During the reporting year, Imperial Logistics was impacted by record temperatures (high and low), drought conditions in some African operations and changing water levels in Europe.
In South Africa, the prolonged drought in the Western Cape resulted in tough demand management programmes implemented by the City of Cape Town, including strict and metered use of borehole water. Water restrictions in the Cape region have forced our operations to review certain business processes, particularly those relating to refrigeration and cleaning bays, while still meeting the requirements set by our clients.
In Lagos, Nigeria, and Zambia our operations depend on borehole water to meet their entire water demand. In Malawi and Mozambique, poor water infrastructure has increased the frequency of water outages, and Namibia is experiencing water shortages.
In Europe, the dry bulk business was negatively impacted by low water levels on the River Rhine which constrained our ability to operate shipping vessels and resulted in volume reductions. Then from mid-December the quick turnaround to high water levels meant that loads had to be split, requiring more push boats and increased costs. Towards the middle of 2018, hot weather conditions once again resulted in low water levels.
While the impact of climate change has not been fully quantified for Imperial Logistics, the risk is likely to have greater impact on our companies, as well as the businesses of our clients and suppliers in the future. Our competitive advantage is underpinned by our ability to minimise clients’ supply chain risk. This means strengthening our ability to provide continued service despite extreme weather conditions and finding innovative ways to reduce fuel consumption, a major driver of logistics cost. It is therefore no surprise that environmental compliance and disclosures are a growing feature of tender requirements, as clients demand that we demonstrate an understanding of and ability to adapt to climate change risks impacting their markets and long-term interests.
The greenhouse gas emissions associated with our transportation activities are the biggest contributors to our carbon footprint. Our trucks travelled over 466 million kilometres in the reporting year and we operate around 3,2 million square metres of storage capacity, requiring electricity for refrigeration, heating, ventilation and air-conditioning (HVAC) and lighting systems. Carbon taxes are already a feature of certain operations in Europe and are expected to be implemented in South Africa during the course of the next financial year.
Separate environmental management frameworks are in place for the African and European operations. As we drive strategic maturity across Imperial Logistics, we will look to set group-wide environmental standards which support flexible procedures at operational level. Target setting is not undertaken for Imperial Logistics as a whole but is devolved to individual companies or a geographical operation. Client trading volumes are influenced by market dynamics and this uncertainty makes it difficult to forecast transport volumes and the carbon footprint for certain companies. For this reason, we place more emphasis on controlling usage spikes and ensuring the integrity and accuracy of data to identify where we can implement efficiency measures.
The internationally accredited Imperial Logistics sustainability management system collates, processes, tracks and communicates data from our company sites across the world. It covers owned, managed and leased sites. In addition to effective reporting, the system enables our companies to share information on environmental issues and initiatives. Data is collected monthly from source and local administrators and internal audit perform regular data integrity checks.
Waste management and guarding against environmental contamination are also key priorities given that we transport chemicals, liquids and gases; and dispose of large quantities of hazardous and non-hazardous lubricants (waste oil and grease) and hazardous waste materials (oil rags) from servicing vehicles, ships and equipment.
Africa
In the African operation, the efficient use of natural resources is governed by an overarching environmental framework and policy. Where it makes sense to do so, performance incentives are in place for business managers, environmental and sustainability managers and equipment operators in certain operations. Incentives are based on the effectiveness of initiatives and reporting, emissions reduction, reduction in energy consumption (both fuel and electricity), driver training, driving style and the procurement of a fuel efficient fleet.
The technical and sustainability teams based in Johannesburg, South Africa, are responsible for researching new and emerging technologies relating to fleet and warehouse management, and energy, water and waste efficiencies.
Where required, new developments are subject to environmental impact assessments during their planning phases. For example, we upgraded a number of Freightmax depots during the year. As these depots are used as storage for chemicals and other hazardous substances, major hazard installation assessments were undertaken in line with the requirements of the National Environmental Management Act and submitted to the relevant authorities for environmental authorisation.
When building new or upgrading existing facilities, green building construction methods are considered as far as possible. Examples of green building design include the insulation of Worldwide Healthcare’s warehouses in Nigeria to reduce generator load and the use of thermo-shield coating at Imperial Health Sciences’ warehouse in Kenya.
Europe
The European Energy Efficiency Directive requires all large companies to conduct energy audits or implement ISO certified energy management systems. The European operation is ISO 50001 certified (energy management) and a number of sites are ISO 14001 certified (environmental management). The energy management system covers 93 sites across Germany, Luxembourg, Poland, Hungary and Sweden and integrates with the Imperial Logistics sustainability management system. In 2019, the system will be extended to operations in the Netherlands and the United Kingdom.
