2021 is considered by many as the year that the supply chain really starts to turn green. We’ve seen some significant moves and heavy investments in green supply chains already this year, not least DP DHL’s announcement in March that it would invest €7bn over the next 10 years to decarbonize its operations. Meanwhile, some of the other large players have also introduced strong carbon reduction goals for 2030.

Alongside DP DHL’s carbon reduction plans other players like Kuehne + Nagel are also making moves, committing to pay to offset fees for all unavoidable emissions from its own direct operations from 2020 and set a goal to achieve carbon neutrality with its supplier pool by 2030. The plan to achieve these goals is based on gaining visibility on emissions, putting in place a plan to reduce those emissions to zero by 2030 and running carbon offsetting schemes to mitigate unavoidable emissions in the meantime, seemingly paid for by shippers (if they are willing). This is an approach that could be applied across the whole industry.

The first part of the plan is to gain visibility of carbon emissions and forwarders are increasingly offering carbon calculators to give themselves and their shippers more visibility on the carbon emissions related to different choices. Kuehne + Nagel itself offers a calculator for shippers in partnership with Clean Cargo which enables shippers to quantify the impact of their sea freight shipments, while DHL offers a calculator across different modes.

These carbon calculators empower shippers to make more environmentally friendly choices when moving their goods but they also help them to see the scale of carbon reduction or offsetting that would be required for them to become carbon neutral. Forwarders are now also offering shippers the opportunity to participate in carbon offsetting programmes as part of their services, both DHL and Kuehne + Nagel already offer participation in programmes of this nature which moves us on to stage two of the plan.

Some of the newer digital players are now offering these services too, but with a more overt green surcharge for those companies wishing to pay to offset their emissions. Some start-ups, like Upply, are offering visibility on emissions for each shipment like the established players. But Forto, a digital forwarder, is now offering the option to pay a carbon offsetting charge as well, at €11 per tonne of CO2 emitted by each shipment.

These offsetting initiatives are broadly welcome as the logistics industry engages with the task of reaching net-zero emissions, but paying an extra charge is a significant step and it is not yet clear whether shippers will be willing to pay.

However, both DHL and Kuehne + Nagel report voluntary participation in their offsetting schemes from selected customers, so we know there is some appetite for these schemes from climate conscious shippers. But Forto has gone even further and has made carbon offsetting an ‘opt-out’ affair for its customers. Forto’s customers appear to be content with this arrangement, in an interview with the Loadstar Forto’s CEO, Michael Wax, reported that the majority of its customers had not opted out and had been happy to participate.

So it seems that shippers may now be willing to start paying for these offsetting schemes. However this offsetting is seen as only a short term measure, in the same interview Forto’s CEO also said that this was only a part of the solution and that investments in new fuels and technologies would be the end goal, saying, “Our mid-to-long-term goal is to reduce emissions as much as possible, and we are investigating several measures, including sustainable fuels.”

Ultimately shippers will be looking for LSPs which can provide the services they require without incurring emissions at all, but in the meantime, it seems many will finally be willing to pay to offset the emissions they do incur.

Source: Transport Intelligence, April 13, 2021

Author: Transport Intelligence

If you would like to know more about the capabilities of different LSPs and how they could help you reach your goals then please take a look at Ti’s Supply Chain Leaders tool to help you find the right partner: https://www.ti-insight.com/supply-chain-leaders/

Or get in touch with Ti today to find out more about which LSPs could help you reduce your emissions: mclover@ti-insight.com

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