INSIGHTS | Carbon Footprint Management for Logistics Firms: Challenges and Strategies

The logistics industry is essential for modern society, as it is responsible for the movement of goods across the globe. However, this industry is also one of the major sources of greenhouse gas emissions, which contribute significantly to climate change. According to the International Energy Agency (IEA), the transport sector accounts for approximately 23% of global energy-related carbon dioxide (CO2) emissions, with road freight transportation being responsible for the majority of these emissions.

This report aims to provide an overview of carbon footprint management for logistics firms. The report begins by discussing the current situation of carbon emissions in the logistics industry, followed by a detailed explanation of how to calculate carbon emissions. The report then provides guidelines for disclosing and managing carbon emissions properly.

Current Situation of Carbon Emissions Polluted by Logistics Firms

The logistics industry is responsible for the movement of goods across the world, which involves the use of various modes of transportation such as ships, trucks, trains, and airplanes. However, these modes of transportation are also responsible for significant amounts of carbon emissions. In 2019, the global CO2 emissions from the transport sector reached a record high of 7.7 Gt, with road freight transportation accounting for approximately 40% of these emissions.

The logistics industry is also facing increasing pressure from consumers, governments, and investors to reduce its carbon emissions. Consumers are becoming more aware of the environmental impact of the products they buy and are demanding sustainable and eco-friendly options. Governments are implementing regulations to reduce carbon emissions, and investors are considering the carbon footprint of companies when making investment decisions.

In response to these challenges, logistics firms are adopting various measures to reduce their carbon emissions. These measures include the use of cleaner fuels, the optimization of transportation routes, the use of electric vehicles, and the adoption of sustainable packaging materials. However, these measures are not enough to achieve the required reduction in carbon emissions. Therefore, logistics firms need to adopt a more comprehensive approach to carbon footprint management.

Carbon Footprint Calculation Methodologies for Logistics Firms

Scope 1, 2, and 3 Emissions

The first step in calculating the carbon footprint is to identify the sources of emissions. The Greenhouse Gas Protocol (GHG) categorizes emissions into three scopes. Scope 1 emissions are direct emissions from sources controlled by the company, such as fuel combustion in company-owned vehicles. Scope 2 emissions are indirect emissions from the consumption of purchased electricity, heat, or steam. Scope 3 emissions are indirect emissions from activities outside the company’s control, such as emissions from the production of purchased goods or services.

In logistics, scope 1 emission are typically from owned or leased vehicles, while scope 2 emissions come from electricity consumption in warehouses, offices, and other facilities. Scope 3 emissions can be from various sources.

Carbon Emission Factors

Carbon emission factors are used to calculate carbon emissions based on the amount of fuel used or the distance traveled. Carbon emission factors are calculated using data on the carbon content of each fuel type and the energy efficiency of each mode of transport. For road transport, the carbon emission factor depends on the type of fuel used, the fuel consumption of the vehicle, and the distance traveled. The carbon emission factor for air transport is much higher than for road or sea transport due to the high fuel consumption and altitude.

Data Collection

Collecting accurate data is crucial for calculating the carbon footprint accurately. Logistics firms should collect data on fuel consumption, distance traveled, and other relevant parameters. This data can be collected through fuel receipts, maintenance records, and telematics data from vehicles. In addition, logistics firms can use software to automate the workflow of collecting data, tracking emissions, and managing carbon footprint.

Allocation of Emissions

Once the data is collected, it is necessary to allocate emissions to each activity or product. This can be a challenging task in logistics due to the complexity of the supply chain. Logistics firms should allocate emissions to each mode of transport, type of fuel used, and distance traveled.

Carbon Footprint Calculation Tools

There are various carbon footprint calculation tools available to logistics firms. The GHG Protocol provides a framework for calculating carbon emissions. The Smart Freight Centre has developed the GLEC Framework, which provides a standard methodology for calculating emissions across the entire supply chain. The GLEC Framework is used by logistics firms, shippers, and carriers to report carbon emissions.

Carbon Footprint Management for Logistics Firms

The first step in managing carbon footprint is to disclose it. Logistics firms need to measure their GHG emissions, including those from transportation, storage, and handling of goods. Smart Freight Centre provides a standardized framework for measuring and reporting GHG emissions from logistics operations, called the Global Logistics Emissions Council (GLEC) Framework. The GLEC Framework enables logistics firms to calculate and report their carbon footprint consistently, using internationally recognized methods.

Once the carbon footprint has been measured and disclosed, logistics firms can take steps to manage it. The following are some of the key strategies for managing carbon footprint:

Reduce carbon emissions from transportation – Logistics firms can reduce emissions from transportation by optimizing routes, reducing empty miles, using more fuel-efficient vehicles, and switching to alternative fuels like electricity or biofuels.

Improve energy efficiency – Energy efficiency can be improved by using energy-efficient equipment, adopting renewable energy sources like solar power, and reducing energy consumption in warehouses and distribution centers.

Use low-carbon materials and packaging – Using low-carbon materials and packaging can significantly reduce carbon emissions throughout the supply chain. Logistics firms can work with suppliers to source sustainable materials and use recyclable or biodegradable packaging.

Implement sustainable practices – Logistics firms can implement sustainable practices like waste reduction, recycling, and water conservation to minimize their environmental impact.

Offsetting Carbon Footprint – While reducing emissions is critical, it is not always possible to eliminate all emissions. Logistics firms can offset their remaining emissions by investing in GHG reduction projects like reforestation, renewable energy, and energy efficiency projects. Offsetting enables logistics firms to balance their carbon emissions by supporting projects that reduce emissions elsewhere.

Conclusion

In conclusion, the logistics industry is responsible for the movement of goods across the globe, but it is also a significant contributor to global greenhouse gas emissions. Consumers, governments, and investors are calling for the reduction of carbon emissions in logistics operations, and logistics firms are taking steps to respond. The first step in managing the carbon footprint is to disclose it, and logistics firms can use the Greenhouse Gas Protocol and the GLEC Framework to measure and report their carbon emissions. Logistics firms can then take steps to manage their carbon footprint, such as reducing carbon emissions from transportation, improving energy efficiency, using low-carbon materials and packaging, and implementing sustainable practices. By adopting a more comprehensive approach to carbon footprint management, logistics firms can meet the challenges posed by climate change and contribute to a sustainable future.

Sources:

https://www.iea.org/fuels-and-technologies

https://sciencebasedtargets.org/resources/legacy/2018/05/SBT-transport-guidance-Final.pdf

https://www.smartfreightcentre.org/pdf/Policy-recs-for-logistics-em-accounting-and-reporting-summary-LEARN-2019.pdf

https://www.flexmail.eu/f-844a1f54174eb51e

https://publica.fraunhofer.de/handle/publica/299479