Imperial Logistics is one of a few European inland shipping companies that meet a level two rating on the tanker management self-assessment programme. The programme encourages companies to assess their safety and pollution prevention management systems against best practice guidance.
Stakeholder engagement
Our dependency on client facilities and processes can at times constrain our ability to drive environmental initiatives. We engage with our clients on environmental issues and we share our carbon emissions data with them so that they can calculate their own carbon footprints.
Environmental training and awareness campaigns drive the use of new technologies, influence employee behaviour and support employee acceptance of environmental key performance indicators. In Germany, a sustainability week was held in June 2018 at four locations to drive employee awareness (see sustainability week for employees in Germany).
Where feasible, we partner with industry leaders to adopt a holistic approach to environmental management for the sector. We monitor legislative developments on an ongoing basis and contribute to public policy on climate change through direct engagement with policymakers and indirectly through our memberships in trade associations. This allows us to assess and prepare for upcoming regulatory changes and share our industry expertise.
While we support the introduction of a carbon tax in South Africa, we have raised the following concerns in our engagements and submission to the National Treasury on the draft Carbon Tax Bill:
- That carbon tax must be ring-fenced to ensure it is used to mitigate the effects of climate change.
- The impact on the transport sector and the consequent implications for inflation and economic development.
- The economic impact of a carbon tax in addition to fuel levies and e-tolling.
| Link to material issues | |||||||
| Opportunity | Securing strong client relationships and our reputation as a responsible corporate citizen. | ||||||
| Risks |
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| Boundary | All Imperial Logistics entities with the exception of water consumption which is not considered material for the European operation. |
Areas of focus
Reduce carbon footprint, particularly electricity and fuel consumption
Challenges
- Reducing fuel and electricity usage in an environment of increasing costs.
- Capital constraints which impact the rate at which efficiency initiatives can be deployed.
- Unstable electricity supply in some African countries requires the use of diesel-driven generators, constraining the ability to lower our carbon footprint.
- Limitations in national infrastructure across Africa does not support the most fuel efficient trucks.
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Group priorities
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Priorities for Africa
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Priorities for Europe
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Performance measures Africa (2017: 515 822 tCO2) 157 565 401 litres of fuel consumed. (2017: 163 868 337 litres) Europe (2017: 240 685 tCO2) 86 371 387 litres of fuel consumed. (2017: 84 602 203 litres)
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Reduce water consumption
Challenges
- Lack of suitable water infrastructure in some African countries requires access to borehole water.
- Meeting client wash bay specifications while operating under water restrictions.
Priorities for Africa
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Performance measure Africa (2017: 627 642 kilolitres) |
Manage waste responsibly
Challenges
- Change management and training required at multiple sites to introduce a formal waste management process.
- Implementing the Imperial Logistics waste management standard in the African Regions where offsite waste management practices and infrastructures, such as licensed landfill sites, are underdeveloped.
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Group priorities
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Priorities for Africa
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Priorities for Europe
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Performance measure No significant spills were reported. Target for |
Ensure environmental compliance
Group priorities
- Contribute to policy development on climate change through industry association memberships.
- Internal audits in all operations assess critical compliance processes and controls. Where required, external compliance assessments may also be undertaken.
Priorities for South Africa
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Performance measure No fines or penalties |
Lowering the energy footprint of our buildings
Feasibility study
Results indicate that if we install PV systems at our owned buildings in South Africa and they operate at peak performance, the average cost of energy from the systems could equate to
R211 million over a
25-year period, saving 100 000 tCO2.
Feasibility study (South Africa)
During the year, we conducted a solar photovoltaic (PV) feasibility study on all owned depots in South Africa. The results indicate that together our buildings have the potential to generate over 2 500 kilowatt peak (kWp), where kWp is the rate at which PV systems generate energy at peak performance, for example, at noon on a sunny day. The first 225 kWp in this project is being installed at a Tanker Services Fuel & Gas facility in Germiston.
Goldfields (South Africa)
Goldfields installed light and air-conditioning motion sensors in its offices, as well as energy efficient lights in its depots. A new solar PV system has been installed at the Bothaville head office and the PV system at the Germiston depot was increased to double the initial installed capacity, covering up to 40% of the depot’s monthly usage and generating more than 160 megawatt hours of electricity from October 2017 to date.
Imperial Logistics Consumer Products (South Africa)
Imperial Logistics Consumer Products is reviewing all its operating sites to identify locations with the potential to realise substantial energy savings. An all-encompassing approach to energy management solutions is being adopted rather than identifying individual projects on an ad hoc basis which realise incremental savings. This means that a number of solutions will be investigated per site to achieve the best possible outcome. Learnings and data are being shared across the company as it moves towards managing energy in real time.
