The current global focus on carbon emissions has brought the issue of environmental sustainability to the forefront of various industries, including the logistics industry. As the world strives to mitigate climate change, reducing carbon emissions has become a priority, and the logistics industry is seeing a direct impact.
Within logistics, Scope 3 carbon emissions from transportation significantly contribute to greenhouse gas emissions to the environment. Many companies are moving toward more sustainable practices and technologies to reduce emissions, in a shift toward sustainability that is not only driven by environmental concerns but also by the growing demand from customers who are seeking greener supply chains. Those that prioritize carbon emissions reduction are likely to gain a competitive advantage as they meet the evolving expectations of their stakeholders.
For shippers and freight forwarders looking to improve their sustainability, one foundational building block must be accurate Scope 3 emissions data. Then, with this data, they need a way to integrate it into their existing operational systems. Read on to learn how integrating accurate carbon emissions data can help you reduce your logistics carbon footprint.
The Need for Precise Carbon Emissions Data in Freight Forwarding
Too often, carbon emissions data is averaged or estimated beyond what is useful for logistics decision-making. Estimations are based on generalized emission factors and assumptions, which may not reflect the specific characteristics of individual shipments or routes. As a result, freight forwarders may struggle to assess the true impact of their operations and identify areas where they can effectively reduce emissions.
When the Greenhouse Gas Protocol was first established in 2001, it aimed to set a standardized framework for organizations to measure and manage their greenhouse gas (GHG) emissions. From this came the Scope 1, 2, and 3 emissions categories. Scope 1 emissions are those GHGs directly from sources owned or controlled by an organization, such as emissions from on-site fuel combustion. Scope 2 emissions represent indirect GHG emissions associated with generating purchased electricity, heating, cooling, or steam. However, the largest category for most companies is Scope 3 emissions, which includes all other indirect GHG emissions in the organization's value chain, including those from purchased goods and services, transportation, distribution, and more.
Imprecise Scope 3 emissions data can lead to misinformed decisions. Shippers may invest resources in implementing measures that do not effectively target the largest sources of emissions. If the estimated data suggests that a particular transportation mode is less carbon-intensive than it actually is, they may continue to rely on that mode instead of exploring more sustainable alternatives. Unfortunately, this can limit progress toward sustainability targets without the company even being aware of a problem with its strategies.
Another problem with low-quality carbon emissions data is that it may lack transparency and standardization. Inconsistent methodologies and varying data sources can make it more difficult to benchmark emissions performance. This makes it challenging to provide accurate and credible information to customers and stakeholders.
To avoid these challenges, freight forwarders and shippers must ensure they have access to accurate and reliable carbon emissions data. This can be achieved through improved data collection methods, the adoption of standardized measurement and reporting frameworks, and collaboration with carriers and service providers or carbon emissions data providers. The result is more informed decisions, more effective reduction strategies, and proof of the company’s commitment to sustainability.
The Challenges in Integrating Carbon Emissions Data
If 100% complete, accurate, and precise carbon emissions data were readily available, any shipper or freight forwarder would use it over public indices. The difficulty is, there is no device measuring the exact carbon emissions of the engine of every ship, airplane, or truck. Shippers depend on data from different carriers or partners within their supply chain or, alternatively, data from a carbon emissions data provider specializing in accuracy and precision.
The challenge of the first option, getting emissions data from different supply chain partners, lies in how many supply chains are fragmented with many stakeholders that each have their own data systems and reporting practices. Integrating and consolidating data from these various sources can be a daunting task, leading to gaps in the emissions data, not to mention difficulties due to the lack of standardized measurement and reporting methodologies. Complex, costly, and time-intensive integrations between different data systems may not be feasible for many companies. They need interoperability for a seamless data flow, yet each stakeholder brings its own IT infrastructure and data formats.
When calculating emissions for shipping activities, shippers and freight forwarders also require detailed, granular information to make the best decisions. For ocean freight shipping, this includes access to port-pair data, which must be specific to the port of origin and destination for a shipment. This data is essential for truly understanding carbon emissions, as it allows for precise calculations based on the distance traveled and the specific routes taken. However, port-pair data is not typically included in public indices or readily accessible to all stakeholders. The lack of transparency makes it challenging for freight forwarders to calculate emissions accurately, leading to reliance on generalized estimations or incomplete data sets. The solution must be accurate and precise data available with easy integration.
