The EU has been in ‘green mode’ for the past few years, with the aim to reduce net greenhouse gas emissions by at least 55% by 2030. To meet this ambitious, long-term environmental and climate goal, they have published a raft of sustainability regulations and guidance. One example of the regulations affecting the logistics and transportation sectors is the Greening Freight Package, launched in June 2023, which contains a number of measures including the Count Emissions EU chapter, which creates a common methodology for measuring door-to-door greenhouse gas emissions and, in turn, requires an enhanced focus on sustainability reporting. For carriers, shippers, and logistics service providers alike, compliance requires one key thing – data. Serge Schamschula, Head of Ecosystem at Transporeon (A Trimble Company) explores this further..
How does this affect the logistics industry?
The EU’s bid to increase supply chain transparency and equip all stakeholders with sustainability data to factor into their decision-making processes, being data-driven is crucial. For example, major investments within hydrogen, autonomous vehicles and exhaust heat recovery are just three decarbonisation measures that we see touted as ‘innovative’ and ‘industry-leading’. But these have limited tangible impact on lowering emissions – at least in the short term.
The three stages of emissions reporting
The Greenhouse Gas Protocol (a global, standardised framework) legislates that emissions fall into three categories – scope one, two and three. Scope one emissions originate from a company’s assets, for example, the fossil fuels burned by their fleet of trucks. Scope two includes indirect emissions from purchased energy generated offsite, like the electricity used to charge electric vehicles. Lastly, scope three includes all other indirect emissions from a company’s upstream and downstream value chain. It’s by far the largest source of emissions for most organisations – more than 70% of their entire footprint on average.
Until recently, the majority of EU companies have only reported on scope one and two – just a third measure their scope three emissions. But, because of the Corporate Sustainability Reporting Directive, this is changing in the 2024 financial year. Under the proposed value chain sustainability reporting, companies will now also be required to report on scope three, as well as their reduction targets and progress for reports published in 2025.
What does this mean for providers?
With scope three reporting quickly becoming the norm, it’s likely we will see end-user customers pressuring shippers to decarbonise. This is down to the fact that customers will want to reduce their own scope three emissions, while preserving their reputations among increasingly environmentally conscious consumers.
Similarly, the services of carriers and logistics service providers are often a considerable source of scope three emissions for shippers. With them now under more pressure to account for and reduce their emissions, they too will prioritise sustainability by voting with their wallets. This could mean contracting carriers based on their sustainability practices, offering longer freight contracts to carriers with lower carbon emissions or even paying a premium for lower carbon transport.
This demonstrates that implementing a robust decarbonisation plan and accurate process for reporting emissions isn’t just the ecologically sound path. It makes smart business sense.
Reducing emissions – two parallel paths
In Europe, the majority of freight is still transported by road. When it comes to road freight, there are numerous ways to reach their decarbonisation goals. One option is to improve the efficiency of vehicles and another is to boost the efficiency of transport logistics operations. A combination of both are required for effective long-term decarbonisation. However, EV and hydrogen technologies are still somewhat immature, and require substantial infrastructure investment. Meanwhile, digital solutions to drive efficiency can be implemented now at marginal cost and with hardly any upfront investment. It therefore makes sense for shippers and carriers to ensure their operations are as efficient as possible. This means reducing empty mileage, tackling unnecessary dwell times and optimising operations in the yard – that integral inflexion point between the road and the warehouse. And of course, shippers and carriers should look at how to combine multiple transport modes intelligently to minimise carbon emissions.
How to ensure your business is making the right decisions
It’s vital for companies to make smart decisions on decarbonisation – and to level up reporting capabilities. In order to do this, shippers, carriers and logistics service providers will need to rely on technology. However, this is a big leap for many businesses. Transporeon’s 2024 Transportation Pulse Report revealed that 60% of carriers and shippers pinned AI as their top concern shaping supply chain management in the next five years.
To ensure accuracy, companies will need to rely on sensor-based (mostly telematics) data. In recent years, the industry precisely measured 20% of its emissions – scope one and two – using this kind of sensor data. However, it falls short on calculating scope three – the remaining 80% – with the same level of precision. With the capabilities of a smart transportation management platform, such as automation and data analytics, companies are now able to solve this issue.
Given the abundance of data points involved in sustainability reporting, companies can further enhance accuracy and minimise employee workload by automating workflows. Similarly, sophisticated data analytics capabilities enable companies to capture real-time insights and make informed decisions throughout the process of managing transportation logistics.
Implementing a ‘network’ approach is also key, as it facilitates connected information flow between otherwise disparate companies and ensures that emissions aren’t measured in isolation from other factors. It also enables shippers, carriers and logistics service providers to work together to reduce unnecessary driving time by streamlining processes like freight sourcing, transport execution, dock scheduling, and freight matching. So, if you want to go far, go together.