Operating fuel efficient fleets
Euro 5 trucks
Test results indicate that on the Durban to Johannesburg route, fuel consumption can be improved from an average 1,79 kilometres per litre (Euro 3 truck) to an average 2,0 kilometres per litre.
Liquefied natural gas truck
We are importing our first LNG truck in South Africa.
South Africa
The biggest challenge to upgrading our fleet with more fuel efficient vehicles is the limited availability of 50ppm diesel (required for Euro 5 trucks) and LNG at truck stops across South Africa. As diesel for the Euro 5 trucks is more readily available in cities, Fast-n-Fresh have started updating their fleet following a successful test run on the Durban to Johannesburg route.
In addition, in partnership with Volvo, we will import and pilot our first LNG truck with a 420 horse power engine in December 2018. The truck will be tested on short and long haul routes. LNG is an attractive option in the long term, enabling us to reduce our dependence on fossil fuels.
In another initiative, Consumer Packaged Goods has successfully developed and implemented a fleet review system and weekly reviews are improving fuel consumption as well as vehicle and tyre maintenance.
Work commuters
In Duisburg, Germany, three lower emission hybrid vehicles were introduced into the staff fleet and charging stations installed in three locations to facilitate business trips in the area. In addition, in June 2018, we started an initiative that enables our employees to lease a regular or electric bicycle at a low monthly cost. The bicycle can be used for work and personal purposes. Employee feedback on both projects has been positive.
Duisburg (Germany)
Imperial Gas Barging’s two newest gas tankers, which transport liquefied petroleum gas (LPG) and pressurised gaseous products, consume less fuel than their predecessors and each have a capacity of 2 856 cubic metres. The tankers are suitable for operations on canals and secondary inland waterways, including the Rhine’s tributaries. The dual Z-drive rudder propellers form a structural unit that requires less fuel, and data from the main engines is sent online to the control centre, enhancing fuel management. The hulls are reinforced providing extra protection in the event of a collision, minimising the risk of environmental contamination. On-board sewage treatment plants ensure the quality of the water discharged from the vessels meets European legal requirements.
Together with chemicals company, INEOS, we have commissioned the build of four butane gas tankers which will be the largest inland waterway gas tankers in Europe. They will be equipped with bow thrusters, particulate filters and catalytic converters with advanced active emissions control technology to ensure we meet the stricter European emissions regulations that come into effect in 2020. All four tankers will be reinforced with collision protection and the auxiliary power units will have full sound insulation, meeting noise level requirements at unloading docks. The tankers are expected to become operational in 2020.
In last year’s report, we said we would investigate the feasibility of introducing e-trucks to our fleet. Unfortunately, the range of electric trucks available do not meet our criteria, particularly in the transport of chemicals which requires stringent safety measures. The cost to run an electric fleet is also a deterrent given the investment required to build charging stations. However, we keep abreast of advancements made in terms of alternative fuels and are participating in a research project on electric push boats to understand the feasibility of this new technology.
Meeting client requirements under water restrictions
Our companies that operate in the chemical and food industry are high users of water as they are required to meet stringent cleaning specifications set by clients. In addition, the transportation and warehousing of cold storage products requires large amounts of water to support the refrigeration process.
Tanker Services (South Africa)
Achieved a 41,6% saving in water through a number of initiatives. In addition, employees were provided with water saving advice which they could share with their families and communities.
To ensure the company is able to continue meeting its clients’ expectations under uncertain water conditions, funding has been made available to access underground water and install a filtration plant which will comply with SANS 241:2015 for drinking water.
Tanker Services (South Africa)
Bulk tankers used to transport consumable products such as wines, edible oils, sugars and milk, among others, must be cleaned with steam and water of a specific quality to meet stringent food quality and safety requirements. The challenge for Tanker Services’ Stikland depot over the past two years has been to comply with the Department of Water’s new water usage bylaw for the Cape region, without compromising product quality.
The company changed its internal washing procedure and now collects water from the last rinse cycle of each wash and reuses it in the washing cycle for non-food grade products. To achieve this, the computerised system had to be re-programmed and a new system of pipes and valves designed and installed to separate the re-usable water from the effluent discharge and route it to a grey water storage tank. In addition, a 5 000 litre storage tank was added to the recovery process to collect the re-used water and use it to wash the outside of trucks.
A number of other actions were also taken by the depot, including the installation of electronic push buttons with 60 second timers to control water flow from taps, water saving shower heads and overhead water hoses that can be turned off at the point of washing.
