Freight transportation is one of the most-important cogs in today’s global economy. When the container ship Ever Given got stuck in the Suez Canal in 2021, global trade was disrupted on a massive scale.
The delayed shipments caused by the Ever Given led to supply chain disruptions and affected businesses’ ability to access necessary raw materials, components and finished goods. This, in turn, caused production delays, inventory shortages and increased costs for companies. On top of that, the incident indirectly contributed to a surge in carbon emissions by forcing other container vessels to travel longer distances when delivering goods.
Billions of tons of cargo are transported annually worldwide by cars, ships, planes and trains, amounting to approximately 10 percent of global CO2 emissions. Freight emissions are expected to grow around 30 percent by 2050 if companies and countries don’t take the necessary measures needed to reach the net-zero goals.
Why Is Net-Zero So Important?
In the pursuit of combating climate change, achieving a net-zero goal has become a paramount objective, particularly in the context of the Paris Agreement. This global initiative seeks to tackle the rise in global temperatures, striving to keep it no more than 1.5°C above pre-industrial levels. This means industrial levels will have to be reduced by 45 percent by 2030 and reach a net-zero initiative by 2050.
As a result of the targets set by the Paris Agreement, stakeholders in freight transport are grappling with the complexity of data, a vital resource for optimizing organizational projects. However, amidst the challenge, there’s a ray of hope as digital solutions continue to advance, offering increasingly efficient tools to aid in the process.
Such technologies empower transport stakeholders to leverage data-driven insights, enabling smarter decision making and resource optimization, and ultimately supporting the transition toward net-zero emissions. Data are key to precisely calculate a company’s freight GHG footprint: it all depends on distance, type of transport, weight, load factor, etc. A company must rely on clean and reliable data to know where it starts from, not to mention to act upon it. Where are emissions concentrated? On specific lines? Times? What are the contributing factors?
By harnessing the power of digital solutions, the freight transport industry can navigate the complexities of decarbonization and contribute to a more-sustainable future.
The E-Commerce Effect
The transportation sector has a substantial effect on greenhouse-gas emissions, and several factors contribute to this heavy impact. One significant effect is the surge of e-commerce businesses, which significantly increased during the COVID-19 pandemic. E-commerce transportation accounts for about 3 percent of worldwide greenhouse-gas emissions. As e-commerce businesses continue to surge with growing competition and consumers’ expectations regarding delivery lead times surging, global greenhouse-gas emissions from e-commerce transportation could rise to 17 percent by 2050.
To fulfill customer demands, e-merchants must make more-frequent and often less-efficient deliveries, potentially using smaller vehicles for last-mile delivery. This leads to increased fuel consumption, vehicle emissions and overall environmental impact.
Shippers Should Lead
Achieving the ambition of total decarbonization in the freight industry is a challenging task, and shippers have the best position to address it.
They have a unique perspective on their transportation activities, allowing them to assess their environmental impact and identify areas for improvement. Essentially, shippers can leverage their influence and implement measures that incentivize service providers to accelerate their transition toward greener practices.
Moreover, shippers have the power to set sustainable criteria in their procurement processes, favoring transportation partners with lower carbon footprints and prioritizing companies that demonstrate a commitment to decarbonization. By incorporating environmental considerations into their decision making, shippers can effectively drive the transformation of the freight industry.
However, for such transformation to take place, shippers must master their freight activity and thus embrace digitalization.
Several initiatives are being implemented to encourage shippers to prioritize sustainability. One of these is FRET21 in France, which incentivizes shippers to include the impact of their transportation activities in their sustainable-development strategies. Participating companies set CO2 reduction targets and take actions to achieve them, signing agreements with ADEME, the French ecological transition agency.
Another notable initiative came up in February 2023 with support of the French Ministry of the Environment and Ecological Transition. Known as the Charter of Commitment for the reduction of the environmental impact of e-commerce, more than 30 major online retail-industry players signed the charter, which outlines 10 concrete measures across four main areas: consumer information, reducing packing volume, eco-friendly logistics and transparent monitoring of actions taken.
A significant commitment is the obligation to inform consumers of the carbon footprint of each delivery option they can choose, helping them make more-sustainable choices in the future and becoming a key element in their purchase decision process. To do so, digital tools are again mandatory.
Voting With Their Wallets
This brings up another new phenomenon, known as “consumer-actors,” a group of people who choose to shop online sustainably. According to a study conducted by EY in 2021, 41 percent of young adults have stopped or decreased their purchases from brands that are not taking enough actions in favor of the environment. In addition, 35 percent of these young consumers have paid higher prices for eco-friendly labelled products or services.
B2B sales also are following this trend. Responsible purchasing policies are increasingly encouraged amongst companies, which leads suppliers and third parties to integrate this new variable to their culture, goods and services.
This also highlights that now, more than ever, the freight industry providers must take on the major challenge of reducing their greenhouse-gas emissions, otherwise they risk losing customers. The same reasoning goes for shippers.
Reinventing a greener transport could be one of the biggest answers to how the freight industry can reach a net-zero goal. But how is that possible?
Whether designed internally or through a collaboration with an initiative such as FRET21, the monitoring of transport decarbonization can’t be performed without the proper tools. A reliable measure for the freight industry’s carbon footprint is indispensable for effective decarbonization efforts.
It provides the necessary information to identify emission hotspots, set targets, implement strategies and track progress. With accurate measurement, stakeholders can make informed decisions, drive innovation, and work toward a sustainable and low-carbon future in the transport sector.