Why We Need to Decarbonise Global Transport and How to Get Started
Worldwide freight transport currently accounts for 8% of global carbon emissions, increasing to 11% once emissions from logistics sites are added. With transport demand forecast to triple, these emissions would double by 2050 if business operations continue in the current way. However, to meet the Paris Agreement targets, carbon emissions from freight transport would have to decrease by at least 45% by mid-century.
While decarbonisation of the logistics and transport sector is undoubtedly more challenging than for other industries, companies such as Kühne+Nagel, DHL and Forto are already setting ambitious goals to achieve carbon neutrality despite these challenges. Their examples show that enterprises involved in the production, distribution and transport of goods can make a difference and become pioneers in their industry.
What can you do to get there? We will guide you step by step through the topic and introduce you to effective measures that help companies engaged in producing, distributing, and transporting products to become carbon neutral.
Why Logistics & Transport Companies Need to Act Now
Global Trade Is on the Rise - and With It Transport Emissions
Emerging technologies, manufacturing methods, materials, information channels, transport capacities and trade policies are speeding up the globalisation of trade. Nowadays, a single product is transported several times by ship or plane before being distributed across the country by barge, truck and rail, which naturally leads to increased fuel consumption.
The growth of e-commerce also has its consequences: While greenhouse gas (GHG) emissions in other sectors have been observed to fall over the last few years, the transport sector's relative contribution to overall emission in Europe has increased significantly. If climate action in the transport sector continues to fall behind, their share in global CO2 emissions is estimated to increase to 22% for international aviation and 17% for maritime transport by 2050.
To reach the reduction targets of the Paris Agreement, action across all industries is needed. Road, rail, aviation and waterborne transport all have to contribute to this reduction.
Government Regulations & Laws Impact All Modes of Transportation
Climate regulations will have a significant impact on the way business is done. Over the past few years, several laws have been passed for the logistics and transport sector, with more on the way.
The International Maritime Organization (IMO) has issued a strategy to reduce GHG emissions from international shipping to bring the sector in line with the Paris Agreement targets. Although shipping “didn’t get a mention in the Paris Agreement, it didn’t go unnoticed either”, said John Maggs, Senior Policy Officer, Seas at Risk. The IMO’s strategy is designed to reduce the carbon intensity of international maritime transport by at least 40% until 2030 and to pursue mitigation efforts to reduce emissions by 70% until 2050 relative to a 2008 baseline.
The International Air Transport Association (IATA) also recognised the need to address climate change and released a set of ambitious targets to mitigate CO2 emissions from air transport, such as the reduction in net aviation CO2 emissions of 50% by 2050, relative to 2005 levels.
The IMO's Regulation on the Data Collection System (DCS) for the Fuel Oil Consumption of Ships also makes annual reports on fuel oil consumption and transport activities mandatory for all transport companies with ships with 5,000 gross tonnage (GT) or more. Since 2015, the EU regulation on monitoring, reporting and verification of CO2 emissions (EU MRV) lays down rules for developing a monitoring plan and submitting an emissions report for ships above 5,000 gross tonnage (GT) calling any EU ports, regardless of ships’ flag. Both the DCS and MRV requirements are mandatory and an important step to collect and analyse shipping emissions data.
Going beyond environmental impact, the recently introduced German Supply Chain Law (Lieferkettengesetz) is designed to hold companies accountable for corporate social responsibility, including human rights, along their supply chain.
Evidently, the international transport industry is under pressure to implement stricter sustainability regulations and play its part in achieving the goals of the Paris Agreement. It is only a matter of time before the entire transport sector is subject to greater regulation. A forward-looking approach will therefore prepare your business for upcoming requirements.
Mitigate Supply Chain Risks & Build Resilience
The COVID-19 pandemic has shown how vulnerable global economies and supply chains are. Building resilience is essential for your business to face the future with greater confidence while coping with the risks of climate change.
Tracking carbon emissions from your logistics supply chain is essential - not only because customers, governments and investors expect it, but also because carbon management and reduction deliver clear business benefits.
As more and more people order online, shipping will increase, creating the need for more efficient, global supply chains. Emission data has the potential to support business decisions in logistics, such as selecting more fuel-efficient modes of transport, routes and carriers, or exploring opportunities to boost efficiency while minimising costs.
