As companies are increasingly urged to reduce their carbon emissions and adopt more sustainable business models, the logistics and transportation industry is under enormous pressure to follow suit, and with good reason. According to the Sustainable Freight Buyers Alliance (SBFA), freight transport accounts for 8% of global CO2 emissions. By 2050, direct CO2 emissions from the logistics sector are expected to increase by 42%. The alliance, a bridge between freight buyers and freight decarbonization initiatives to support the industry’s transition to net zero freight transport, says decarbonizing freight transport is key to achieving global targets for net zero greenhouse gas emissions by 2050.
Is this a big challenge? According to Dr. Shereen Nassar, Global Director of Logistics Studies, Edinburgh Business School, Heriot-Watt University Dubai, decarbonization goals can only be achieved when companies rethink their traditional ways of working.
“Logistics and transport sustainability objectives should be developed and integrated into the business model and strategy to ensure accountability and compliance with environmental, social and economic requirements by all stakeholders, including governments, non-governmental organizations (NGOs), citizens, investors, customers and businesses themselves.
Transparency is key when it comes to reporting emissions, which is mandatory in some countries. Bodies such as the Global Logistics Emissions Council (GLEC), an industry-led partnership, are driving emissions reductions in global logistics supply chains through global guidelines for reporting and reducing logistics emissions that work. for companies.
The council is led by the Smart Freight Centre, an international non-profit organization focused on reducing greenhouse gas emissions from freight transportation. The center and the World Business Council for Sustainable Development recently reiterated their commitment to increasing transparency on carbon emissions and working towards a net zero logistics sector. Backed by the World Economic Forum, with McKinsey & Company providing analytical insights and advisory advice, and in partnership with more than 25 global organizations, this consortium is taking the next steps to achieve net zero logistics by co-developing an actionable framework and achievable to quantify the impact of logistical GHG (greenhouse gas) emissions from the supplier to the end customer; end to end.
The adoption of sustainable practices across the sector is gaining momentum. Dr Nassar says logistics companies are increasingly working on this, from reducing the overall amount of packaging used to improving delivery times that can be met in fewer trips.
“Retailers are now increasingly aware of the type of logistics service providers they use. As a result, electric, hybrid and low-carbon vehicles are becoming increasingly important in the logistics fleet. In addition, reuse and recycling are an integral part of a sustainable supply chain. As a further step towards sustainability, initiatives are multiplying for the transformation from a linear supply chain to a closed loop and circular supply chain model which is the key to sustainability. This model requires a close partnership with supply chain partners to establish sustainable practices throughout the supply chain to support a circular plan for the full life cycle of a product and its packaging” , adds Dr. Nassar.
Challenges still exist
Despite the drive to become carbon neutral and achieve net zero goals, there are obstacles. The Covid-19 pandemic has led to an increase in e-commerce; and while customers want long-lasting products, they want them immediately and at reasonable prices. This means more deliveries, traffic
congestion and even more emissions.
According to a study by the World Economic Forum, by 2030, last mile emissions are expected to increase by more than 30% in 100 cities around the world. Additionally, these journeys could increase by 21%, taking up to 11 minutes longer due to additional traffic on the road. And as businesses begin to use electric delivery vehicles, it is costly to replace traditional utility vehicles with hybrid or electric vehicles (EVs) to add to the possibility of inadequate infrastructure to support electric vehicles. Low-emission modes of transport such as rail could also mean longer lead times and higher costs.
Companies that use carbon offsets (a way to offset your emissions by funding an equivalent carbon dioxide saving elsewhere) to achieve decarbonization goals are scrutinized for a multitude of reasons such as the quality and price of the offsets. These issues may dampen the determination of logistics providers to become carbon neutral immediately, but as electric vehicles become more common and hydrogen vehicles join the ecosystem, the pressure will ease. Additionally, solutions such as overnight delivery and pick-up and drop-off centers will also bring benefits.
Take the lead
Early adopters of decarbonization, including logistics companies such as Maersk, which have made sustainability a strategic objective, provide good examples. Maersk is committed to setting targets as defined in the Science-Based Targets Initiative (SBTi), a global coalition
created in 2015, which aims to enable companies to set emission reduction targets in line with key climate science.
Christopher Cook, Managing Director, Maersk UAE, Qatar and Oman, says: “We have taken 2020 as our base year and set short term targets for 2030 and a net zero target for 2040. This means that by 2040 we will want to achieve net zero across our business and 100% green solutions for our customers. Initiatives have also been launched to achieve these objectives. In fact, our first vessel to run on green fuel will be operational in 2023 – seven years ahead of the initial 2030 commitment. We have ordered 12 larger container ships with a capacity of 16,000 TEU (twenty foot equivalent units) which will run on green methanol. Delivery begins in 2024.
“We are also partnering with several companies and countries to find the right fuel for these ships, as this will be the biggest challenge for years to come. We believe that moving to carbon-free logistics is the right thing to do, and we need to act on it now. Even our customers expect us to help them decarbonize their supply chains, and our vision matches our customers in this regard.
Scandinavian company Scan Global Logistics is also using sustainable fuel to improve its air cargo operations. Mads Drejer, Director of Global Operations and Chief Commercial Officer of the company, says: “We have recently invested heavily in Sustainable Aviation Fuel (SAF) and are now able to offer it to our customers around the world. This fuel has the potential to reduce carbon emissions by up to 80%.
The company’s digital CO2e platform also allows customers to calculate their current transportation emissions footprint. Drejer adds: “As one of the first providers of this service in the world, we can also offer a consolidated report to our customers, allowing them to also include transport not managed by SGL in the same report for more efficiency. This simplifies the CO2 emissions reduction journey for our customers. »
Regional logistics giant Aramex has doubled its decarbonization commitments by committing to SBTi in 2021. Alaa Saoudi, Chief Operating Officer at Aramex, says, “We have been dedicated to decarbonization for over 10 years. We are committed to achieving carbon neutrality by 2030 and becoming net zero by 2050. By setting science-based carbon emissions targets, we are accelerating our climate action goals.
The company has invested in the deployment of solar panels and the introduction of electric vehicles in its fleet. “Additionally, we have moved to innovative and reusable packaging to reduce plastic pollution and its negative impact on the physical environment and wildlife,” Saoudi said.
DHL Global Forwarding’s low-carbon range of GoGreen Plus products for air and sea freight aims to make its operations more sustainable. Its Green Plus service offers real emissions reductions through carbon insertion, a process by which a company offsets its emissions through a carbon offset project within its own value chain.
Emissions are reduced by replacing the amount of conventional fossil fuel needed with a sustainable fuel. Customers can easily choose which parts of their supply chain they truly want to decarbonize. Finally, more efficient processes can also contribute to sustainable operations.
These include fast order fulfillment, which is sure to influence travel volumes, says Soham Chokshi, CEO and co-founder of Shipsy. “To reduce carbon footprint and build sustainable supply chain operations, companies need to adopt smart logistics management tools. Such tools can help companies achieve their sustainability goals by reducing miles driven, increasing first-attempt deliveries, eliminating empty miles, decreasing trip volumes, improving resource utilization and limiting paper consumption.
With all these opportunities on offer, logistics service providers can easily go the distance towards a sustainable future for the sector.