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The must watch talk show for global supply chain professionals is now available as podcast. After each edition of the Supply Chain Talks we sit down with one of our guests and continue the conversation. Start listening while preparing lunch or take your podcast with you as you go on your daily walk.
Welcome to the supply chain talks podcast. My name is Sophie van der Enk. In season 2 of this podcast, I will dive into the world of sustainable container supply chains. As decision makers, cargo owners, and freight forwarders play a key role in boosting sustainability in the logistics chain. But how do you build a c 02 neutral and at the same time resilient supply chain?
Sofie van der Enk:And what are the possibilities and standout examples that exist today? In this podcast series, we've discussed the decarbonization of the container supply chain with various players in the industry using the replace, reduce, rethink strategy as our guiding principle. In this last episode of season 2, we're joined by Elisabeth Munk Averroesenschold, head of sustainability, and Stefan Katteger, the project leader, ports at IKEA Global Transport and Logistics Services. With their impressive handling, of over 1 point 7,000,000 shipments annually, resulting in 1,000,000 tons of c 02 emissions, IKEA stands at the forefront of decarbonizing its supply chain. IKEA is committed to reducing, replacing, and rethinking how they reduce their greenhouse gas emissions all the while supplying us with those wonderful products that we all have in our house.
Sofie van der Enk:So welcome Elizabeth and Stavon. It's very good to see both of you. We're connecting via the screen because you are in Switzerland. Right? Yes.
Sofie van der Enk:Elizabeth, let me start with you. Maybe you can introduce yourself. You're the head of sustainability. So what does that mean working at IKEA?
Elizabeth Fauvelle Munck af Rosenschold:Thank you so much. Yeah. I I lead sustainability then in IKEA supply chain operations. I've been with IKEA for the last, almost 8 years. Based out of Switzerland here together with Stephan.
Elizabeth Fauvelle Munck af Rosenschold:And and throughout my career I've been working within sustainability and it's a passion of mine. And in IKEA supply chain operations, we are responsible for all the global movement of home furnishing goods from the suppliers to the warehouses and stores. And then for the last mile, that is, handled by the IKEA Retail Organization. But for all of the these 1,700,000 shipments, that is the responsible responsibility of IKEA Supply Chain Operations.
Sofie van der Enk:Yeah. And you mentioned that sustainability is a passion of of yours. Why does it matter so much to you?
Elizabeth Fauvelle Munck af Rosenschold:I think, I've I've always been interested in this topic, and I think it's about, bringing positive change, trying to get people to actually make these changes. And I am really fortunate to to be part of this organisation where sustainability is really integrated into the business and we have the
Sofie van der Enk:exhilarating things for me, working on this podcast that we're talking with players that are so big. You know, if you start making a change, it's actually on a scale that really matters. So that must be exciting working for IKEA. Stefan, so you are the project leader ports. So that means, like, you you love ships and ports, and what is it that you do?
Stefan Krattiger:Yeah, indeed. I'm the project leader port within IKEA SEO. So the same organization as Elizabeth is in, here in Switzerland. I started with IKEA 2 years ago when this role was newly implemented into the SEO structure. So I have a passion for port.
Stefan Krattiger:I think it's it's, very
Sofie van der Enk:You're in the wrong country.
Stefan Krattiger:Yes. There, we have quite we have small ports at the Rhine, so we have to start at the small level. But, for sure it's very exciting and being IKEA now for 2 years coming from the Freight Forwarders' end where I worked for 15 years, it has been a very exciting journey especially now also deep diving into the sustainability topic.
Sofie van der Enk:Elizabeth, could you tell me a little bit more about, the the replace, rethink, reduce model in in terms of, from IKEA's perspective?
Elizabeth Fauvelle Munck af Rosenschold:Yeah. Absolutely. Maybe I can start by by saying that in IKEA, we're guided by our people and planet positive strategy. And there are 3 focus areas in this strategy. It is about healthy and sustainable living.
