What is Carbon Neutral Shipping? A Comprehensive Guide
By Komal Puri | November 9, 2023
According to the World Economic Forum, 5.5% of the total global carbon emissions occur from the logistics industry. This is a staggering 5,800 megatonnes. While 5.5% might look like a small sum, the rising demand for e-commerce has environmentalists worried.
We are living in a time where climate change and sustainability have become concerning matters. The good news is that the logistics industry is taking proactive steps to reduce its carbon footprint. This is also driven by the new-age customers who are sensitive towards the effect their shopping habits have on the environment.
Customers today are willing to pay extra in order to reduce the carbon emissions that occur due to their purchases. This trend has led organizations to look for ways to reduce their carbon emissions. With the rise of technology tracking and reducing your organization’s carbon footprint is now easier than ever before.
What is Carbon-Neutral Shipping?
Carbon-neutral shipping refers to a sustainable and environmentally friendly approach towards the shipping of goods and services. The goal is to have a net-zero carbon footprint in the shipping process. This can be done via the reduction of carbon emissions in the shipping process or by offsetting the carbon emitted in the shipping process through eco-friendly measures outside of the shipping process.
In essence, carbon-neutral shipping involves achieving a balance between the greenhouse gas emissions generated by shipping operations and the removal or reduction of an equivalent amount of these emissions from the atmosphere.
Why is Carbon Neutral Shipping important?
The shipping industry plays a key role in global carbon emissions. Between new-age customers demanding environmentally friendly practices and international regulations penalizing non-compliance of emissions reductions, carbon neutrality is no longer a mere choice but an organizational target.
The fact still remains that the planet is slowly dying, owing to climate change. Today’s leaders and problem solvers understand the importance of preserving natural resources and leaving behind a better world.
Transitioning to eco-friendly practices has become an important criterion for success, and organizations have begun to adopt such practices. There are incentive programs for green energy that ensure your efforts are rewarded by means of tax benefits and subsidies.
In all, the demand of today’s customers, the regulatory penalties, the will to preserve the nature, and the financial gains of eco-friendly practices have come together to create the perfect stage for your organization to adapt and fulfill carbon neutrality in your logistics operations.
How Carbon Neutral Shipping Works
Carbon-neutral shipping involves a combination of strategies and techniques. These strategies and techniques together contribute to achieving sustainability standards set by organizations as their sustainability goals.
Carbon Reduction Techniques
There is a wide range of mechanisms and strategies that can be used to reduce carbon emissions and promote sustainability in the transportation of goods and services.
Carbon reduction techniques focus on reducing the emissions that are generated during your supply chain process. These have a direct impact on your carbon footprint. Below are some key techniques that can be implemented in your day-to-day process:
Eco-Friendly Transportation Modes: The first and foremost way a shipping company can reduce its carbon footprint is by utilizing eco-friendly transportation. These include going for electric trucks, hybrid vehicles, and rail transportation against carbon-heavy diesel trucks.
Route Optimization: The next step for organizations is to create more efficient routes that will reduce the number of miles driven and the idling time of vehicles. Companies like FarEye have decades of experience in providing such routing software.
Fuel Efficiency: Logistics companies can invest in vehicles and equipment with improved fuel efficiency. Manufacturers of such vehicles and equipment have already taken measures to divide vehicles into segments of efficiency and performance. Going for an efficiency-first option will make a lot of environmental difference when considering the lifetime of the vehicle.
Energy-Efficient Warehousing: Warehouses play a crucial role in logistics, and implementing energy-efficient practices can reduce emissions. These practices include having solar-powered electricity generation and electric-powered equipment and vehicles inside the warehouse.
Eco-Friendly Packaging: Companies today opt for recyclable and biodegradable packaging materials. They have collaborated with the recycling industries and also encourage customers to return or recycle packaging.
Waste Reduction and Recycling: Minimizing waste production and engaging in collaborative efforts with suppliers, customers, and other logistics providers can pave the way for the adoption of more sustainable practices.
Together these mechanisms and strategies play a significant role in reducing carbon emissions and helping you reach your sustainability goals.
