Global Sustainability Agenda #54: The Five Decarbonization Levers for Logistics – Part 2 of 3

Global Sustainability Reality

?'Ambitious climate action is more urgent than ever:' 3 Climate records broken in 2024 (Space)?

Billionaire Michael Bloomberg to fund UN climate change body after US exits Paris Agreement (Euro News)?

What is the Paris Climate Agreement? And why does it matter? (Vital Signs)

Extreme weather failing to encourage political climate action (The Guardian)

As the Los Angeles fires burn, the world passed 1.5 degrees of warming. Here’s why there’s still hope to fight climate change. (Greenpeace)

Global Sustainability Business Impact

Leaders at Davos Economic Forum Vow to ‘Stay the Course’ on Climate Action (NY Times)

Do we really have to choose between energy security and the energy transition? (World Economic Forum)?

What America's 'Golden Age' Might Mean for Supply Chains: Alexis Asks (SDC Executive)

Why we need to start talking about the relationship between climate change and security (World Economic Forum)?

How the oil industry and growing political divides turned climate change into a partisan issue (The Conversation)?

Public-private partnerships "vital" to advancing decarbonization (Axios)

Economic Winners and Losers: The Energy Transition Under Trump (T&D World)?

The Supply Chain Outlook for Q1 2025 (Supply Chain Digital)?

The Future of Fossil Fuels in a Decarbonized United States (Resources)?

The shipping sector must reach net zero by 2050. Here’s how scalable maritime green fuels will help (World Economic Forum)

New year of challenges and opportunities for shipping (Hellenic Shipping News)?

China says it will work with Netherlands to maintain stable global supply chain (Reuters)

Trump’s Retreat From Clean Energy Puts the U.S. Out of Step With the World (NY Times)?

COMMODITIES 2025: Hydrogen's role redefined as decarbonization fuel in US (S&P Global)?

What are the challenges facing the maritime industry? (Lexolgy)

Dryad Global: Cyber security risks for the maritime industry (Safety4Sea)

The Risks of Decarbonized and Digitalized Shipping (US Naval Institute)

What Trump’s Executive Orders Really Mean for the Climate (Time)

President Trump Pledges to Roll Back Climate Policies but Clean Energy Momentum Continues (World Resources Institute)?

Shipping Goes Back To The Future - With Sails (Forbes)?

2025 outlook for marine propulsion: more regulatory heavy lifting ahead (Riviera Maritime)?

Decarbonization Strategies in the Steel Industry (Nature)?

The path forward

Last week, we explored the role of two of the five decarbonization levers in assessing and achieving carbon reductions across the maritime supply chain. This week, we will explore the role of one more decarbonization lever – Increasing Capacity Utilization.

As presented last week, the ‘five decarbonization levers’ framework further refines the "Improve" category from the Avoid-Shift-Improve (ASI) framework—which categorizes measures into (i) reducing the demand for transport, (ii) shifting transport to lower-carbon modes, and (iii) improving the carbon efficiency of transport systems—by distinguishing between capacity utilization and energy efficiency.

Next week, we will explore the remaining levers and discuss how maritime stakeholders can effectively leverage the combined potential of all five levers to align with economic needs and infrastructure availability.

Increasing Capacity Utilization

The "increase capacity utilization" lever emphasizes optimizing space and resource use across the supply chain to ensure vehicles, containers, and facilities operate at peak efficiency. Despite its importance, freight-carrying capacity across all transport modes is chronically underutilized. This lever involves maximizing the use of existing logistics assets—such as trucks, ships, containers, and warehouses—by reducing empty miles, idle time, and underutilized space. By increasing load factors, freight movement can be consolidated into fewer trips and voyages, thereby reducing distances traveled, fuel consumption, and CO? emissions.

This strategy is often considered a "low-hanging fruit" in decarbonizing freight transport because it not only cuts carbon emissions but also delivers cost savings. Moreover, efforts to improve capacity utilization can be implemented in the short or medium term, in contrast to the gradual transition to low-carbon energy in the maritime sector. The latter faces a lengthy process due to the long replacement cycle for vessels and the significant time required to transform the marine energy supply system. Implementing changes to enhance capacity utilization, however, demands adjustments in business practices, market dynamics, and operational procedures rather than relying on new technology, fleet renewal, or high capital investments. Despite being less capital-intensive, these adjustments pose significant challenges, particularly in the maritime sector.

