic slotting. AI is helping warehouse teams improve inventory management to predict future demand and optimize stocking levels. AI can quickly suggest an appropriate box size based on an order’s total dimensions to minimize package waste. By analyzing shipping and delivery data, the technology can recommend the most efficient delivery routes to reduce fuel consumption. AI’s influence even benefits equipment performance. Analyzing sensor data helps AI establish predictive maintenance programs to keep equipment and refrigeration units operating efficiently and prevent downtime.

Robotics Warehouse robots offer distinct environmental advantages because they can operate in the dark, do not mind higher ambient temperatures, and work 24/7 with minimal energy requirements. Research shows warehouse automation and robots can reduce warehouse energy consumption by as much as 75%.

Warehouse operations are increasingly using robotics to expedite the loading and unloading of equipment. This reduces energy loss through dock doors and damages that create waste. Automated storage and retrieval systems (ASRS) use robotic cranes to move goods around the warehouse faster and safer than staff.

need for 12 aerial work platforms, significantly improving worker safety. The drones counted inventory three times faster than staff and eliminated the need for a three-day annual closure to conduct inventory. The improved process also helped reduce shipping errors that unnecessarily generated waste and GHG emissions.

Drones, once seemingly just science fiction, now work in facilities around the world. The aerial vehicles manage inventory, pick orders, and make deliveries. A study comparing the environmental impact of final-mile delivery methods found GHG emissions per parcel were 84% lower for drones than diesel trucks. Drones also consumed 94% less energy per parcel. According to McKinsey, more than 730,000 commercial drone deliveries occurred worldwide in 2022.

Management Systems

Multinational cosmetics company L’Oreal piloted the use of drones to manage inventory at its international distribution center. The technology reduced the

3PLs leveraging warehouse management systems (WMS) gain insights to optimize the layout of facilities and minimize work that consumes energy. Simple acts like reducing the number of movements in and out of cold stores can significantly improve sustainability. Business intelligence platforms also help logistics providers assess performance on key environmental indicators such as energy usage per square foot, underutilized space, or waste tonnage. Gaining visibility to the data helps 3PLs engage in continuous sustainability improvements.

5. Sustainability in Packaging

Every shipment comes with some type of packaging—from plastic wrap and wooden pallets to corrugated boxes, air cushions, and ice packs. According to the EPA, more than 42% of all containers and packaging end up incinerated or landfilled in the United States every year. Green logistics providers work to beat the national average by following the “environmental three R’s”: reduce, reuse, recycle. 15

Reduce Automated dimension technologies measure items in less than a second and feed the data to the WMS to optimize packing, storing, and shipping. The software ensures right-sized containers for all products. Cartonization programs analyze the optimal way to pack boxes and pallets to maximize their potential. In addition to reducing packaging, they

also generate significant cost savings. Better dimension data limits the need for loose fillers that consume space within the package. SIOC, or ship in own container, is growing in popularity for eliminating the “box within a box” shipping issue that generates additional waste, especially in e-commerce. Amazon has eliminated more than 2 million tons of packaging material since 2015 from its supply chain. The company is making a major push for SIOC. A case study conducted on Samsung 49-inch televisions found that SIOC eliminated nine packaging components, which reduced packaging volume by 69% and the amount of air shipped by 87%.

Recycle Standard supply chain operations generate tons of waste every year. Packaging materials that end up in the landfill cost companies twice: for purchase and disposal. The price is even higher for the environment with increased emissions, materials waste, and natural resource consumption. Green logistics operations work to recycle as many materials as possible and track their performance. Bins within facilities clearly delineate between recyclable materials—sorted by type— and trash. Staff receive regular training on recycling efforts.

Reuse Returnable and reusable packaging comes with a higher price tag than single-use materials but can last more than a decade. Sustainable logistics partners develop processes to deploy reusable pallets, bins, totes, bags, crates, and cages. Network optimization practices factor in recycling dunnage and returning materials for reuse in future shipments. As the use of thermal packaging grows, green 3PLs are creating closed-loop networks to limit waste and energy consumption.

6. Certifications and Standards Sustainability certifications demonstrate a special commitment to protecting the environment and creating an eco-friendlier supply chain. The certifications come with high standards that require significant effort and dedication to achieve. Logistics providers participating in sustainability programs have voluntarily chosen to improve their operations in support of the planet and their shipping partners. While dozens of programs exist, the following represent a few of the most reputable and renowned initiatives:

LEED Leadership in Energy and Environmental Design recognizes green buildings with gold, silver, and bronze certifications. The U.S. Green Building Council requires buildings to meet metrics in multiple areas and pass inspections to attain the certification.

ENERGY STAR Certified buildings save energy and money while helping protect the environment by generating fewer greenhouse gas emissions than their peers and meeting strict energy performance standards set by the EPA. 17

ISO-14001

Achieving the ISO-14001 certification shows an organization has met the international standard for environmental performance through the efficient use of resources and reduction of waste.

GRI Standards GRI provides reporting standards for how organizations communicate and demonstrate accountability for their impacts on the environment, economy, and people. Standards cover topics ranging from waste and emissions to health and safety.

EPA SmartWay The SmartWay program provides a comprehensive system for tracking, documenting, and sharing information about fuel usage, freight emissions, and environmental risks across the supply chain. Freight shippers, carriers, and logistics companies partner with the EPA to measure and improve operations to reduce their environmental footprint.

Better Supply Chain. Better World. Better for Everyone. Supply chain sustainability is critical to both boosting business and benefiting the planet. Logistics providers committed to green practices are paramount to addressing the world’s most prevalent environmental issues. From packaging innovation to reducing warehouse footprints and maximizing transportation effectiveness while minimizing its environmental impact, 3PL expertise is essential. At Langham Logistics, we see sustainability as a corporate responsibility and a business imperative.

Langham’s Pledge to Protect the Planet: Delighting our customers begins with making earth-conscious choices for running our business.

The Langham Logistics family of solution providers is committed to ensuring our decisions today create the absolute best opportunities for all of us tomorrow. We think globally and act locally across our network of services to continually reduce our reliance on non-renewable energy and raw materials while seeking relationships with suppliers who emphasize the reduce/reuse/recycle mentality.

We are creating sustainable supply chains for our customers by: • Designing every warehouse in our network to reduce environmental impact with sustainable materials, energy use optimization, and emission-reducing electric equipment. • Building distribution capabilities based on proximity to rail and ocean transport, existing infrastructure, and availability of green energy. • Partnering with local packaging providers to redesign and reduce the shipping materials supporting our operations. • Developing a fully recyclable temperature-sensitive shipping solution to reduce packaging waste and save customers money. • Leveraging state-of-the-art automation and robotics in our facilities to increase throughput while decreasing environmental harm.

• Deploying advanced optimization software to help shippers reduce waste within their transportation networks from more efficient routes, better loading practices, and smarter inventory management. Focusing on sustainability is not just what we do at Langham, it is part of our DNA as a logistics provider. Discover all the ways Langham Logistics partners with shippers to support the planet at www.elangham.com.

About Langham Langham Logistics is a global transportation and warehousing company based in the Midwestern United States. The company offers supply chain management, domestic and international freight services, airport logistics services, and warehouse and fulfillment services with a focus on the life sciences industry. The reputation of being calm, cool, and delivered echoes throughout all of Langham’s services, giving their clients the freedom to stay focused on their business while their goods are stored and shipped on time and in perfect condition. www.elangham.com 20