Carbon Offsetting Techniques:
Other than the aforementioned strategies, there is another method of reaching your sustainability goals. It might not possible for all organizations to adapt to drastic changes such as shifting to solar powered warehousing, or changing their transportation modes.
This is where organizations can take a proactive approach towards balancing their carbon emissions. They can utilize the following carbon-offsetting techniques to negate their carbon emissions:
Reforestation and Afforestation: By reforestation you can plant trees at areas that underwent deforestation. While afforestation implies identifying new areas that can be covered with forests thereby creating a positive environmental impact. There are various environmental programs that utilize these techniques. Your organization need not go through the hassle of doing the plantation themselves. You can merely collaborate with the organizations providing these services.
Renewable Energy Projects: You can allocate resources to renewable energy endeavors like wind farms and solar installations. These will substitute the use of fossil fuels, thereby diminishing carbon emissions. You need not have them installed at your locations or bear the complete cost of setting up such facilities. You can allocate some part of your capital and invest/pool in companies that are providing these facilities.
Methane Capture and Utilization: Instead of letting methane escape into the atmosphere, you can trap the methane gas and use it as an energy source. This not only saves the environment but provides you with alternative energy.
Carbon Capture and Storage (CCS): Carbon Capture and Storage (CCS) is a technology designed to capture carbon dioxide emissions generated by industrial processes. It is then securely stored in underground facilities, often with geological formations. This not only reduces the amount of carbon in the atmosphere but boosts geological carbon sequestration(capture and storage). This helps in boosting soil health and reducing the damage done to carbon balance by processes such as mining.
While at times organizations might not have the desired resources to implement each of the above-listed techniques in full, allocating some part of your resources can create a big impact on the overall carbon footprint of your organization. The smallest of contributions you make today will have an exponential impact in offsetting the emissions that result from your shipping operations.
By implementing a combination of both, carbon reduction and carbon offsetting techniques, your business will significantly reduce its carbon footprint. While each technique might only bring about a small change, when put together it is a substantial impact on the environment, over the lifetime of your business.
How Carbon Emissions are Measured?
In order to achieve carbon neutrality, you need to be able to measure carbon emissions generated by your business. Only after having this measure can your organization make an informed decision on how to reduce its carbon footprint. Here are the key steps involved in messing carbon emissions:
1. Carbon Accounting: Carbon accounting is the process of tracking and measuring the carbon emissions at different stages of your operations. This involves, quantifying carbon emissions by each delivery, shipment process as a whole, warehousing, etc. By measuring these you can have an exact figure on which parts of your business are amounting to what percentage of your total emissions.
2. Establishing a Baseline: After you have the data for each part and in toto, you need to establish a baseline for the amount of carbon reduction you can achieve at each segment of your business operation in a year. This baseline acts as a benchmark and allows you to gauge the future reduction figures. You can add the amount of carbon offsetting figures as a positive reduction measure to your total emissions.
3. Carbon Footprint Assessment: Carbon footprint goes deeper than the carbon emissions you produce. Together with your carbon emissions, you need to account for the emissions that are produced by your partners and suppliers. For example, if you have a green fleet, but the mid-mile for your delivery requires you to partner with third-party suppliers, then that becomes a part of your carbon footprint.
4. Common Metrics and Standards: Various metrics and standards have been developed to measure and report carbon emissions. These include the Greenhouse Gas Protocol, the ISO 14064 standard, and national or regional regulations.
5. Carbon Calculators and Software: Many organizations and individuals use carbon calculators and software that collect data, perform calculations, and generate reports that quantify emissions and reduction progress. These platforms usually also facilitate the provision of carbon-neutral shipping for your businesses. Platforms such as FarEye have decades of experience in providing the right data set and strategies that you can implement to reduce your carbon footprint.
Measuring carbon emissions is a tedious process that involves assessing emissions, utilizing current metrics and standards, and tracking progress. With the insights from this data, you can plot your journey towards achieving carbon-neutrality.
The Advantages of Carbon-Neutral Shipping
The shift towards carbon-neutral shipping provides numerous benefits, positively impacting both the environment and the shipping sector.
