Welcome to Check Call, our corner of the internet for all things 3PL, freight broker and supply chain. Check Call the podcast comes out every Tuesday at 12:30 p.m. EDT. Catch up on previous episodes here. If this was forwarded to you, sign up for Check Call the newsletter here.
Inside this edition: It’s never too late to adopt sustainable choices; head on to the blue markets; and the battle rages on for TravelCenters of America.
Supply chains just got a seat at the C-suite table, so is now the right time to bring up supply chain sustainability? The answer should always be yes. The biggest hurdle is how to make a commitment to sustainable supply chains without taking too many hits to the balance sheet. Findings from the Capgemini Research Institute found that only 21% of business leaders see a clear case for sustainability in their business strategy.
The report found that many organizations lack a collective vision and collaboration around sustainability efforts across operations. In fact, only 43% of respondents say that sustainability-related data is available and shared across the entire organization, and only 47% of businesses are actively recruiting new talent with strong sustainability skills.
The squeaky wheel getting the sustainability grease is oddly enough pressure from current and future employees. The same study found that 60% of executives were getting pressure from current and prospective employees for strong sustainability initiatives. Those that are rising to the challenge of these pressures stand to gain quite a bit. While the upfront costs are not insignificant, 60% of consumers are willing to pay more for a product with sustainable packaging or that came from a sustainable source, according to a McKinsey report.
In honor of Earth Day this Saturday, April 22, we’re doubling down on sustainability initiatives and their importance. With the impending Securities and Exchange Commission regulation on carbon disclosures for publicly traded companies, there should be no more dilly-dallying on getting some initiatives rolling. To recap, there are three “scopes” of emissions, according to the Environmental Protection Agency:
Scope 1 emissions are direct greenhouse gas emissions that occur from sources that are controlled or owned by an organization (e.g., emissions associated with fuel combustion in boilers, furnaces or vehicles).
Scope 2 emissions are indirect GHG emissions associated with the purchase of electricity, steam, heat or cooling.
Scope 3 emissions are an indirect result of a company’s supply chain and result from assets not owned by the reporting company. These emissions often account for most of a company’s total GHG emissions.
While most carbon emissions fall in the Scope 3 category, you have to start somewhere to get a handle on your total emissions. The easiest way is cutting down on empty miles, especially with freight rates leaving a lot to be desired. It’s a win-win-win. Carriers make more money not running empty, shippers pay less overall, and it’s better for the environment.
When it comes to sustainability, it doesn’t have to be an all-or-nothing approach. The same way a business doesn’t grow overnight, companies can’t become carbon-neutral overnight. Little steps every day make for a bigger impact overall.
Market Check. This week’s SONAR chart is the Headhaul Index (colors) and the Outbound Tender Market share (height). These two together provide a quick snapshot of each trucking market. The higher the market, the more outbound tender market share it has. Consider Atlanta, Houston and Ontario, California. These markets hold a majority of the freight, which leads to more opportunities, especially since these markets are also blue. Blue freight markets indicate there is more outbound freight than inbound freight; same with red. From there the darker the color, the more of one type they have. Lakeland, Florida, for example, has very little outbound freight but plenty inbound. Always be heading to the blue.
Who’s with whom? The battle for TravelCenters of America continues. To recap, Oil giant BP America wants to buy TA for $1.3 billion or $86 per share — what anyone would consider a generous offer as the stock price per share closed at $49.44 at the time the offer was made. A competing offer was technically higher but TA isn’t loving the terms of the sale. Later, Arko, a convenience store company, announced it was the face behind the higher offer.
Fast forward to today and Arko still hasn’t given up. Despite TA saying it wants BP to buy the company, Arko has sent letters to TA management and the Securities and Exchange Commission to have its bid price of $92 per share considered. Included in the letter to the board of TA: “We are just asking for the same information to allow Arko the opportunity to do so (possibly make a higher offer),” the letter says. “This is not asking the Board to deem today that our proposal is superior, but that it could lead to a ‘Superior Proposal.’”
The one thing that keeps dragging Arko down is its credit. BP has a credit rating of A- whereas Arko has a B+. That doesn’t seem like a big difference, but anything that isn’t in the A family is considered to be below-investment grade.
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