Forward-thinking businesses, like Kühne+Nagel and DHL, are now striving to build resilience into their supply chains while at the same time becoming more environmentally friendly and establishing sustainability targets with climate change as a top priority.
Are you ready to kick-start too? Let’s explore how you can start your journey to becoming a carbon-neutral company and a pioneer for your industry!
6 Strategies to Improve Freight Efficiency & Impact on the Environment
Calculate and Manage Your Company’s Carbon Footprint
Analysing and understanding your company’s carbon footprint is an essential part of the way to carbon neutrality. It will help you uncover your emission hotspots and, thus, enables you to identify significant emission drivers and climate action levers.
The majority of GHG emissions from the transportation sector are scope 1 emissions that are, for example, generated by a logistic company's fleet of vehicles or fugitive emissions caused by the cooling of goods such as food. The second-largest share of emissions comes from scope 3 which include emissions from fuel & energy-related activities like fuel production for trucks. In the future, we can expect scope 2 emissions to become more significant as a result of the increasing electrification of vehicles.
To get the full picture, companies in the logistics sector should also account for Well-to-Wheel (WTW) emissions in their carbon footprint (also referred to as Well-to-Wake for maritime transportation). WTW basically means that emissions from the provision of the fuel (Well-to-Tank; WTT) and the combustion of the fuel (Tank-to-Wheel; TTW) are taken into account. WTT emissions encompass emissions resulting from production of a fuel, including resource extraction, initial processing, transport, fuel production, distribution and delivery into the tank of a vehicle. TTW emissions cover tailpipe emissions and leakage (e.g. coolant liquids, methane slip) created during the operation of a vehicle. An electric truck, for example, has no tailpipe emissions (TTW) but emissions that occur during electricity generation and transmission (WTT). A cooled electric truck on the other hand could also have coolant liquid leakage (TTW).
Sounds complex? Don’t worry! At Planetly, we make your carbon footprint analysis as simple as never before and will guide you every step of the way. We calculate your corporate carbon footprint in compliance with international standards such as the GHG Protocol and the GLEC Framework to increase transparency amongst logistic and transportation companies.
Establish Carbon Reduction Targets as a KPI for Your Company
Once your carbon analysis is complete, you should focus on understanding your biggest emission hotspots across your supply chain and define reduction targets. This is essential to implement effective and cost-efficient reduction measures and ensure that your company moves in the right direction.
Many companies set their emission reduction targets in line with the Science Based Target Initiative (SBTi) and, therefore, in line with science-based criteria and the climate targets of the Paris Agreement. For transport companies, the SBTi also offers guidance for modelling science-based targets for direct and indirect transport emissions. Our climate action experts at Planetly are happy to provide you with more information if you plan to use the SBTi framework for your reduction strategy.
Creating and approving a target will naturally take time. In the meantime, you should already start taking climate action, for example by switching to renewable energy in your offices and warehouses and continuously engaging with your suppliers - these are crucial aspects to successfully reach carbon neutrality.
Avoid Emissions Wherever Possible
Following the A-S-I approach (Avoid - Shift - Improve), reducing the environmental impact of transports starts with avoiding emissions wherever possible. Unnecessary transports can be avoided by, for example, picking local suppliers and optimising packaging and transport capacity. Freight efficiency solutions can also help to avoid unnecessary empty runs.
Through digitalisation, advanced technologies and Big Data, your company can transform how freight and traffic flows are organised and managed while generating economic opportunities. Businesses adopting these innovations can gain substantial competitive advantages.
Digitalisation facilitates collaboration between all different supply chain actors, improves supply chain visibility, enables real-time management of freight flows and reduces administrative burden. In addition, companies can benefit from the digitalisation of their supply chains through better use of infrastructures and resources, leading to higher efficiency and lower costs.
Forto, for example, built an online platform for sustainable end-to-end optimisation of your supply chain consisting of millions of data points capable of generating different shipping scenarios, creating real-time quotes and tracking information for customers in real-time. By enhancing the visibility and efficiency of sea freight shipments, their software enables more accessible and manageable sea freight loads for cargo owners.
Emissions can also be avoided by investing in driver training for energy-efficient driving to lower fuel consumption. This will not only reduce emissions but also save cost for your organisation.