How Freight System Integration of Carbon Emissions Data Addresses These Challenges
There are many benefits of integrating carbon emissions data from a specialized provider—standardized calculations, accurate and validated data, and simplified data management, to name a few.
Chain.io was built from a deep understanding of the logistics industry's challenges regarding data exchange, collaboration, and supply chain integration. With the increasing industry focus on sustainability, we know these challenges are especially true for shippers and freight forwarders seeking carbon emissions data.
To help solve this integration problem, we have developed a cloud-based platform that acts as a central hub, allowing you to connect with data across your entire supply chain ecosystem. By integrating carbon emissions calculations and carbon offsetting capabilities, Chain.io enables freight forwarders and shippers to enhance emissions tracking and optimization.
Through direct integration with partners like EcoTransIT, Lune, and Searoutes via the Chain.io network, companies can seamlessly work within their own management systems while using APIs to capture and report on the carbon impact of each quote, shipment, or transport leg. Chain.io makes it easy to access the expertise of these data providers with comprehensive environmental impact reports on a shipment-by-shipment basis. Freight forwarders and shippers can easily get a reading on emissions for complex, multi-leg journeys across various transport modes, making sustainability reporting straightforward. Freight forwarders can help shippers make more sustainable choices by showcasing lower-emission shipment options to reduce their Scope 3 emissions.
Some carbon emissions data providers, like Lune, also help with carbon offsetting, for achieving carbon neutrality. Shippers and freight forwarders can invest in vetted, high-quality carbon projects such as reforestation or direct air capture, bringing tangible climate action to the bottom line of their carbon footprint.
The Benefits of Using a Supply Chain Systems Integration Partner
When partners are better connected across the global supply chain, companies can eliminate the friction of working across multiple screens, enabling critical data and insights to flow right into the management system where it’s needed. This integration eliminates the need for manual data entry, reducing errors and increasing operational efficiency. With real-time data, companies increase their visibility into the movement of goods for better strategic and daily decision-making.
Applying this integration capability to carbon emissions data enables better visibility into the environmental impact of supply chain operations. With detailed data, companies can identify areas for improvement, optimize routes, select greener transportation modes, and implement targeted reduction strategies to minimize their carbon footprint. Lune even has an API to allow customers to see the carbon footprint of their purchases at checkout.
An added benefit comes in the form of cost savings. By prioritizing sustainability and better understanding the carbon intensity of different activities, companies can promote cost efficiency by uncovering opportunities for operational optimization and resource allocation. These emission-reducing measures help them save on fuel and transportation costs.
Finally, accurate emissions data helps support regulatory compliance, especially as environmental regulations and reporting requirements increase. Companies can avoid penalties, maintain compliance, and demonstrate their commitment to sustainability while having a system of collecting data that makes reporting simple.
Transform Your Supply Chain for Sustainability with Chain.io
Chain.io recognizes the importance of sustainability in today's world. With our platform and connectivity, companies can make informed decisions that support sustainability initiatives and reduce their environmental impact. You can easily optimize routes, reduce waste, and contribute to a greener and more efficient logistics ecosystem through integration and more streamlined processes.
Chain.io is more than just a technology company. We are your partner for success, driving innovation, connectivity, and collaboration in the logistics industry. With pre-built adapters to leading carbon emissions data providers and other logistics-tech software, Chain.io offers an accelerated time-to-value of just a few weeks rather than months.
Let us help you unlock the full potential of your supply chain and navigate the complexities of achieving sustainability. Together, we can transform your operations and create a sustainable future.
To learn more, check out our free webinar on June 29 at 10 am ET or book a demo with one of our supply chain experts. At our webinar, we'll dive into they ways LSPs and Shippers can navigate changing emissions reporting requirements while still meeting their customer's unique needs. RSVP now!RSVP for FreeBook a Demo