Other Imperial Logistics South Africa companies operating in the Cape region have undertaken similar initiatives, including the installation of rainwater harvesting systems.
Working towards our recycling target in South Africa
In April 2017, we started standardising the management of waste in the South African operation. During the reporting period, we took this a step further and set a target to recycle 80% of the general waste stream under our control by 2020.
Between 60% to 70% of our general waste is treated in line with the disposal or destruction requirements set by our clients, limiting our opportunities to recycle and divert more general waste from landfill. However, we have introduced a formal waste management programme applicable to all companies in South Africa. Our aim is to better manage the 30% to 40% of general waste under our control. We have entered strategic partnerships with two major waste companies and our agreements range from the responsible collection and disposal of waste to full onsite waste management (waste segregation, recycling and safe disposal), depending on the needs of a company. Awareness training is being delivered and new procedures developed to formalise the discipline and improve the accuracy around capturing and reporting waste data, including volumes, associated costs and rebates.
Pleasingly, a number of companies are starting to see the benefits of optimal waste management, including income from recycling rebates. Good progress has been made on data integrity and we expect to include robust waste metrics in next year’s integrated report for the first time, including the volumes of hazardous waste, general waste sent to landfill and recyclable material.
As we mature the formal waste management process, we hope to partner with our principals and clients and expand recycling, where feasible, into the portion of the general waste stream controlled by them.
Ensuring our relevance in the markets in which we operate
Delivering food aid to drought stricken communities and solar power to healthcare facilities in Malawi
The Southern African Development Community (SADC) Secretariat called on various stakeholders, including Imperial Logistics, for an urgent solution to delivering food aid to communities impacted by the worst drought to hit Southern Africa in 20 years. The challenge was that within six months, nine million metric tonnes of food aid had to be delivered to communities in remote areas. Our flexible, asset-light model proved an ideal approach as it offers a temporary solution that can quickly provide the required capacity for vast volumes but can also be disbanded at the end of a project.
With a predominantly agricultural economy and with the lowest GDP per capita in Africa, Malawi was especially hard-hit by the drought and lives were at stake. In just three weeks, we were ready to help Malawi’s desperate communities through the use of 15 Samil vehicles with a carrying capacity of between seven and 13 tonnes each and the ability to operate in harsh African terrain and adverse weather conditions. Drivers and a mechanic received training on the Samils, stand-by vehicles were arranged, permits secured and controllers upskilled to manage the project in-country.
Our solution was able to deal with vehicle breakdowns, driver care, the changing of personnel at short notice due to Malaria and other health hazards and quick load transhipment, when needed. The Samils successfully delivered more food aid to difficult to reach areas than any other vehicle used on the project.
In response to the increasing power outages being experienced in the country, the Ministry of Health has embarked on a US$3,7 million project to install solar energy at 85 health facilities nationwide. The installations focus on theatres, maternity wings, intensive care units and wards for children under five. Together with a non-profit organisation, Partnership for Supply Chain Management (PFSCM), Imperial Logistics company, Resolve, is installing the panels, panel arrays and solar PV systems, as well as solar powered streetlights, geysers and air-conditioners at the hospitals. Heat reflecting paint will also be applied at 16 hospitals.
Combating the demise of bees
Experts believe that the world would lose one third of the food we eat without the work performed by bees. Unfortunately, the increasing use of impervious surfaces and single-crop agriculture are restricting the living space for bee colonies, and bee numbers have declined alarmingly in the past few years.
At our multi-user warehouse in Herten, Germany, we have provided 13 000m2 to house 10 bee colonies, supporting the biodiversity at the site. The colonies are looked after by a professional organic beekeeper who is local to the area. The location offers ideal conditions for honey bees because of its variety of herbaceous plants and low shrubs. The plot of land is secluded and there is no risk to employees or local residents.
One bee colony can consist of between about 20 000 to 80 000 bees, depending on the time of year, and can produce 20 to 30 kilograms of honey annually. Going forward, we hope to organise events at the site using the beehives to teach children about beekeeping and biodiversity.