Elizabeth Fauvelle Munck af Rosenschold:It's about enabling people all over the world to live a better and more sustainable life at home. Then we have the, climate and circular part of it, where we're really trying to transform into a circular business and really work towards science based, climate targets. And the third part is about fair and equal is about, ensuring diversity, inclusiveness, etcetera throughout our supply chain. And as this being a big global shipper, we with this 1,700,000 shipments, we emit a substantial amount of greenhouse gas emissions. And but also involved in the everyday life of of, drivers and seafarers and warehouse workers, etcetera.
Elizabeth Fauvelle Munck af Rosenschold:And and it gives us a big responsibility but also big opportunity to make a a difference. And, we are striving towards in clean and fair goods flow. And by clean, we mean that we want to go 0 emissions in our transport value chain, and we want to use a 100% renewable electricity and energy in our operations. And by fair, it's really about enabling a better everyday work life for all of the people handling our goods in the value chain, but also have a positive impact on the communities where we are involved in. And, if we look at them, reduce, replace, rethink, we have a very important milestone in in 2030.
Elizabeth Fauvelle Munck af Rosenschold:So when it comes to transportation, we said that we are to reduce the carbon footprint from every transport that we do by minus 70% compared to our baseline year 2017.
Sofie van der Enk:Mhmm.
Elizabeth Fauvelle Munck af Rosenschold:We are on our way, and we just released our, climate report. And we have now reduced since 2017 minus 25% on average from every transportation. But it is a long way to go, and we really now need to speed this up. So what is guiding us is our strategy on reduce, replace, rethink. Where reduce is about really capturing efficiencies in everything we do.
Elizabeth Fauvelle Munck af Rosenschold:Replace is about replacing fossil fuel with much better alternatives. And Rethink is about integrating new types of innovation technologies and new types of collaborations into our value chain.
Sofie van der Enk:Well, you've, really sort of peeled off the the onion quite a bit. That's a good place to start. So let's dive into this, reduce, concept. You touched on it already, of course, a little bit. So it's about reducing fuel and energy consumption, of course, increasing the, the use of equipment, switching to intermodal solutions really, and optimizing your transport networks.
Sofie van der Enk:And, going digital, of course, plays a an important or crucial role in achieving, this goal because you want to reduce existing emissions, by by having the right information. How else would you even measure your your improvement? How important are our visibility, transparency, and and speaking a common language in terms of those data for you, Elizabeth?
Elizabeth Fauvelle Munck af Rosenschold:For us, this is super important. It it it is a key foundation, in when executing our strategy and to to reach our targets. And to have a really fact based foundation for everything that we do, it's also about really about speaking the same language, internally, externally with our service providers, but also with all other stakeholders to enable benchmarking, to share good practice and learn from others on on what we can do better.
Sofie van der Enk:Yeah. How just a question also for Stefan. You work with all these different kinds of ports. Do you find that there is a common language port to port or do you think oh I'm now talking to this port, They have this system. And do you have to how how does that work?
Stefan Krattiger:Yeah. You're spot on with that. And I think we're all set on the journey when it comes to the port, the emissions, how to report it, and what type of figures to report it. It's still quite very unstructured, but, of course, by having a structure into that it will help them to have this foundation which, Elizabeth was referring to. And if you look at the different parts of the supply chain, different parts are more advanced or less advanced, and ports, I think, are still to cover a lot of mileage to have that foundation then at the end.
Sofie van der Enk:Yeah,
Elizabeth Fauvelle Munck af Rosenschold:I can add to that also because we we are actually reporting emissions from ports, but we used, you know, an average general's estimate on on the emission. And I think it's less than 1% of our total carbon footprint. But what we really want to have is to have the transparency and visibility from the ports as well as part of our end to end visibility of our transportation.
Sofie van der Enk:And for our understanding, what percentage of the total carbon footprint is actually attributed to logistics, Stefan?
Stefan Krattiger:When we look at the specific part where we are responsible within supply chain operations, meaning supplier to warehouse or logistics units. Product transport and logistics services represent 4.2% of the total emissions. And half of it within that comes from our ocean flows and half from our land flows with 2% from the warehousing part. That's how we have splitted it.
