BASF Leverages Searoutes Data in Their Freight Negotiations

Searoutes is proud to work with companies who are looking for carbon reduction insights that not only help them to succeed in their carbon reduction goals but also provide them with valuable intelligence that they can use as leverage in their freight negotiations.

One business we’ve enjoyed working with is BASF, a global chemicals products producer headquartered in Ludwigshafen, Germany. Like us, they are dedicated to reducing greenhouse gas emissions and combating climate change. The company has publicly pledged its commitment to sustainability and is preparing to reach carbon neutrality by 2050. They realize the importance of reducing transportation emissions in the context of global shipping.

We recently chatted with Marko Hahn, a member of BASF’s global liner shipping department, to learn how and why BASF uses Searoutes’ carbon emission data that they leverage when procuring global ocean freight services.

When Building an Emissions-Conscious Supply Chain, BASF Faced Significant Challenges

As Hahn explained, BASF procures ocean freight services for its businesses on a yearly basis. The end goal for BASF’s final allocation is to find the perfect balance between service, price, and quality while being prepared for any regional or global geopolitical situations that may arise.

Another goal is to see how BASF can reduce carbon emissions during the procurement process, as the company aims to become carbon-neutral by 2050.

“Besides our focus on Scope 1, 2, and 3.1 emissions we are also targeting our transportation emissions in more detail as we are expected to find a clear, transparent approach towards reducing those emissions,” Hahn said.

While some ocean carriers may provide BASF with carbon emission data, they may also have their own methodology and approaches to obtaining that data. That lack of standardization can make assessing and comparing carriers’ emissions performance more difficult.

“If you want to be able to compare carriers, you need to find a unified approach, and this is where Searoutes comes in. Searoutes can produce vessel or service-specific emission figures on a TEU basis that can be easily added to our bidding sheets,” Hahn said. “The accuracy of their data is well respected in the market by consultancies and carriers making it a great base for negotiations”.

With Searoutes, BASF Built a Unified Approach to Emissions Reduction in Freight Negotiations

To gain transparency on the emissions produced by their ocean carriers, BASF relies on the emissions data provided by Searoutes to glean insights into carriers’ emissions performance. Once BASF has insights into carriers’ emissions performance and the performance of their vessel fleet and services, BASF uses that analysis as leverage during the procurement process. The data allows BASF to incentivize sustainable practices before and during negotiation rounds. It also enables BASF to build a portfolio of “greener” carriers based on emissions transparency.

“With the data provided by Searoutes, we are gaining transparency about the emissions produced by our ocean carriers,” Hahn said. “Currently, we have mainly used it for our global negotiations. Before negotiation starts, we prepare ourselves to assess who the lowest emitting carriers and services are and who are the most carbon-intensive.”

Hahn said BASF’s emissions data on carriers also helps it navigate other, more traditional factors during the procurement process, such as price and transit time.

“We want to have emissions that are as low as possible, but, of course, there are other major factors that will impact the final allocation, such as price, transit time, port coverage, transshipments, dangerous goods acceptance, etc.,” Hahn said.

BASF also uses carriers’ emissions data to inform its divisions: the company is looking to award more volumes to carriers with lower emissions. The company also sees the potential for freight rate savings due to higher allocations to lower CO2 emitting carriers.

“We consider awarding more volumes to carriers with a lower carbon footprint if all other requirements are met. We thus motivate them to go on a path with us towards carbon zero,”

Hahn said. “This includes more proactivity and flexibility on pricing due to higher allocations. Around 60-70% of carriers are working actively with us based on Searoutes’ data. It is leading to freight rate savings when correctly applied.”

BASF has received positive feedback from carriers on the transparency and credibility of Searoutes’ data. “We have had a very good experience, actually. Some carriers, of course, already have data related to their vessels’ emissions. Therefore, it is vital the data provided to us by Searoutes is trustworthy so as not to lose our credibility,” Hahn said.

“Carriers acknowledge our data, compare it with their own, and ask us how it has been made, which helps us strengthen our negotiation position. Being awarded more volumes thanks to their objective carbon performance is also something they can promote internally.”

Carbon Emission Data is growing in importance with EU ETS considerations becoming more prevalent

BASF, like others, is preparing for the upcoming tender season, in which key regulatory changes will likely play a major role. Regulations such as the European Union’s emissions trading system (EU ETS) for the maritime transport sector loom over the procurement process, causing parties to see the need for clear data during negotiations.

“Next to the pure CO2e data, the EU ETS charges will play a bigger role for the next two years since the applied percentage of emissions will go up. We will again need clear data to be able to challenge those amounts since carriers have proved to be very inventive when it comes to surcharges,” Hahn said.

With Searoutes, BASF is Building a Sustainable Future

Searoutes’ data is enabling BASF to build a sustainable future for their ocean freight business. “BASF is taking freight negotiations to the next level by utilizing carbon data as a negotiation tool” says Searoutes VP Sales, Jocelyn Hansen. “Few BCOs have shown this level of sophistication in their negotiation of freight, making BASF a true leader on how to innovate freight negotiations beyond the traditional price vs service scenario”.

Hahn explains that “BASF has an ambition to inspire other shippers to use carbon data in freight negotiations. Shippers can drive the conversation on carbon emissions with their ocean carriers by understanding how they can optimize their supply chain. We want to incentivize our ocean carriers to invest in modern technologies that help all shippers to reduce emissions and expand the conversation beyond the selling of biofuels”. Jocelyn adds, “Applying those fuels to a supply chain that has yet to be optimized can be expensive. It’s motivating to work with shippers who are pushing the conversation on optimizing supply chains to reduce carbon emissions and helping to move the needle today rather than waiting for regulations or investment and infrastructure to be put in place by the rest of the industry”.

Partner with Searoutes and Get Emissions Data You Can Leverage During the Procurement Process

In this article, we explored how BASF and Searoutes work together. Searoutes offers carbon insights for carriers, services, vessels and actual EU ETS charges making it the leading marketplace for carbon emission intelligence. We’d like to collaborate with others and provide them with visibility into their supply chain emissions, which they can then use to bolster internal sustainability initiatives or leverage during the procurement process.

You might be our next partner. Contact us today to learn how to get started.