Shift to More Environmentally-Friendly Transport Modes
Next up would be the shift from energy-consuming and polluting transport modes towards more environmentally-friendly ones, for example by shifting from road to rail or barge, or from air to sea freight. Already today, digital solutions such as Forto’s technology, for example, help shippers assess and identify opportunities to reduce air freight which is faster but significantly less efficient than ocean freight.
On top of that, the International Energy Agency (IEA) reported that rail freight increased steadily over the past 20 years and continues to grow, yet other forms of freight such as trucks are still expanding faster. With rail freight using around 90% less energy than trucks per unit of freight, it has tremendous potential to reduce emissions compared to road transport.
Whilst shifting to environmentally-friendly transport modes will initially mean higher short-term investments for your business, it offers long-term benefits in terms of carbon reduction and freight efficiency.
Improve Vehicle and Fuel Efficiency
Speaking of efficiency: improving vehicle and fuel efficiency is another significant emission reduction driver. This could include using new, environmentally friendly equipment such as lightweight containers and trailers or modern trucks running on advanced fuels.
Advanced biofuels such as Hydrogenated Vegetable Oils (HVO), biodiesel (B100), Liquified Natural Gas (LNG) and Compressed Natural Gas (CNG) are already widely used in transport. Driving with advanced fuels can decrease carbon emissions by up to 90% compared to fossil diesel.
Other advanced fuels include battery electric and hydrogen fuel cell vehicles that can be powered by renewable electricity such as wind and solar - a great advantage in terms of carbon reduction. Whilst these new technologies are not yet scalable, advances in the development of battery technology will very soon bring heavy-duty electric trucks to the world's roads. According to a Stockholm Environment Institute (SEI) study, battery-powered trucks will quickly become economically competitive with diesel fuel trucks. The last critical step would be to build a charging system that enables fast and powerful charging.
Hydrogen cell technology has also been pinpointed as one of the new energy technologies needed to achieve a 60% to 80% reduction in GHG by 2050. The Norwegian energy firm Statkraft and Skagerak Energi have recently announced plans to provide the world’s first hydrogen-powered cargo ship with green hydrogen planned by HeidelbergCement and Felleskjøpet.
Transitioning to new fuels will be more expensive in the short term, but these investments will also likely be key for competitiveness in the future. The UK, for example, recently announced that the sale of new diesel and petrol trucks will be banned from 2040 under the government’s transport decarbonisation plan.
Support Industry-Specific Decarbonisation Measures
The measures mentioned above will help you to reduce your corporate emissions in the long term. However, not all emissions can be reduced right away, especially in the logistics sector, where zero-emission transport solutions are not widely available yet. Offsetting your carbon emissions offers the opportunity to compensate for your unavoidable emissions by funding certified, high-impact global offset projects, mainly outside the impact area.
While offsetting is undoubtedly beneficial and necessary as a first step in making logistics more sustainable, it does not reduce transport-emitted GHG emissions or associated pollutants such as black carbon, ozone and nitrogen oxides. Offset projects related to transportation currently account for less than 1% of the voluntary offset market.
So-called carbon insetting can counteract this by decarbonising worldwide freight transportation. What is carbon insetting? A carbon inset invests in projects seeking to reduce carbon emissions within the emitting sector. This way, they can fund projects by their suppliers and the freight transport industry that show promise to bring about meaningful change and encourage the decarbonisation of the entire sector.
An inset project can, for example, scale up the development and application of advanced fuels such as hydrogen and biofuels by investing in building out the infrastructure for fuel production and distribution. One such initiative is GoodShipping, enabling companies to switch from fossil fuels to sustainable alternatives, thereby reducing scope 3 emissions from logistics. Other insetting examples include fleet renewal, engine retrofitting and increasing efficiency to improve the supply chain operations.
All projects aim to reduce global transport emissions as well as improving public health and safety. By that, they help reach the climate targets and support the Sustainable Development Goals (SDGs).
The Future of Logistics
The 21st century bears numerous challenges for the logistics and transport industry. Advanced Fuels, carbon neutrality and digitalisation will influence the way companies are operating tremendously.
Many logistics service providers have already taken the first steps towards more sustainable supply chains. But the industry needs more ambitious and forward-thinking pioneers to meet the targets of the Paris Agreement by 2050. Your time to act is now, and we are happy to support you along the way.
Are you ready? Contact us to start your journey towards carbon neutrality.