The world’s largest shippers have gotten deadly serious about their Greenhouse Gas (GHG) reduction targets and they’re depending on 3PL partners to help them get there. In fact, they’re demanding it.
Sustainability strategies have gone from a “nice-to-have” to a business imperative as business buyers and consumers now base purchase decisions, in part, on a seller’s green credentials. At the historic Paris Agreement on Climate Change in 2015, countries mutually agreed to hit aggressive reduction goals for GHG emissions. Corporations are following suit with a drive toward “Net Zero” (AKA carbon neutral or climate neutral) by 2050.
Net Zero is that state at which GHGs entering the atmosphere (e.g., transportation emissions) are balanced by GHG removal out of the atmosphere (e.g., planting new forests). Companies have mapped out a path to Net Zero with objectives and timelines. Many expect their logistics partners to be part of this effort.
Dimerco regularly collaborates with customers on how to hit GHG reduction targets. Customers share their objectives with us and may even provide specific formats to follow for emissions data reporting. Some companies now keep scorecards on 3PL sustainability performance, and even make freight RFP participation contingent on high scorecard ratings.
How and Where Can 3PLs Help?
In our Green Shipping 101 article, we covered the three different types of emissions:
- Scope 1 – direct emissions from assets owned by a company (e.g., its own trucks)
- Scope 2 – indirect emissions linked to a company’s energy use (e.g., heating, cooling, electricity)
- Scope 3 – emissions from contracted transportation (air, ocean, rail, road)
Shippers look to 3PLs to help reduce Scope 3 emissions.
Here are some of the sustainable logistics strategies 3PLs employ.
Mode Optimization. One of the easiest ways to reduce GHG emissions is to shift to a more GHG-friendly mode. Dimerco has many programs designed to do just that. The recently introduced Air-Sea solution for Singapore-to-Dongguan (China) freight replaces truck travel with a short sea journey to cut costs, travel time and emissions. Also, companies regularly use Dimerco’s cross-border road freight solution connecting China with Southeast Asia markets, all the way to Singapore. The service helps companies avoid emissions from air freight (the least carbon-efficient mode), while cutting costs 56%.
Direct Flight Options. These are greener than indirect routings because as much as 50% of the carbon emissions from flights relates to takeoff and landing.
Freight Consolidation. This is one of the best and easiest ways to reach GHG reduction targets. 3PLs are ideally suited to help because they handle cargo from lots of different shippers that are all shipping to the same destination. Shippers simply “share the ride” and reap the cost and carbon reduction benefits. Dimerco is now working with a leading semiconductor company to shift a portion of its air shipments to “deferred air,” which adds a day or two to delivery times but opens up more consolidation opportunities. To date the initiative has not only reduced GHGs, but has saved nearly $900,00 in just 8 months.
Fleet Electrification. Scope 3 emissions are reduced when 3PLs transition their fleets from internal combustion engines to zero-emission electric vehicles (EVs).
Carrier partnerships and the use of sustainable fuels. Freight forwarders, like Dimerco, that book freight with ocean carriers and airlines can choose carriers that use sustainable fuels. Shippers must indicate their commitment to such fuels since doing so could mean paying more. Sustainable Aviation Fuel (SAF), for instance, is 3-8x more expensive than standard jet fuel. But the positive environmental impact of SAF is substantial. As an example, IATA has outlined its strategies to achieve Net Zero by 2050 and 65% of those emissions reductions will come from the use of SAF. Dimerco partners with airlines to maximize use of SAF in air freight shipping.
3PL Reporting on Carbon Reduction is Critical for Corporate ESG Reports
When reporting progress on sustainability objectives, companies have an easier time tracking Scope 1 and 2 emissions because measurement is more in their control. Scope 3 emissions are one or two steps removed from the actual shipper as freight forwarders handle carrier bookings from the first to last mile. For this reason, shippers are highly dependent on 3PLs for accurate Scope 3 reporting.
Large, global companies regularly report progress toward GHG reduction targets and need validated proof from their 3PLs of these Scope 3 emissions reductions. Dimerco issues regular reports to customers on CO2 reduction, either using Dimerco’s format or the customer’s own requested format.
All reported data must be validated. Dimerco Express Group follows the Global Logistics Emissions Council (GLEC) framework for calculating and reporting GHG emissions across multi-modal supply chains. Companies integrate data reported by Dimerco and other 3PLs with their own data to issue ESG reports.
Need 3PL Help Meeting Your GHG Reduction Targets?
ESG goals are now a boardroom priority so the pressure on logistics teams to contribute to GHG reduction targets and accurately report performance has never been greater. Want to discuss how 3PLs can help you reach your GHG reduction targets? Contact Dimerco today.