While project freight forwarders have a relatively light direct carbon footprint, their choices and decisions are central to the success of the heavy lift sector in its efforts to achieve sustainability.
Project freight forwarders, by design, are asset-light businesses that utilise their skills, expertise and project management capabilities to coordinate complex project deliveries. As such, their direct carbon footprint is limited compared with the subcontractors it appoints. Project freight forwarders also have no legal requirement to report their carbon footprints to the authorities. Nevertheless, indirect emissions are impossible to ignore in today’s climate – and shippers seem to be taking a firmer hand when it comes to the environmental footprint of their suppliers. Sustainable project freight forwarding has many facets.
The market for project freight forwarding activities is changing, and the companies that coordinate complex project moves are changing with it. Some have reorganised their internal structures to bring oil, gas, carbon capture and storage (CCS), biomass, hydrogen, wind and solar energy under one ‘energy’ banner, such is going to be their interdependence in the future. On the day-to-day level, activities are being modified and new technologies implemented to realise greater efficiencies and, in turn, minimise waste and impact.
Still, there are operational and regulatory hurdles to overcome, both in the short and long term, and the clock is ticking with 2030 emissions targets just over seven years away, and 2050 goals on the horizon.
Record, report and reduce are the three mantras of environmental logistics. One way that forwarders and carriers are adapting to the green revolution is through carbon trading and offsetting, where emissions are countered with credits that fund projects that remove CO2 from the atmosphere. Detractors argue that this is tantamount to greenwashing, as it does not physically limit greenhouse gas emissions.
Tim Killen, deugro group’s chief sales officer, believes it to be a “valuable short-term intervention” but agreed there is fine line to walk. Speaking at May’s Breakbulk Europe 2022 conference and exhibition, he called for better and clear auditing of carbon trading/offsetting to improve confidence. “It needs to be assessed, audited and qualified by a third party to ensure it is being delivered.”
Stephanie Lüning, director of tendering and marketing at Bertling Logistics, explained that the Germany-headquartered project forwarder is keen to offer sustainable logistics solutions to its clients, one pillar of which is carbon offsetting. “We sell this by estimating the footprint already at the tendering stage,” she stated, noting that Bertling Logistics has partnered with four global carbon offsetting projects. Highly visual IT platforms provide clients with access to the environmental data on tailor-made dashboards.
Lüning also highlighted that when it comes to reporting, “we give our customers the ability to capture and report their scope III supply chain emissions via our sophisticated IT solution”.
Sustainable project freight forwarding: timelines
Climate reporting obligations have become increasingly common with the pressure to improve and offer sustainability solutions coming from clients themselves. However, “with limited capacity and the rates elevated, few are really prepared or ready to pay extra with the market as it is”, she explained. That is a concern. “The timeline is tight [to realise climate goals]. The next eight years will be the ones where we can make the difference.”
Freight forwarders themselves, including Bertling Logistics, use generally accepted calculation and scientific principles to calculate these scope III emissions.
“Now we are looking at ways to actively reduce our [indirect] footprint,” said Bertling Logistics’ Stephanie Lüning.
Bertling Logistics is also looking at its own corporate footprint and is setting annual percentage reduction goals when it comes to emissions. “Now we are looking at ways to actively reduce our [indirect] footprint,” said Lüning. One way has been to review and rank subcontractors’ environmental credentials, before passing this information to its people and clients to consider when appointing suppliers. She conceded that the process may be in its infancy. “This is the reality of the industry still, but we are certainly committed.”
Allan Dahl Leiberg, business development manager, energy and projects, at Blue Water Shipping, said that sustainability is a fast-growing topic of its strategy going forwards.
With road transport, monitoring emissions is a growing requirement for shippers, and Blue Water is increasingly turning to those that can offer transport services utilising greener fuels. “We are also maximising the way we utilise our trailers to improve internal efficiencies, for instance,” he said. Racking systems to stack pallets inside trailers to increase yields was one example given. “With seafreight, we have the option of purchasing carbon credits,” he added, “sponsoring biofuels for other carriers to use. These are good ideas that we offer to our clients.”
Vessel bunkering requirements have also been analysed and procuring biofuels has been prevalent where vessels and jobs allow for it. However, Leiberg noted that these fuels remain hard to get, are less efficient than traditional fuels and, unfortunately, remain much more costly.
Asma Ouchan of Smart Freight Centre drew attention to the Global Logistics Environmental Council (GLEC) – a partnership of 150 companies, industry associations, programmes, experts and other organisations, which is developing a variety of tools and frameworks that allow the supply chain to monitor and report emissions. A total of 100 multinationals use the GLEC Framework to calculate and report logistics emissions across the multimodal supply chain, for instance. At present, it is the only globally recognised methodology for harmonised calculation and reporting for multimodal logistics.
Designed to inform business decisions and steer efforts to reduce emissions, it is aligned with: Greenhouse Gas Protocol, UN-led Global Green Freight Action Plan, and CDP reporting. A formal ISO 14083 “quantification and reporting of greenhouse gas emissions of transport operations” standard is also being developed. The goal is that the principles and methodology for freight transport will be based on, and be consistent with, the GLEC Framework, and will cover both freight and passenger transport. This ISO standard would ensure a single, worldwide approach that would be widely accepted by industry, governments and investors, it said. ISO 14083 would replace the existing European standard EN 16258.
