The Carbon Cost of Logistics: What You Need to Know

Impact of Logistics on your carbon footprint

Over 95% of GHG emissions of the logistics sector are directly attributable to handling freight for clients. So what their industry does, and how they do it, directly affects you.

In January 2023, the World Economic Forum launched a new guidance to support the logistics industry on its journey to net-zero emissions. Combined with ISO14083, there is now clarity and uniformity on how to quantify and report on GHG emissions arising from transport chain operations for passengers and freight.

The International Maritime Organization (IMO) has set a target to cut industry emissions by 50% by 2050. Though marine transport has the lowest ratio of carbon emission to tonnage-kilometres, the sheer volume of marine freight has brought this mode of transport under scrutiny. Fuel will be the game changer.

Fuels derived from biomass can reduce CO2 and sulphur emissions by up to 90%. International carriers, like Mediterranean Shipping Company (MSC) have begun using biofuel blends, achieving 30% emission reduction. Unfortunately biofuel is not yet readily available, with biofuel production less than 10% of annual marine fuel consumption.

Meanwhile Qatar and Royal Dutch Shell have agreed to develop liquefied natural gas (LNG) as a marine fuel for use by Maersk. Roughly 10% of Maersk's fleet is currently using LNG.

While one segment focuses on cleaner fuels, those who think out of the box have gone back in time. Cargill has chartered the world's first cargo ships powered by giant wind turbines. Today, there are only 20 large wind-powered commercial vessels. But if their capital costs come down, the tremendous fuel savings, and corresponding reduction in carbon emissions, will have sailing ships of a sort making a comeback.

Road freight is barely a quarter of marine freight by tonnage-kilometer, but it is over thrice as polluting. Freight trucks add up to 17% of total vehicle miles driven, but are responsible for 39% of life-cycle GHG emissions of all road vehicles. According to the International Energy Agency (IEA), improving the fuel efficiency of diesel trucks will be pivotal in limiting future diesel demand and emissions growth.

Within India, nearly three-fourths of all goods are transported on trucks, and heavy duty trucks account for 45% of on-road emissions. For India, road transport will play a key role in the country's transition to clean energy.

Rail transport is the most electrified transport sector. It is best placed to take advantage of the rise of renewable energy.

India plans to become the world's first "green railway" through 100% electrification and achieving net-zero carbon emissions by 2030.

65% of the global net zero target is expected to be achieved by switching to Sustainable Aviation Fuel (SAF). India is on trend with state refineries already having conducted aircraft trials using locally produced SAF. Bharat Petroleum Corporation Limited (BPCL) plans to establish SAF facilities at its three refineries, with investments totalling Rs14bn. Private players are also focusing on green energy and ramping up SAF production. Axens and Praj have signed an MoU for joint projects to produce SAF in India. Praj GenX pilot plant is expected to be operational by 2025.