Forwarders are increasingly been seen by shippers as a resource to help reduce or mitigate their supply chain-related carbon footprint. Photo credit: Shutterstock.com.
DSV is aiming to more aggressively reduce its internally and externally derived carbon footprint by 2030, according to a sustainability report it released last week along with its quarterly earnings.
The report commits the Danish forwarder to reducing so-called scope 1 and 2 emissions — e.g., from company-operated cars, offices, and warehouses — by 40 percent, and scope 3 emissions — e.g., from subcontracted freight transport — by 30 percent from a 2019 baseline.
The focus on sustainability comes amid a surge of development in tools to equip forwarders and shippers with the ability to calculate logistics-related carbon emissions on a granular basis. Decarbonization has long been an area of focus for Kuehne + Nagel, while APL Logistics and Flexport in 2020 both unveiled offerings to help shippers map their carbon footprints. Software provider SeaRoutes is working with forwarders and other technology companies to embed its carbon calculation software into their offerings to shippers.
Lindsay Zingg, senior director of sustainability at DSV, told JOC.com the global drive to reduce carbon footprints in supply chains is changing the nature of the forwarder-shipper relationship.
“We’ve become green consultants for our customers,” she said. “Some come to us and say, ‘DSV, these are our [decarbonization] targets; would you help us analyze the data to reach those targets?’ Sometimes they ask us to support them in the target-setting process. Some customers want us to solve the transport optimization piece for them. Others want us to focus on the planning.”
Over the next few years, DSV will develop a capability on its website that will allow its customers to pull their emissions data for themselves, something that some existing forwarders offer via their websites.
Every company has reduction targets
Zingg said it’s rare to find a corporate organization these days that doesn’t have a goal to reduce its emissions, if not defined targets. She said the retail and fashion industries were first to prioritize the issue from a supply chain perspective, but the automotive and oil and gas industries have been catching up, among others.
“I spoke to a customer [last week] saying you need to help make us carbon neutral by 2023,” she said. To call that an aggressive goal would be a massive understatement, and achieving it will take a range of solutions, from better use of transportation capacity across modes to reduce miles traveled to use of non-carbon-based alternative fuels.
Still, as a forwarder, DSV only has so much control over the fuels used by the capacity providers with which it contracts. “Alternative fuels, for air, ocean and trucking, this is where we’re partnering up with providers for solutions,” Zingg said. “We won’t be able to reduce our subcontracted emissions by 30 percent by 2030, which we’ve committed to, without alternative fuels.”
Executives from food conglomerate Nestle and ocean carrier CMA CGM last month underscored the urgency of sustainability issues in a webinar conducted by the transportation management system provider BuyCo and SeaRoutes. They said shippers need to work with service providers to improve their ability to use assets better, through strategies like street turns and collaborative procurement, while asset-based companies should use technology to calculate more efficient transportation routes.
Zingg said there’s been a marked shift in attitude from when she initially joined Panalpina 16 years ago, a time when sustainability initiatives were just starting to be discussed and were often dismissed as unnecessary or overreaching.
“I never thought a logistics company would be involved in investing in alternative fuel,” she said. “Now I have our CIO saying, ‘hey, we want to have a CO2 strategy.’ The stigma that used to be there is gone. Something has clicked, and this is now an important part of the business.”
Emissions savings can equal cost savings
As an immediate initiative, Zingg said although DSV does not offer a self-service carbon calculator, it can present shippers with emissions data on a granular, per transportation leg basis, allowing them to weigh those against factors like cost and transit times. “Sometimes you see that an aircraft with a more efficient engine is available,” or use supply chain optimization technology to determine where they are reducing emissions but also saving money. “And these are things that have nothing to do with alternative fuels.”
DSV has the ability to work within its customer base to find collaborative opportunities between shippers that reduce empty miles, Zingg added, citing an instance where two shippers on the same origin and destination could share space in a truck as an example. She also cited packaging optimization as another area in which shippers can reduce their carbon footprint.
Harder to pull off, but potentially a bigger opportunity, would be the opportunity for DSV to work with other forwarders to collaborate on better usage of capacity, or to leverage others’ investments in alternative fuel vehicles. That type of collaboration is still uncommon, largely because forwarders often see their own investments into decarbonization tools as a differentiator to lure customers with emission reduction targets to meet. “Which is quite understandable, but the climate would be better off if forwarders collaborate more,” Zingg said.
DSV during 2021 will roll out its ”Green Logistics Program” which will contain a service catalog of products for customers aimed at reducing emissions related to their shipments. About half of Zingg’s team globally is dedicated to such consultative offerings.
DSV has also enlisted help from researchers at Cardiff University’s PARC Institute of Manufacturing, Logistics & Inventory, with whom it has a long-standing partnership, to help build a geographical assessment of alternative fuel vehicles around the world. This matrix would enable it to help customers determine where lower-emission vehicles are an option in all the markets in which they operate. “We want to be able to say to customers, we know what the market is and where it’s going.”
Contact Eric Johnson at eric.johnson@ihsmarkit.com and follow him on Twitter: @LogTechEric.
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