Environmental Gains: Carbon-neutral shipping significantly lessens the environmental effects of the industry. It nullifies the damage that shipping operations cause to the environment and paves the way for efficiently reducing the existing global carbon emissions.
Economic Benefits for Shipping Companies: Despite the misconception that sustainability is expensive, carbon-neutral shipping can yield economic advantages for companies. Many governments provide subsidies and tax benefits for the adoption of eco-friendly shipping practices.
Consumer and Regulatory Demands: As consumer and regulatory pressures grow, companies embracing carbon-neutral shipping practices can position themselves favorably in the market.
These are some of the direct advantages carbon neutral organizations enjoy.
Challenges and Hurdles in Achieving Carbon Neutrality
Introducing carbon-neutral shipping comes with its own set of challenges.
Cost Considerations and Financial Obstacles: Shifting to carbon-neutral shipping may involve substantial initial expenses, potentially leading to financial difficulties in the short term. In an industry where margins are low, this becomes a key concern.
Technical and Infrastructure Hurdles: Adapting to new technologies and infrastructure can be intricate, and the shipping industry may encounter obstacles in adopting sustainable methods.
Regulatory and Policy Challenges: Navigating the regulatory and policy landscape is crucial, as shipping companies must adhere to evolving environmental regulations and standards.
While there are advantages of taking the carbon-neutral route, some challenges persist. With time as regulations and policies mature, it will become a lot easier for companies to adopt carbon-neutrality in their operations.
Carbon-Neutral Shipping Providers
Several well-known courier and delivery service companies are taking diverse steps to decrease carbon emissions, transition to cleaner energy sources, and offset the remaining emissions. Some of these include:
- UPS (United Parcel Service): UPS has pledged to achieve a 12% reduction in its carbon emissions within its global ground operations by 2025.
- FedEx: FedEx has established ambitious sustainability goals, aiming for carbon-neutral operations globally by 2040.
- DHL: DHL Express, a global express and logistics company, operates the GoGreen program with the goal of making all of their logistics operations carbon-neutral by 2050.
- DPD Group: DPD Group, a significant European courier company, has committed to becoming carbon-neutral by 2025.
- TNT Express: TNT Express, a division of FedEx, has set sustainability targets, including improving energy efficiency and reducing carbon emissions in its operations.
- Hermes: Hermes, a courier company serving multiple countries, has implemented carbon-neutral parcel delivery services.
- Tuffnells: Tuffnells provides carbon-neutral parcel deliveries and has allocated resources for investment in carbon offset projects.
These courier companies actively work towards carbon neutrality through various strategies. These include transitioning to electric and alternative-fuel vehicles, optimizing routes, and offsetting emissions via renewable energy projects and reforestation initiatives.
How FarEye Supports Companies in Achieving Carbon Neutrality
FarEye is a leading logistics and supply chain technology platform. It helps in attaining carbon neutrality with its inventive solutions. FarEye's technology streamlines logistics operations, reduces fuel consumption, and enhances overall supply chain efficiency.
By offering route optimization, real-time tracking, and visibility into transportation processes, FarEye aids companies in minimizing the carbon footprint of their shipping operations. It enables businesses to consolidate shipments, implement eco-friendly transportation modes, and optimize routes, thus reducing emissions.
Additionally, FarEye's solutions follow sustainable practices and encourage the utilization of renewable energy sources in logistics. Through its data-driven approach and advanced logistics tools, FarEye plays a central role in helping organizations reduce their environmental impact and move towards carbon neutrality.
In conclusion, carbon-neutral shipping is an essential approach to reduce the environmental impact of the shipping industry. As the global community increasingly acknowledges the importance of sustainable practices, companies and individuals together will contribute to a cleaner, greener future.
Through the use of sustainable practices, reduction of emissions, and support of eco-friendly choices, companies like FarEye help pave the way towards a more sustainable future for the shipping industry and our planet.
Komal Puri is a seasoned professional in the logistics and supply chain industry. As the Senior Director of Marketing and a subject matter expert at FarEye, she has been instrumental in shaping the industry narrative for the past decade. Her expertise and insights have earned her numerous awards and recognition. Komal’s writings reflect her deep understanding of the industry, offering valuable insights and thought leadership.