Sofie van der Enk:So it is a it is a small part, but still in the quantities that IKEA is working on it's still significant amount of course.
Stefan Krattiger:Yes. And very important that we we we have this, every step counts. So no matter how big the percentage is of the total, footprint, we we still need to to make take our actions and have our, measures to to reduce that to to reach our overall goals.
Sofie van der Enk:So 4.2% to go. In what, in transportation from the port to the warehouse, what percentage is, intermodal? And how is that modal split, divided within the transportation, area of IKEA, Stefan?
Stefan Krattiger:Yeah. We use intermodal solutions such as rail, short sea, inland waterways in many transport routes, many more than only from the port to our warehouse. So switching from diesel trucks to intermodal transport also reduces 50% of the emissions on average. Therefore, we can proudly say that 51% of our land flows is on intermodal.
Sofie van der Enk:Wow. That that is a lot. And and then many shippers and freight forwarders face challenges in making their supply chains more sustainable due to the perceived high cost or the potential impact on reliability, in and and efficiency. And that, of course, is so so key when delivering goods that it's difficult to to to let go and and to trust that you can also do it in a different way. What advice would you offer to these shippers and freight forwarders?
Stefan Krattiger:Yeah. That's a very famous topic. And for us, it's really the answer is all aspects have to be looked at. And so in any business case, we consider the cost, the reliability, the quality and the sustainability perspective. So to weigh in all these factors as an integral part and then consider that with our goals to make the business decision.
Stefan Krattiger:So I would say there are many pathways, and we are making investments for the future. On that hand, the cost of not doing the investment will result in much higher costs in the future. And along this journey, we have so much learnings to find opportunities that serve various, different perspectives. So that's why we are really convinced that it's important to to get many on board to even shorten that transition time which we are in.
Sofie van der Enk:Yeah. And to share your your your best practices I guess, to to convince others. And what about a premium for using, 0s 0 emission fuels, which are still more expensive than the traditional fuels, obviously. So what incentive is then needed for the market to to finally hop aboard and and and make the switch? Maybe for both of you, really, Elizabeth.
Elizabeth Fauvelle Munck af Rosenschold:Yeah. That's a really good question, an important question and maybe there's not one answer but many different answers, to that question or many things that needs to fall into place. But for us, in IKEA, first of all, we do not believe that that sustainability should come at a premium, that you need to pay more for sustainable products. I mean, sustainable products should really be a better option. The option that you choose for the benefit of the environment and the customer.
Elizabeth Fauvelle Munck af Rosenschold:But we also see that, to create the necessary climate impact there are lots of investments that need needs to be made. Right? And and, and there is also need for collaboration to create these zero emission solutions. And we are not willing to pay a forever premium for sustainability but we are willing to be part and share the investments investments that are needed in order to make this transformation. And just as Stefan mentioned, what we really want to see now is that we make a fast transformation.
Elizabeth Fauvelle Munck af Rosenschold:We don't want this to drag on for years years, but to really get as many as possible on board now so we can make this shift that is so needed. Of course, a strong policy support is needed as well to support this journey.
Sofie van der Enk:Yes. That is something that we've heard throughout this podcast as well. It's very much a a joint effort and companies cannot do this by themselves. You want to really ensure a level playing field. Alright.
Sofie van der Enk:So I think we've sort of tackled the reduce part, for for now. Thank you so much. Let's move over to, replace and and focus, on that for a moment. So transitioning from fossil fuels to cleaner alternatives, that really that's the essence of replacement, obviously. An example of of replace is, carbon insetting.
Sofie van der Enk:Maybe you can explain what that is Elizabeth.
Elizabeth Fauvelle Munck af Rosenschold:Yeah. First I can maybe start with saying that in IKEA, we don't do offsetting, because we we believe that we need to tackle the root cause of of the problems within our own value chain which is really the concept of of insetting. Right? So when it comes to ocean shipping, there is not yet the scale of biofuels or zero emission solutions, to be able for us to ensure that the goods we ship are placed on vessels due, using these solutions. So if we compare this, for example on land transportation, we know that we can can, buy a land transport service on the truck for example, and we know and we can say this is the the fuel that we want to use.
