A Data-Driven Approach for Freight Forwarders to Lead with Decarbonization & Emission Reduction
As the world continues to wrestle with the challenges posed by climate change, the need for sustainable and environmental responsibility practices is becoming increasingly important. This is especially true in freight transportation, and freight forwarders are beginning to realize the role they can have in response to this customer demand for sustainable ocean freight procurement.
According to a study by McKinsey & Company, shippers are willing to pay a premium for more sustainable transportation and logistics services. If freight forwarders execute this well and invest in carbon emissions reporting, they are not only aligning with the global push for environmental responsibility, but they can also make themselves more attractive to shippers and BCOs with this as a unique selling proposition (USP).
The Importance of Carbon Emissions Tracking for Freight Forwarders
Freight forwarders have more than a few reasons to measure carbon emissions associated with their services and operations. Like businesses in any other sector, there is a need to address climate change and reduce greenhouse gas emissions for the good of the environment. Measuring ensures that this is done methodically and effectively, while also providing a foundation for the reporting that proves the positive action they’ve taken.
Beyond the social responsibility aspect of sustainability, there is also the compliance aspect. Governments and regulatory bodies are implementing more requirements related to carbon emissions and sustainability. Maintaining compliance helps businesses avoid penalties and sets them on a path for continued progress.
There are more business-focused reasons to track carbon emissions as well, starting with meeting customer expectations. Customers are increasingly demanding greener and more sustainable solutions and services. In response to this demand, businesses should be transparent about their carbon footprint. Making moves to reduce their emissions attracts environmentally conscious customers who prioritize eco-friendly partners.
For freight forwarders in particular, customer demand holds significant potential, especially in the current freight market. With rates dropping, freight forwarders are finding their margins slipping. Business was steady for a few years after the pandemic’s start, but this is now a different situation where freight professionals need a way to set themselves apart from the competition. If a customer has more than a few options for freight forwarders, the one that wins their business is the one with the differentiator that appeals the most to them and their business.
Carbon Emissions Tracking as a Unique Selling Proposition
Shippers and BCOs are looking for ways to adopt green practices in response to their own customer demand. However, it is not uncommon for shippers to be lagging behind technology trends. Without this foundation, it can be a daunting task for them to implement carbon emissions tracking on their own, as it can be challenging to know where to start.
Freight forwarders have an opportunity to not only meet this need but introduce sustainability as their differentiator, their unique selling proposition. If freight forwarders work this into their services, it is easy for shippers to bring sustainability to their customers. Shippers and BCOs can gain access to carbon emissions tracking and the ability to make informed logistics procurement decisions for all shipping modes and report resulting emissions to their customers, all with no added effort and no new technology to implement.
One user-friendly way for freight forwarders to provide this is to offer a carbon calculator. Shippers and BCOs can enter the information for an upcoming shipment and get a carbon emissions estimation from door-to-door for any port pair. They can then make decisions based on which option is the fastest, the cheapest, or the greenest. This gives knowledge and control to the shipper so they can prioritize and make decisions on a case-by-case basis. Having this information readily available, provided by the freight forwarder, lets shippers unlock sustainability in a previously inaccessible way.
The 3-Step Strategy for Reducing Emissions
To most effectively utilize the carbon emissions data they receive, shippers and BCOs should follow a 3-part approach to turn this into results.
Understanding their baseline carbon emissions is the crucial first step. This means ensuring that past carbon emissions data is calculated and reported accurately. Shippers should stay informed on their current carbon footprint and set attainable goals. A carbon calculator can help shippers estimate the effects of their ocean freight procurement decisions.
Next, shippers can use analytics and tools to visualize their carbon footprint, like a heatmap or BI dashboard. Interpreting their data, shippers can then develop a plan for reaching their goals, identifying the sources of carbon emissions with the most potential for reduction. By routing for carbon emission optimization, they can make informed progress.
Shippers and BCOs should continuously track and measure their progress to see the impact of their efforts. With this feedback loop, supported by accurate data and reporting methods, companies can have proof of their carbon emission reduction. They can report that as a result of the steps taken, they were able to reduce their footprint by X percentage.
The Current State of Carbon Emissions Data
In addition to the main technology implementation hurdle shippers and BCOs may experience trying to go green by themselves, they might also encounter another big challenge with carbon emissions data. Freight forwarders should be aware of this challenge, even though it can be avoided entirely with the right carbon emissions data provider.
Challenge: Obtaining Standardized, Granular, Accurate Data
Despite the development of new guidelines, there is still a lack of standardized methodologies for measuring emissions in the supply chain. Different calculation approaches can result in a wide range of emissions calculations. This lack of standardization presents a problem for companies to compare and report their emissions consistently.
Companies may also have difficulty obtaining precise information from their sources of Scope 3 emissions. They might turn to public indices, industry averages, or default data, leading to emission calculation inaccuracies. Instead, they need accurate data specific to their cargo’s exact journey, down to the port-pair, not just the average for the trade lane (for example, US East Cost to North Europe). When averages are used, they can expect these numbers to change over time regardless of their actions to reduce emissions. Unfortunately, data challenges such as these can open the door to greenwashing, when organizations claim to be more environmentally friendly than they actually are.
Solution: The Methodology of Modeled Data
To measure Scope 3 carbon emissions more accurately, modeled data has emerged as a valuable option for measuring fuel consumption and emissions. Unlike relying on averages, modeled data takes into account every critical factor—from equipment type and vessel speed to distance traveled—and uses advanced algorithms to provide the most accurate and precise data on carbon emissions associated with a shipment. By tailoring data to each specific scenario, ocean freight procurement professionals can better identify opportunities to reduce carbon emissions.
Solving the Carbon Emissions Reporting Challenges with Searoutes API
By specializing in this modeled data methodology, Searoutes makes it possible for shippers and BCOs to easily work informed sustainability into every procurement decision. Proprietary algorithms guarantee accurate and precise data companies can use to develop their carbon reduction strategies. Searoutes’ easy-to-implement API allows freight forwarders to integrate reliable data into their existing systems, so they can extend green freight options to their customers, making it easier to report, route, and reduce their emissions.
The Benefits of Improved Carbon Emissions Data for Freight Forwarders
Freight forwarders that take advantage of the demand for sustainable freight options gain a competitive advantage by supporting shippers’ priorities and aligning with their goals. This differentiation in the market can set them apart from competitors and improve their brand image as responsible, green partners.
By including carbon emissions data as a core part of their service offerings, freight forwarders can access new market opportunities driven by sustainability initiatives. Their ability to provide environmentally conscious solutions will help attract customers seeking sustainable ocean freight procurement, and the freight forwarder can position themselves as a preferred partner.
Unlock Your Competitive Edge with Searoutes
With the increasing focus on decarbonization, freight forwarders have an opportunity to differentiate themselves and gain a unique selling proposition by providing data on sustainable procurement to their customers. By extending Searoutes’ modeled methodology for accurate and precise data, freight forwarders can help shippers make informed decisions. Freight forwarders can better align with environmental priorities, strengthen their brand image, and tap into a new market of customers.To learn more about Searoutes, reach out to book a demo with us today.