Capacity utilization in shipping operations directly influences carbon intensity through various factors. The primary factor is the proportion of a vessel's deadweight that is actively used. Bulk tankers carrying dense products like iron ore, oil, or grain often achieve very high utilization rates. Conversely, container vessels, which transport lighter manufactured goods, food products, and reposition empty containers, typically exhibit lower utilization rates.

In road, rail, and air cargo systems, underloading vehicles reduces weight, energy consumption, and emissions. However, underloaded ships must take on ballast water to maintain stability and trim. Ballast water often constitutes 25–30% of a vessel’s deadweight, accounting for the movement of an estimated 10 billion tons of water annually. Consolidating maritime cargo on fewer sailings can replace some ballast water with freight, improving the energy and carbon efficiency of shipping.

Challenges for container ships

Measuring container ship utilization presents unique challenges. Empty containers, which fill slots but generate no revenue or productive cargo movement, complicate utilization metrics. Laden container utilization also varies widely by weight and volume. Empty containers account for 20–30% of global container movements, reflecting significant inefficiencies. Their loading is generally the responsibility of the shipper exporting the consignment, not the shipping line.

Repositioning empty containers also incurs a heavy carbon penalty, particularly in hinterland transport, due to circuitous routing. After being unloaded at import locations, empty containers are often routed through ports or distant inland terminals to export locations for reloading. Global trade imbalances—such as high export volumes from Asia versus lower import volumes to Africa—exacerbate these inefficiencies, requiring frequent repositioning to balance container supply.

Another challenge is the misalignment between a ship’s weight and volume utilization. Low-density cargo, such as electronics, occupies significant space but doesn’t maximize the ship’s weight capacity. Consequently, metrics like TEU slot utilization can overestimate efficiency when weight limits are not considered. While deadweight tonnage (DWT) reflects a ship’s weight capacity, TEU utilization focuses on container slots, creating a partial picture of operational efficiency.

The multi-stop nature of shipping routes further complicates utilization tracking. Containers are loaded and unloaded at multiple ports, making it difficult to measure real-time utilization at each stage of the journey. Many metrics fail to capture the variations that occur across different route segments.

Data fragmentation is another significant hurdle. Limited integration between key stakeholders—shipping companies, ports, and freight forwarders—results in data silos, restricting visibility into cargo flows. Without real-time, comprehensive data, accurately measuring utilization becomes challenging. Moreover, competitive or confidentiality concerns often hinder stakeholder collaboration, further exacerbating the issue.

Approaches to address these challenges are:

Advanced-Data Analytics:

AI and Machine Learning: Predict demand and optimize container flows to reduce repositioning of empty containers.

Example: Maersk uses predictive analytics to better manage container imbalances.

Digital Twins: Simulate container movements to identify bottlenecks and inefficiencies in utilization.

Integrated Platforms:

Blockchain-based systems (e.g., TradeLens) provide real-time visibility into container status and utilization metrics, fostering better stakeholder collaboration.

Dynamic Metrics:

Introduce composite utilization metrics that combine slot utilization, weight utilization, and revenue efficiency to provide a more comprehensive picture.

Infrastructure and Policy Changes:

Encourage the development of regional container pooling hubs to reduce empty container repositioning.

Incentivize shipping alliances to share capacity more effectively.

Foldable Containers:

Several companies are now marketing foldable containers that can be collapsed, tacked and transported by land and sea in units of four or five, saving around 75% of space.

Case Studies

• Maersk and Empty Container Management:

Maersk implemented AI-driven container optimization strategies, reducing empty repositioning by 15%, focused on using fewer containers with higher efficiency to improve revenue utilization.

• Port of Rotterdam’s Digital Twins:

Using digital twin technology to simulate vessel arrivals and optimize load factors for container ships resulted in measurable improvements in slot and weight utilization.

• Global Container Imbalance Solutions:

Companies like Avantida (part of the INTTRA network) enable triangulation of container moves, allowing containers to be reused closer to their drop-off points.