The context
The logistics industry plays a significant role in the economy. The global logistics market is projected to reach USD 12.68 trillion by 2027, driven by the growth of e-commerce, globalization, and increasing demand for the efficient supply chain management.
Furthermore, international trade and logistics create significant employment opportunities. In the United States alone, the logistics industry employs over 10 million people, with employment in the sector expected to grow by 7% between 2019 and 2029. Similarly, in Europe, the logistics sector employs over 11 million people, making it one of the largest employers in the region.
Why is carbon-neutral logistics necessary?
Decarbonizing logistics is important for several reasons. Firstly, logistics is a significant contributor to global greenhouse gas emissions. According to the International Energy Agency (IEA), the global transportation sector, which includes logistics and international trade, is responsible for approximately 24% of energy-related CO2 emissions.
Additionally, the United Nations Conference on Trade and Development (UNCTAD) estimates that maritime shipping alone accounts for around 2.5% of global greenhouse gas emissions, projected to increase by up to 250% by 2050 without additional action.
Decarbonizing logistics is essential for achieving global emissions reduction targets and addressing the climate crisis.
An emerging demand for carbon neutral logistical services
There are several reasons why logistic companies should invest in carbon neutral service. First and foremost, it is essential to address the urgent need to reduce greenhouse gas emissions to mitigate the impacts of climate change. With the transportation sector responsible for a significant portion of global greenhouse gas emissions, reducing emissions from logistics operations is crucial for meeting global climate goals.
Moreover, investing in carbon neutral services can also be a business opportunity for logistics companies. Many businesses and consumers are becoming increasingly aware of the environmental impact of their supply chain and are looking to reduce their carbon footprint. By offering carbon neutral services, logistics companies can differentiate themselves from competitors, appeal to environmentally conscious customers, and potentially increase revenue.
In fact, there is growing evidence to suggest that there is a significant demand for climate smart or carbon neutral logistical services.
• A survey conducted by UNCTAD found that 70% of respondents plan to purchase more products and services from companies with a lower carbon footprint.
• A report by DHL found that 69% of companies surveyed have implemented or plan to implement a carbon reduction strategy in their supply chain (DHL, 2019).
• McKinsey also found that 47% of companies surveyed have set a carbon reduction target for their supply chain, and 87% of these companies believe their suppliers can help them achieve their targets.
• A study by EcoVadis found that 62% of companies surveyed said that sustainability is a key factor in their purchasing decisions, and 38% have implemented sustainability criteria in their supplier selection process.
• The International Transport Forum estimated that there will be a demand for up to 60% lower emissions in the global logistics sector by 2050 (International Transport Forum, 2018).
In summary, investing in climate smart logistical services is essential for reducing greenhouse gas emissions, meeting global climate goals, and addressing customer demand for more sustainable products and services.
Climate neutral logistics on practice
DHL
DHL is committed to becoming carbon neutral by 2050 and offers a range of carbon neutral shipping options to its customers. These options include carbon offsetting, biofuel, and electric vehicles.
Maersk
Maersk, the world’s largest container shipping company, has set a goal to become carbon neutral by 2050 and offers carbon neutral shipping options to customers through its “Carbon Neutral Programme.”
UPS
UPS has set a goal to reduce its greenhouse gas emissions by 12% by 2025 and offers carbon neutral shipping options to customers through its “UPS Carbon Neutral” program.
FedEx
FedEx has set a goal to reduce its greenhouse gas emissions by 50% by 2030 and offers carbon neutral shipping options to customers through its “FedEx Carbon Neutral” program.
Amazon
Amazon has committed to becoming carbon neutral by 2040 and offers carbon neutral shipping options to customers through its “Shipment Zero” program.
These companies are just a few examples of logistics providers that are actively working to reduce their carbon footprint and offering carbon neutral options to their customers. By investing in these services, customers can offset the carbon emissions associated with their shipments and support companies that are leading the way in sustainability through decarbonizing their value chain.
Who is leading this change?
Some of the key players promoting the decarbonization of international trade and logistics are:
IMO
The International Maritime Organization (IMO) has set a target of reducing emissions from the sector by at least 50% by 2050 compared to 2008 levels.
Global Maritime Forum
Is leading a global call to action with the aim to accelerating maritime shipping’s decarbonization with the development and deployment of commercially viable deep sea zero emission vessels by 2030 towards full decarbonization by 2050.
World Economic Forum
Through the Supply Chain & Transport CEO Statement, the World Economic Forum is promoting a coalition of business leader in the transportation supply chain to run entirely on net-zero energy sources by 2050.
Why Green Initiative?
At Green Initiative we are working with leading global shippers and carriers to reduce their carbon footprint and improve climate performance in freight transportation. Our aim is to support the decarbonization of national and international trade by 30% by 2030 and to support the transition to zero emissions freight sector. We collaborate with our global partners to quantify impacts, identify solutions, and advocate logistics decarbonization strategies.
