Cap and trade legislation may be dead, but companies still want to be publicly percieved as being socially responsible. Implementing a Transportation Management System is a way for companies to reduce their transportation costs while also reducing their carbon footprint. This is a logistics and environmental win-win.
But I recently downloaded a report from Cefic, The European Chemical Industry Council, called “Measuring and Managing CO2 Emissions of European Chemical Transport.” Despite the title, the issues discussed in the report apply to all industries and regions. I also visited a site called EcoTransiteIT, which is an online transportation C02 calculator, for a discussion of these issues.
Because there is currently no single, agreed upon standard on how to calculate carbon emissions, companies have some latitude in how they calculate it. According to the Cefic report, “The simplest and most accurate way of calculating these emissions is to record energy use and employ standard emission factors to convert energy values into C02.” If you have your own private fleet, you can come up with a highly accurate measure. But since most companies don’t have a private fleet, they need to take an “activity-based approach”—i.e., take the tons transported and the average distance traveled and apply various emissions factors to come up with a number. Mode of transport is one such factor. From an emissions standpoint, ocean and rail are better modes then road and air. But it gets a lot more complicated than that, depending on how granular you want to get.
- Shippers often do not know the route of their intermodal shipments, nor the split between the different modes, and not all carriers are capable of providing this data.
- Do your trucks weigh out or cube out? If they cube out, what load factor should you apply? In other words, when transporting heavy goods, you can achieve an excellent level of vehicle capacity utilization on a weight basis. As a result, the environmental impacts per transported ton are lower.
- The steeper the gradients encountered, the higher the carbon emissions. Do you apply averages by region or by country?
There are also boundary questions: Who owns the carbon emissions, the shipper, carrier, or consignee? And which emissions should each party own for a multi-leg shipment? It is generally recognized that the party who owns the carrier contact also owns the C02 emissions. If your customer arranges for a pick up at one of your facilities, they own the emissions. However, who owns the CO2 emissions associated with empty backhauls? Shippers, of course, prefer not to have “empty running” allowances as part of their calculation, but there are good arguments to include them.
One thing this means to me is that if you are in the market for a TMS solution, you should look at the CO2 reporting capabilities of the different solutions available. The business intelligence (BI) tools should come with the key parameters built in so that it is easier to automate the reporting. But until there are some agreed upon standards in this area, those BI tools also need to be flexible.