Sustainability in Transportation and Shipping
Transportation and shipping companies are pivotal players in moving cargo and people around the world. Their services—everything from container shipments by sea to ground transport to overnight package delivery to personal air travel—are central to the growth of global commerce. Increasingly, cost pressures have pushed companies to seek ways to reduce their environmental impacts, particularly their energy consumption. As manufacturers and retailers seek ways to green their supply chains, transportation and shipping companies that have already reduced their footprints and implemented sustainability strategies will be well positioned to meet their needs.
Sustainability Drivers
To date, transportation and shipping companies’ sustainability efforts have been mostly cost-driven. But new carbon and environmental regulations, such as the European Union’s Emission Trading System and more stringent vehicle emissions standards, will create additional pressure. Also, some metropolitan areas in Europe are experimenting with road user charges to control congestion, something that may spread to U.S. cities and elsewhere. Responding to cost pressures and regulatory concerns, leading companies are taking action on several levels: tracking and reporting their greenhouse gas emissions; managing logistics to optimize routes; upgrading older vehicles and aircraft with more efficient equipment; and where possible, converting to alternative and renewable fuels and vehicles.
So far, pressure from customers and other stakeholders has been relatively modest. But new pressure is likely to come from companies looking to make their distribution more efficient and sustainable. Transportation and shipping companies will need to continue making improvements. They will also need to become better at how they communicate about their sustainability efforts with customers.
Challenges and Opportunities
To prepare for the challenges and opportunities ahead, transportation and shipping companies need to ask themselves:
- What types of new technology investments should we make?
- Given the emissions intensity of our business and uncertainty over fuel costs and regulation, how can we manage potential regulatory impacts on our operating costs?
- How should we connect with customers on sustainability issues, and how can we position ourselves as a sustainable player in our customers’ overall supply chain?
Viridis has advised leading companies on these and other issues.
Case Study
The client is a private jet service provider that operates one of the world’s largest jet fleets and provides on-call service to a demanding client base. Because jet flight is inherently greenhouse gas emissions-intensive, the company engaged Viridis to develop a world-class sustainability initiative with an aggressive carbon management program as its centerpiece.
Viridis worked with the company to create a comprehensive program with five core elements:
- Energy and Conservation program to reduce its carbon footprint and address other environmental impacts.
- Research partnership with a major academic institution to advance next generation fuels.
- Carbon offset program for emissions that could not be eliminated in the short term.
- External environmental advisory board consisting of environmental and climate experts to provide broad perspective.
- Engagement in public debate on impacts and regulations through building relationships with environmental NGOs.
As a result of the success of this program, the company has achieved a position of sustainability leadership in its industry.