Elizabeth Fauvelle Munck af Rosenschold:So it's a different setting. But when it comes to shaping our goods over the oceans, we want to be part of increasing the demand, enable the scale up of of these solutions. So for example, we buy biofuels, from our ocean carriers. But it might not be that the exact vessel that our goods are on actually burn this, biofuel. Still, we say we want to ensure geographical connection that the vessel that burned this biofuel is is on a route on, let's say, from EU to to the US, for example.
Elizabeth Fauvelle Munck af Rosenschold:And ultimately, as this is deployed and scaled and the solutions are out there, of course, we want to ensure that our goods is placed on the 0 emission solutions, the 0 emission trucks, the 0 emission warehousing units, etcetera.
Sofie van der Enk:Yeah. So and where where does that stand today? How how far along is this process where you can really say, yes. This is actually the way that we're working all across the board?
Elizabeth Fauvelle Munck af Rosenschold:I would say this is a journey that we are all on. It it's, it's a development. Right? I mean, if we look at biofuels, we started this back in 2019 with a pilot actually together with Puerto Rotterdam, CMA, CGM and Goodfuels, good shipping. Where we then together tested biofuels for the first time on an ocean going container ship and it was proven successful.
Elizabeth Fauvelle Munck af Rosenschold:And and there is no not yet standardized accounting methodology on on how to account for for for these. We don't have the detailed visibility of the emissions from the individual, shipments. But we are using, working with clean cargo. We are using the average trade lane data. We are then deducting the biofuels that we are buying from our service providers from the carbon footprint.
Elizabeth Fauvelle Munck af Rosenschold:And I think what is happening right now, there's a lot of work going on to develop this methodology, which is super good, and we are closely following this. What, the the really the focus for us right now is that we need to reduce the emissions here and now. And this methodology needs to follow and and it is.
Sofie van der Enk:Yeah. Yes. Yeah. That that comes back to that point that we talked earlier about how important it is to have a set of data and then a language, a shared language to understand what it is where we are. How, so this this, pilot actually is a good example.
Sofie van der Enk:Do you see that more often, Stephan, that other ports are are running pilots like this, or what's the role of Rotterdam in this perspective?
Stefan Krattiger:Yeah. Across the globe with ports there are very very many interesting initiatives on the ports becoming hubs for bunkering of alternative fuels. Green corridors are coming up so we are monitoring that with high interest to see what could be a perfect match for us.
Sofie van der Enk:Yeah. The Port of Rotterdam Authority offer offers a substantial port fee reduction for ships that bunker sustainable fuels in in Rotterdam and supporting initiatives like the 0 Emissions Maritime Buyers Alliance mostly known as ZEMBA. IKEA is also involved in that. As one of the initial members, can you elaborate, Elizabeth, on on this initiative's, success?
Elizabeth Fauvelle Munck af Rosenschold:Yes. We are member of Zenba. We believe it's a great example of, how signals from different, shippers, you know can be channelled into concrete actions. So, it actually started back in in 2021 where we signed the COSAVE ambition set statement, which is cargo owners for 0 emission vessels, where we committed to only ship our goods on 0 emission vessels latest 2040. And then in 23, we joined ZEMBA, which is then a buyer's group of of cargo owners.
Elizabeth Fauvelle Munck af Rosenschold:We are now more than 20 companies in in Zemba. So we've come together to demand 0 emission shipping. And what is happening right now is that there is actually a request for proposal out for 600,000 TEUs over a period of 3 years. And now in not a long time in spring, we're looking forward to see who the winner of this request for proposal will be. And then the work will start for us, all the individual companies, to actually buy these zero emission solutions from the winner.
Elizabeth Fauvelle Munck af Rosenschold:And and Semba is is is an important example of of innovative ways of coming together, collaborating, aggregating demand that actually will generate concrete results. And it sends, a strong signal that the demand is here. And further builds that trust and confidence that this is the direction that we need to take altogether. And it's a very action oriented and hands on way of of collaboration, I would say.
