Carbon Data Driving Freight Decisions

An article in Fast Company caught my eye last week.  A “caviar production facility in Abu Dhabi” worked with a “biotechnology company” and a “cleantech logistics company” to find a cheaper, less-carbon intensive manner of moving sturgeon from Germany to Abu Dhabi. This venture was successful, as the companies were “able to perform the largest-scale transport of live fish ever, all while slashing 90% of CO2 emissions compared to conventional live fish transportation methods.”

Through some innovative chemistry, the solution enabled an increase in the “amount of time that sturgeon can stay in the same water without getting harmed by waste buildup.” This enabled a mode shift from air freight (the most carbon-intensive mode) to container shipping (a relatively carbon-efficient one). Hence, the 90% improvement in carbon performance.

What is most notable about this story to me is the fact that it is becoming a fairly common theme. Leading shippers (the companies demanding goods movement services) are telling carriers (the companies that actually move freight, such as Maersk, JB Hunt and BNSF) that carbon emissions matter. Carriers are starting to compete on minimizing carbon emissions from origin to destination while meeting other key criteria, such as time, cost and reliability.

CMA CGM, the world’s third largest container shipping company, recently announced that it was making a carbon calculator available to its clients who are increasingly asking for data on the carbon impact of goods movement services.

Maersk, the world’s largest container shipping company, announced last month that it was building the largest container ships ever, and that carbon-efficiency was a key reason for the project.

“[Reducing CO2 emissions] is not only a top priority for us, but also for our customers, who depend on us in their supply chain, and also for a growing number of consumers who base their purchasing decisions on this type of information,” noted Maersk CEO Eivind Kolding.

Carbon makes an excellent key performance indicator for freight too. It allows the comparison to be easily broken down along functional unit, grams of carbon per TEU kilometer for container ships or grams of carbon per ton-mile for truck, rail and air. It is technology neutral. It is also strongly correlated with operating costs.

The lack of transparency around carbon data has been a barrier for shippers seeking to signal their desires to carriers. Efforts are underway to overcome this barrier, including Smartway 2.0, the clean cargo working group of Business for Social Responsibility, and the new tool from the Carbon War Room, Clearly, carriers are beginning to recognize that it’s good business to position themselves as lower-carbon service providers and share carbon data with their clients.

The question going forward is: will others now follow their lead?  I believe the answer depends on the actions of shippers.  They drive the goods movement market. It is up to them to starting asking for the data they need to make performance-based decisions to reduce the environmental impact of their down-stream logistics.

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