As regulations begin to mount for the reduction of carbon emissions in transportation, the logistics industry is facing heightened scrutiny and businesses are seeking solutions within their supply chains.
According to the International Energy Agency, a Paris-based autonomous intergovernmental organization, transportation accounts for 28% of all emissions, with 12% of global emissions attributed to freight and logistics.
“The carbon intensity of [over-the-road] freight is way different than some other types of freight,” said Hayden Pirkle, Account Management Lead at Patch, a platform for negative emissions that integrates with businesses to calculate their carbon footprint and systematically compensates by funding verified carbon removal projects. “It is 100 times more carbon intensive than shipping via cargo ships, which is where the bulk of freight is delivered.”
To address these emissions, government agencies at the state and federal levels have been preparing regulations aimed at the transportation industry, which includes businesses in over-the-road shipping. While many of the rules go into effect in a few years, Shippers and 3PLs need to plan now to get ahead of the changes.
Pending Environmental Legislation Impacting OTR Shipping
Recently, California pushed a bill that requires both public and private companies to disclose their carbon emissions, according to the Wall Street Journal. Businesses would have to calculate and disclose emissions from their suppliers and customers, as well.
These rules will be the biggest changes in U.S. carbon emission disclosures in decades. They add climate information to the financial data that companies need to report, making it clear if they are reducing emissions in line with their commitments.
Other pending regulations that will have a big impact on transportation and OTR shipping include:
- The U.S. Securities and Exchange Commission is expected to announce Climate Related Disclosure requirements in October 2023. It would require certain climate related disclosures in initial filings and annual financial reports.
- In April, the U.S. EPA announced a proposal for more stringent standards to reduce greenhouse gas emissions from heavy-duty vehicles beginning in 2027. The new standards would be applicable to vehicles such as delivery trucks, refuse haulers, public utility trucks, transit, shuttle, school buses, and tractors (such as day cabs and sleeper cabs on tractor-trailer trucks).
- In August 2021, the U.S. EPA announced plans to reduce greenhouse gas emissions and other harmful air pollutants from heavy-duty trucks by reducing emissions that form smog and soot from heavy-duty engines and vehicles beginning in 2027.
- The Transportation and Climate Initiative, a regional collaboration of 13 Northeast and Mid-Atlantic states and the District of Columbia, seeks to improve transportation, develop the clean energy economy and reduce carbon emissions from the transportation sector.
Solutions for Shippers and 3PLs
Many businesses are either required, or have chosen, to work with companies based on their commitment to the environment making it apparent that Shippers and 3PLs need to seek solutions now for managing their carbon impact to get ahead of these regulations. For example, Carbon Trust reports that 50% of multinational retailers select their suppliers based on carbon performance.
“The first is measurement, which is the tracking piece. So that's carbon accounting, which could be helping a business understand their holistic carbon footprint across all of their operations, he said. “Or it could be footprint measurement of a particular activity, such as sending a specific shipment from A to B, credit card transaction for a purchase that's made, you can footprint, a lot of activities.”
Compensation or removal is the offset piece of the carbon action puzzle, according to Pirkle.
“We enable businesses to access a wide range of carbon reduction and carbon removal projects. And by projects, these are generally for-profit businesses that are doing the hard work on the ground of reducing or removing the carbon that's put out there,” he said.
Better with Banyan
To help Shippers and 3PLs get ahead of pending carbon emissions regulations, Banyan Technology, the leading provider of freight execution software for real-time rating and execution of all over-the-road (OTR) shipments, recently launched the CarbonTRAX™ & Offset feature in our LIVE Connect® software.
Partnering with Patch, Banyan offers Shippers and 3PLs the ability to calculate the carbon impact of every shipment and allows them to select from a variety of vetted climate action projects around the world to offset them.
“When I get a shipment, it's going to tell me exactly that the footprint of this load from A to B equals X,” said Pirkle. “Then we allow [Banyan’s clients] to participate in the compensation piece, that removal piece, so they can then buy a carbon credit, or a metric ton of carbon that's either been avoided, reduced or removed from the atmosphere.”
CarbonTRAX checks all the ‘must-haves’ for Shippers and 3PLs looking to align their shipping operations with their corporate and customer Environmental, Social, and Governance (ESG) requirements, including:
- Track Footprint: View per-shipment emissions output, track over time and view data aggregation.
- Purchase Credits: Contribute to carbon credit projects that meet your organizations values, goals, claims and price points in the same system.
- Gain Confirmation: Track which emissions have been neutralized. Receive dynamic carbon credit certiﬁcate with every purchase. Track in Patch and Banyan.
Contact Banyan Technology today to learn more about our new CarbonTRAX & Offset and other new features that will help you stay ahead of the competition.