Key data for Africa
| 2018 | % change | 2017 | 2016 | ||||
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| Fuel consumption | |||||||
| Road fuel usage (litres) | 156 501 478✔ | * | (3,8) | 162 689 477 | 177 721 610 | ||
| Non-road fuel usage (litres) | 1 063 923✔ | * | (9,7) | 1 178 860 | 1 145 418 | ||
| Total fuel consumption (litres) | 157 565 401✔ | * | (3,8) | 163 868 337 | 178 867 028 | ||
| Electricity | |||||||
| Electricity purchased (megawatt hours) | 73 341✔ | * | (11,7) | 83 031 | 79 989 | ||
| Emissions | |||||||
| Scope 1 emissions (tCO2) | 422 311✔ | * | (3,4) | 437 385 | 482 125 | ||
| Scope 2 emissions (tCO2) | 72 021✔ | * | (8,2) | 78 437 | 79 272 | ||
| Total Scope 1 and Scope 2 emissions (tCO2) | 494 332✔ | * | (4,2) | 515 822 | 561 397 | ||
| Scope 3 emissions (tCO2) | 1 572 | * | |||||
| Total emissions (tCO2) | 495 904✔ | * | (3,9) | 515 822 | 561 397 | ||
| Water | |||||||
| Water purchased from municipalities (kilolitres) | 504 028✔ | * | (19,7) | 627 642 | 679 727 | ||
| Spills | |||||||
| Number of significant spills | 0✔ | * | 0 | 0 | |||
| Environmental compliance | |||||||
| Fines or penalties for environmental incidents | 0✔ | * | (100) | 1 | 0 |
| Methodology used: Greenhouse Gas Protocol – A Corporate Accounting and Reporting Standard (Revised Edition). The boundary used is operational control. | |
| ✔ | Satisfied with performance. |
| * | Assured (see the independent limited assurance report in the 2018 integrated annual report). |
The 4% decrease in road fuel consumption and 3% reduction in Scope 1 emissions is attributable to smaller fleets, in line with our asset-light strategy, as well as our ongoing initiatives to train drivers and optimise routes, contributing to improved fuel efficiency. The asset-light strategy requires a balance between the use of our own fleet and sub-contractors. The kilometres travelled by sub-contractors on our behalf has not been audited and therefore is not included in the Scope 3 emissions reported, which for this year only reflects Imperial Logistics' business travel.
In our warehouses that store chilled and frozen products, the refrigeration of cold storage, receiving and dispatch areas is a high consumer of electricity. Improved energy management initiatives and the restructuring of certain companies, which has resulted in a smaller warehouse footprint, have resulted in the 12% decrease in electricity consumed.
The 20% decrease in water sourced from municipalities was mostly achieved in the South African operation where smaller fleets required less water for cleaning and the volume of water recycled increased by 37% compared to the prior year, mostly in wash bays. The awareness campaigns held during the year have also contributed to better water management at our facilities.
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| One of the three lower emission hybrid vehicles introduced into the staff fleet in Duisburg, Germany. |
Ten bee colonies introduced at our multi-user warehouse in Herten, Germany, supporting the biodiversity in the area. |
Key data for Europe
| 2018 | % change | 2017 | 2016 | ||||
|---|---|---|---|---|---|---|---|
| Fuel consumption | |||||||
| Road fuel usage (litres) | 25 051 935✔ | * | (5,6) | 26 524 451 | 25 707 838 | ||
| Non-road fuel usage (litres) | 61 319 452° | * | 5,6 | 58 077 752 | 65 534 637 | ||
| Total fuel consumption (litres) | 86 371 387° | * | 2,1 | 84 602 203 | 91 242 475 | ||
| Electricity | |||||||
| Electricity purchased (megawatt hours) | 29 812✔ | * | (44,9) | 54 111 | 52 194 | ||
| Emissions | |||||||
| Scope 1 emissions (tCO2) | 216 731° | * | 0,4 | 215 875 | 260 758 | ||
| Scope 2 emissions (tCO2) | 15 995✔ | * | (35,5) | 24 810 | 25 672 | ||
| Total emissions (tCO2) | 232 726✔ | * | (3,3) | 240 685 | 286 430 | ||
| Water | |||||||
| Water purchased from municipalities (kilolitres) | 96 320✔ | * | (59,3) | 236 947 | 230 180 | ||
| Spills | |||||||
| Number of significant spills | 0✔ | 0 | 0 | ||||
| Environmental compliance | |||||||
| Fines or penalties for environmental incidents | 0✔ | 0 | 0 |
| Methodology used: Greenhouse Gas Protocol – A Corporate Accounting and Reporting Standard (Revised Edition). The boundary used is operational control. | |
| ✔ | Satisfied with performance. |
| ° | Area for improvement. |
| * | Assured (see the independent limited assurance report in the 2018 integrated annual report). |
The sale of Schirm in January 2018, a contract manufacturing business and the biggest consumer of electricity and water in Imperial Logistics International, has resulted in the 45% decrease in electricity purchased and 59% decrease in water consumed. Given that the 2018 metrics include seven months of electricity purchased and water consumed for Schirm, we expect further decreases in the year to come.