Sofie van der Enk:Yeah. So it sends a strong signal. But to whom? I I wonder how how does IKEA communicate these types of efforts in making your own supply chain more sustainable. You're working with all different kinds of partners, stakeholders.
Sofie van der Enk:Do you make it understandable, for for them, like, this is what we're doing? Do you go actively proactively go out and and and talk about these achievements?
Elizabeth Fauvelle Munck af Rosenschold:Yeah. But absolutely. And I think communication, engagement, dialogue is is is crucial to get to talk about this. And the good thing is that it is being talked about more often and frequently, and and and different stakeholders are coming together finding ways of how to collaborate and drive this agenda. So so for us then, what we do for example, in a standardised way we are reporting on our carbon footprint from transportation and logistics in the IKEA sustainability reports, the climate reports, etcetera.
Elizabeth Fauvelle Munck af Rosenschold:We are reporting exactly on our carbon footprint both from the land transportation, the ocean transportation, the warehousing activities. We're presenting the examples of how we are working with our reduce, replace, rethink agenda and the different actions that we are doing. So that's an important thing. What we're also do doing and we're in the midst right now, it's our yearly good examples catalog because we are collecting good examples from across the globe with how we work with our stakeholders, with our service providers, and actually very fact based then saying different projects, what reductions do they actually, result in? But also this year, letting the people really working with these things to to talk about what they are doing because it's it's really about engaging us all into this topic and also with a strong message that every step counts towards 0.
Elizabeth Fauvelle Munck af Rosenschold:It's really this topic is is bigger than IKEA. We really need to engage with others. We are engaging a lot with our service providers. So the business people, this is a dialogue, constant dialogue together with our service providers. What can we do?
Elizabeth Fauvelle Munck af Rosenschold:And it's a completely integrated part of how we do business.
Sofie van der Enk:Yes. But of course, IKEA is a very big name not only for for me as a consumer but also within the industry. So you you actually have another IKEA catalog, if I understand you correctly, that shares these positive stories. And is this the type of thing and tool that you can bring with you, Stefan, when when when talking to shippers and and freight forwarders who might hesitate to to really, go for such alternatives because of the higher costs?
Stefan Krattiger:Well, about this catalog, definitely, that's what what we carry with us to to when we have the dialogue with the stakeholders on my side mainly with the ports and terminals to to share that with them, inspire, but also we get a lot of inputs from from the ports and terminals, which is a quite a new business intelligence we want to bring into our organization. So it's really this give and take on on, inspiring each other and learn from each other.
Sofie van der Enk:And are there do do they carry the the the big convincing argument, for for for shippers and forwarders to to choose these alternatives, or do you sort of custom make the the the the argument for every individual, person you talk to?
Stefan Krattiger:Yeah. Of course, the the the bigger topics like electrification and and alternative fuels, that that comes in in most of the conversation. But then it really it's a matter of what what could be a fix, what could be workable for us, and what can the the your partner offer. So that's that's then the the the fine tuning of it.
Sofie van der Enk:Yeah. That has been such a through line, I think, in this entire, series in the podcast that I've been hosting now. That's what everybody really comes back to. You can't do it alone. The task is just too big.
Sofie van der Enk:And and within this dialogue, you can, rethink, solutions, which brings us to the final topic, obviously, rethink. Rethinking supply chains is about thinking outside the box, I I guess, and and and collaborating with others and and really drive that innovation and and look at things that you've done a certain way for decades and really trying to put it turn it on its on its head and and go at it differently. So so rethinking these supply chains really involves collaborations that might not initially seem obvious, but they need to sort of, evolve. How how does IKEA perceive this, Elizabeth?
Elizabeth Fauvelle Munck af Rosenschold:Well, as you said, re rethinking is much about collaboration. Collaboration is key because rethinking is not just about new innovative technologies or new innovative fuel. It's it's about people. It's how we collaborate with each other. So we we need innovation in collaboration, finding new ways of of coming together.
