Greenhouse Gas Emissions and the Shipping Industry: Introducing our free CO2 Calculator

Jonas Krumland

Supply Chain Expert & CEO at Logward

We’re proud to introduce Logward’s first freebie feature: a simple CO2 calculator that enables a quick comparison of route and transport mode options. We’ll dive into the calculator itself below, but first we wanted to take a look at the context.

The shipping industry accounts for anywhere between 2 to 3% of global greenhouse gas emissions. (World Economic Forum) At more than 1 billion tons annually, this is more than the entire country of Germany. In spite of growing awareness and improvements in technology, emissions from maritime transport are expected to grow alongside global trade in the coming years.

This represents a massive challenge for our customers and the industry in general: How to grow and reach new markets while reducing our environmental impact, or at least without worsening it?

While we recommend hearing it from the dedicated experts on this topic (links below),from our perspective we see several steps the industry, and our customers, can take to start making progress.

Maintain and Improve Vessels

Carriers should be encouraged to continue upgrading their fleets with more efficient propulsion, maintaining hull and propeller conditions, and experimenting with and adopting new technologies such as LNG or even Hydrogen-fuelled vessels. So far the results of such efforts appear mixed (BBC), although this is typically the case with new technologies. Worryingly, during the 2010s, many carriers upgraded to more efficient vessels, but overall emissions went up. Case in point, efficiency per unit of transport for general cargo ships improved by 5% from 2013 to 2015, but overall emissions from the class increased by 9%. (ICCT) In addition to seeing more cargo traffic, one factor was that all things being equal, as vessels become more efficient, carriers increase their cruising SOG (speed over ground).

Under normal conditions, carriers will “slow-steam” to reduce fuel costs and emissions, but as efficiency improved between 2013-2015, SOG for large container vessels increased by 11% as it made traveling faster financially feasible. This suggests that improvement will not come from advances in technology alone, and that carriers will understandably require a combination of incentives and market pressure. The International Maritime Organization (IMO), a UN special agency responsible for governing the industry, has begun to apply pressure to reduce emissions of sulfur and establish targets for overall greenhouse gas emissions. In July 2023, the IMO adopted the 2023 IMO Strategy on Reduction of GHG Emissions from Ships, which includes enhanced targets to tackle harmful emissions. This strategy outlines a pathway for the shipping industry to achieve net-zero GHG emissions by or around 2050, with intermediate targets for 2030 and 2040. (IMO and JOC) While the IMO and other industry organizations are playing an increasingly active regulatory role, as discussed below, market forces are not yet as strong as they might be.

Increase operational efficiency

Shippers, forwarders, and carriers alike can play an important role through better planning and increased collaboration. A lack of visibility and predictive capabilities can cause shippers and forwarders to split what could be full container loads on a single vessel into several partially filled containers on several vessels. For example, one forwarder estimated that in 2018, their average FCL container was 68% full on the Transpacific Eastbound trade. (Flexport) Similarly, shippers who are unable to adequately match inventory and production timing to demand are oftentimes forced to use an even more environmentally and economically costly alternative, air freight. Meanwhile, trade imbalances on routes such as the TransPacific (nearly 10M TEU in 2017) cause vessel capacity utilization and empty container repositioning problems for carriers. (Zhao, Xue, & Zhang) In the coming years, we look forward to efforts by industry players and new entrants that provide greater visibility and planning capabilities by unifying stakeholder data sets and removing communication barriers.

At Logward, for example, our solutions help customers reduce their reliance on airfreight, while our structuring and analysis of historical data helps identify opportunities to consolidate pre- and main-carriage shipments.

Make no mistake, improving supply chain operational efficiency represents a challenge for any company, small or large. Yet given that improvements here typically correspond to gains in economic outcomes and customer service, we’re confident that progress will be made, especially knowing how many great and motivated companies are tackling the issue.

Make data-based freight procurement decisions

Many companies still face challenges in comprehensively measuring their CO₂emissions from logistics. While there certainly is benefit to “logic based decisions,” ie, the longest route likely consumes the most fuel, reduction of CO2 cannot truly be tackled until the stakeholders are more aware of the facts. The best way to measure CO2 output would be to know actual fuel consumption, and while there are initiatives driven by IMO and others to achieve this, for a variety of reasons we are some way away from having this information widely available. Until then, calculators like ours can provide an imperfect alternative, taking into account distance and speed travelled, mode, vessel-type, and more.

Not only does this help shippers to perform internal analysis down to a SKU level and report to investors and consumers alike, it also can be used to drive decision-making. If a certain carrier is underinvesting in new vessels or routinely travels at higher speeds, shippers can “speak with their dollar” by choosing competitors, thereby incentivizing the technological and operational changes mentioned above. Of course, this also requires a willingness on the part of shippers to incorporate CO2 impact alongside other considerations such as cost and transit time when choosing a schedule and carrier. Yet, if and when CO2 offsetting and decarbonizing become more widespread, and shippers must pay for it, the motivation to improve accuracy will grow.

Our Calculator

It is on this last point where we are happy to say our free CO2 calculator can play its small part by providing easy access to a well-to-wheel calculation of CO2, regardless of transport mode. Publicly available on the webpage, our tool considers route (distance), mode, vehicle and fuel type, and more, and relies on “emission factors,” which are trade specific CO2 estimates based on verified carrier reporting to the Clean Cargo Working Group. Powered by EcoTransIT, our calculator is built on a GLEC (Global Logistics Emissions Council) approved methodology supported by scientists and industry associations like BSR.

For customers using our solutions for route planning and procurement, we also use the same methodology to provide an estimated CO2 output for the suitable options. Once they move into actually booking a transport, we carry this CO2 information through to the end and include it in our dashboards and performance statistics, enabling analysis of CO2 by SKU, geography, business unit, and more.

Our calculator is far from perfect, but it is a start. In this way, we hope Logward can help our customers and the wider industry confront this generational challenge.

Sources

Some Groups, Companies and Experts tackling these issues:

EcoTransIT World
European Commission
Arronax Podcast hosted by Craig Eason – Episode: IMO and the Other Race Toward Sustainable Shipping
Zero North – seek to optimize vessel operations through digitalization.
Spire Maritime – George, Olga and team at Spire provide API access to satellite AIS data, crucial information for those looking to independently measure exact distances.
Breakthrough Fuel – Matt Muenster and the team measure fuel consumption and provide greater visibility into costs, including CO2.
SeaRoutes – using AIS, weather, and routing information to create a different approach to CO2 calculation.