Charting a Course for Cleaner Cargo in the Transport Sector

[Editor's note: This article was authored by BSR, a global business network and consultancy focused on sustainability.]

During the past 20 years, global commerce has come to depend on an intricate web of supply chains that have revolutionized the way even the most basic products are sourced, assembled, and distributed.

The transportation and logistics sector linking these networks has become critical in supporting greater speed to market, more efficient and cheaper production, higher profits, and sustainable growth.

In spite of this function and its decade-long focus on creating more responsible supply chains, transportation and logistics remain a mostly overlooked area for potential risks and certain opportunities related to climate change.

Understanding greenhouse gas emissions across this complex system -- which includes vehicle and vessel owners, logistics providers and freight forwarders, and warehousing and distribution points -- will require a greater level of collaboration to support two key things:

•    Common language: Most supply chains today are measured by key performance indicators (KPIs), and although current KPIs can be used to measure supply chain efficiency, they do not adequately address sustainability. Partnerships across these networks need to develop common standards, tools, and methods across entire value chains.

•    Increased transparency: For reduced carbon emissions in the freight sector as a whole, shippers can shift to more carbon-efficient modes of transportation, optimize routes, and rethink supply chains only if they can quickly and accurately compare options. In order to do this, both carriers (companies that transport products) and shippers (companies that produce the products) need to increase visibility into the transportation supply chain.

This article uses BSR's Clean Cargo Working Group as a case study to examine how one part of the sector -- ocean freight -- has begun working on common metrics and increased transparency. It also discusses the opportunities that remain for transportation and logistics industry as a whole to collaborate to reduce emissions.

Clean Cargo Working Group: Starting with Ocean Freight

Ocean transport carries more than 90 percent of the world's traded goods and contributes between 3 percent and 4 percent of global emissions -- or more than those generated by Germany.

Although ships trail behind road and air freight when it comes to emissions, the fact that a large shipping line can transport more than 3 percent of the globe's gross national product at any given time places the industry in the spotlight. And driven by efforts from retailers and major companies to reduce costs and increase efficiency in the supply chain, carbon emissions represent the most material impacts from container shipping today.

To promote sustainable growth, organizations such as BSR's Clean Cargo Working Group (CCWG), a supply chain collaboration between carriers (in this case, ocean freight companies) and shippers, are working to collectively address issues such as emissions. The CCWG has done this by developing tools and standards that allow carriers to benchmark performance, and allow shippers to access accurate data on which to base decisions about which carriers to use on a given route.

In 2007, CCWG created a standardized data-collection process that has resulted in the launch of current, industry-leading emissions factors, based on actual data, for ocean freight on all global trade lanes. Already, these efforts have allowed shippers to begin comparing carrier performance and have allowed carriers to identify higher- and lower-performing routes. The group is also finalizing a process to verify the annually collected data, and is seeking to align with other leading supply chain efforts to encourage consistent assessment and quantification of environmental impacts.