Elizabeth Fauvelle Munck af Rosenschold:And we just spoke about Zemba. And another example is is what Stefan just talked about about the ports which is also a new stakeholder to us in that sense to really start and and discuss and learn from etcetera etcetera. So I think for us, we are very much open to collaboration. We are very much reaching out to meet new stakeholders, understand and learn and also bring our knowledge and confidence of what we have learned along the way to find new ways.
Sofie van der Enk:Yeah. Have you had experiences that have really surprised you? Like, oh my god. We we were talking to APM Terminals, earlier this series, and they said that they'd been, they'd had a session sitting together with lots of different partners and they actually found a way to reduce 22% while, clearing a shipment. So that was this really big number, and it was just a matter of sitting together and really thinking how can we be more efficient?
Sofie van der Enk:Have do you have an example like that?
Elizabeth Fauvelle Munck af Rosenschold:I think actually that is very much a good examples catalog because what we see in the catalog and this good example, it's actually about people coming together, sitting down, thinking out of the box, finding new ways and then also applying this fact based approach we can actually see what has this actually generated, what results. And I think it is this that we really want to inspire because tackling the climate change is not about the sustainability department working with this. It's about everyone in their daily operations to take this on and find the ways of how to do that. And that is really what we would like in the good examples catalog to share all of these good examples that we see it generate results.
Sofie van der Enk:Right. Yeah. And it inspires. Well as we know, the the Port of Rotterdam wants to be a front runner in sustainable supply chains through electrification, shore power, promoting sustainable modalities, obviously. What what is your view, Stephan, on on the role of a port authority in this perspective?
Stefan Krattiger:Yeah. I think really the the ports, especially the port authority, can be an important enabler to bring the stakeholders together and then capitalize and direct the energy of the different stakeholders to a clear roadmap. And that's why we also started to work with ports and port organizations, to to to be part of the of the discussions. And in the case of Rotterdam, I think you you're you have your agenda. You're on your way with the green and digital corridors you you have implemented and you're working on, the green hydrogen journey and the the whole circular economy which you're tackling.
Stefan Krattiger:So I really think it's about being innovative, new ways of collaboration, to connect on these initiatives.
Sofie van der Enk:Yeah. Yeah. It's interesting because, of course, as a portra facilitator, you need to facilitate the customers that are still, using mostly fossil, which is the majority at this point still, but you also want to facilitate that that movement forwards, of course. So, yeah, it's interesting to hear your perspective on that, Stephane. Good to hear that you feel that what that Rotterdam is playing, how how do you feel Rotterdam is taking up its role?
Stefan Krattiger:Well, yeah. As I said, I think you have your agenda which which is probably on on the forefront of of the industry, also Rotterdam being the the biggest container port in Europe. So I think you're on a good track there and inspire others as well from the port industry as such.
Sofie van der Enk:Yeah. Well, thank you. Thank you so much. Both of you, is there anything you feel like we we need to, add, to this interview? Anything that you feel like you'd still like to
Elizabeth Fauvelle Munck af Rosenschold:say? I think the dialogue and and communication collaboration continues, and I we would like to thank you so much for inviting us. And also thank you for this initiative also of of coming together and having this discussion. Yes. It's a good step.
Elizabeth Fauvelle Munck af Rosenschold:Thank you so much.
Sofie van der Enk:Right. That's all part of the process, right? Getting together and really, exchanging ideas. Well, IKEA has shown us that there are several ways to move forward to a sustainable supply chain. Examples like the the carbon insetting, are are the first steps that could be taken right now as we can see because you're doing it to get, our goals for 2015 within reach.
Sofie van der Enk:Action needs to be taken now, obviously, and not in the future. I would like to thank both of you, Elizabeth, Stephan, for for joining me today for your great pioneering roles in in making the global supply chain more sustainable and working on that every single day with, passion and dedication and on a knowledge and fact based, basis. So that is absolutely vital. With this episode, we have come to the end of this supply chain talks season, and what a finale it was. So thank you so much, all of you, for listening.
Sofie van der Enk:And if you still would like to learn more about sustainable container supply chains and initiatives, then, check out portofrotterdam.com/container shipping.