Ouchan added that she preferred “insetting” to offsetting and that companies should strive to be more efficient rather than paying to run a dirty business. Decarbonisation should be achieved by improving internal efficiencies, and she argued that it is “perceived to be too easy to just buy credits”.
Reduction, rather than offsetting, is the approach often taken by carriers, which for the most part prefer to invest in new technologies and low-carbon fuels.
Long term, the industry will incorporate new technologies to curtail carbon emissions. New fuels, technology and retrofitting existing equipment are required – but of course this will require large-scale capital investments over a long period.
Bonus and penalty clauses for delivery schedules in logistics contracts are common, but could something similar be inserted for emissions targets? To be held accountable with key performance indicators (KPIs) seems like a sensible plan to address supply chain emissions, but few agree that this could be integrated today.
Ouchan considered whether the integration of such clauses is fair to smaller companies, many of which lack the capital to invest in decarbonisation technologies and systems. “Very large carriers can afford to do it… but smaller companies need more time.”
Emissions reporting is an area of the energy transition that remains ambiguous. Leiberg described the situation as “tricky” while noting that freight forwarders themselves have two sets of reporting accounts to consider: “What we emit ourselves, and what we are indirectly responsible for through subcontractors”. The potential for favourable counting by only considering what forwarders emit themselves is obvious but might not show the actual picture.
While Blue Water does not vet the green credentials of its suppliers, it does work with them to optimise footprints, vehicles and fuel usage, said Leiberg.
One thing that Leiberg is sure of is that the demand for heavy lift and project logistics services will grow in lockstep with the sustainable energy transition. The established wind energy sector will continue to grow. CCS projects will become increasingly attractive, hydrogen demand will foster more investment, as is the case for battery manufacturing, all of which will create work for the project logistics sector.
deugro launched its Sustainable Energy division in 2021. “The world is changing, clients are changing and so are we,” said Daniel Cogbill, global head of the business unit. The division’s mandate is to continue to find ways to add value today and in five years’ time; it has dedicated subject matter experts in the UK, Denmark, Spain, and the USA. Asia Pacific will be the next region to have a presence for the global team during Q4 this year.
“Europe is a mature market [for renewable energy] but the pipeline is huge – in the UK there is a 50 GW target by 2030, for example” said Cogbill. The challenge: not enough capacity to deliver projected volumes. “There needs to be investment. Right now, it is being largely left to the supply chain to drive the levelised cost of energy through cost-effective logistics delivery, but things need to change by the way of more government investment for infrastructure build up so we do not end up with a stagnant pipeline of projects.”
“The world is changing, clients are changing and so are we,” said Daniel Cogbill, global head of deugro’s Sustanable Energy division.
Plethora of challenges
In particular, he referenced the dearth of offshore assets in the energy sector. He also drew attention to a lack of port capabilities in handling and storing these cargoes, as well as the skills gap. “There is a plethora of challenges.”
Tackling these challenges will require innovation. “In offshore wind, projects [in the UK] are already being delayed. Cargoes are being moved out as far as eastern or southern Europe just for storage.”
Internally, other plans are afoot to make deugro’s activities greener. Small steps include campaigns across the business to promote recycling and electric vehicle use, and traditional energy suppliers have been switched to greener alternatives. Employees have switched to the Ecosia search engine, which supports environmental projects internationally each time a search is completed.
Another pillar of its environmental strategy is the rollout and enhancement of its supply chain management software deugro visiotrack, which now includes a feature that measures the carbon footprint of global transports.
“As part of deugro’s commitment to providing innovative logistics solutions for our clients to support global CO2 reduction, and in line with our social responsibility for a net-zero future, the newest feature of the deugro visiotrack tool is another important step towards achieving environmental sustainability,” said Mario Hess, global head of customer solutions – deugro visiotrack.
Based on a transparent and compliant calculation methodology, the overall CO2 impact of a trade lane can be displayed through a widget within the deugro visiotrack dashboard. This enables users to record, report and potentially identify CO2 reduction targets and optimise routings.
In this way, alternative solutions for carbon reduction can already be calculated during the transport planning phase based on the identification of intelligent routes and modes of transportation, the optimal utilisation of transportation mode capacities, and the forward-looking design of transport schedules.
Cogbill said: “The top management and board are motivated to go ahead in these arenas, and we will use our professionalism and experience to do so.” He conceded, however, that the present strain on the supply chain is challenging shippers, who are having to weigh up carbon reduction or logistics costs – an unfortunate reality.
There are many hurdles to clear on the path to 2030 and 2050 climate goals – and overcoming them will require collective efforts and investments from all supply chain players. For forwarders, industry-wide guidelines to record, report and reduce emissions are paramount. “Getting everyone aligned and to develop guidelines that work for everyone,” is the next big challenge, said Ouchan.
“If we spend the next five years talking, then we will miss the 2030 targets,” said Killen. The steps introduced now will be the ones that truly have the greatest benefit for future generations.