Australia, Companies, Features, Logistics

Sustainability strategies for shipping

Sue Tomic, Chair of the Supply Chain & Logistics Association of Australia (SCLAA).

Sue Tomic, Chair of the Supply Chain & Logistics Association of Australia, tells MHD about how intermodals can provide a solution to companies looking to reduce their carbon emissions.

Corporations are increasingly faced with pressing regulatory, public, and internal responsibilities to achieve net-zero greenhouse gas emissions.

The below chart shows how the “average persons” emissions would be distributed across the different sectors (average footprint) measured in tonnes of carbon dioxide equivalents per year.

Transportation is the third largest contributor to the carbon emissions of the average Australian.

And with Australia’s domestic freight task projected to grow an estimated 26 per cent between 2019-2020 and 2049-50, adopting more sustainable tactics will be critical for shippers to shrink their carbon footprints.

While alternative solutions like electric and autonomous vehicles offer promising environmental advantages, wide-scale implementation is still largely out of reach due to infrastructure and technology limitations.

However, a more sustainable alternative is already available: intermodal. Specifically, leveraging rail transportation as an additional mode of transportation has environmental and cost-saving benefits.

According to one government Transport industry study, rail accounted for 3.96 per cent of GHG versus Road GHG emissions accounting for 88.33 per cent GHG in Australia in 2021.

Rail is approximately three to four times more fuel-efficient than truckload, making it an economical way to transport long distances and in bulk. Including rail as part of a multimodal transport strategy is a more sustainable alternative to long-haul trucking alone.

But despite the significantly lower emissions output of rail, many shippers still do not prioritise rail usage for its environmental benefits. This means that many companies are missing out on a capital-efficient and widely available opportunity to significantly reduce their carbon footprints.

Corporations, especially enterprise-level companies, are being urged from all angles to take actionable steps to reduce carbon emissions, which directly contribute to rising temperatures. Investors and shareholders, consumers and governments are putting pressure on businesses to acknowledge their impact and commit to lowering and offsetting carbon emissions.

  • Measuring carbon emissions per year is the most common sustainability metric.
  • Companies are aware of how their actions, especially in relation to freight transportation and shipping, impact the environment. And many mid- to large-size companies have set goals to improve.

The key metrics being implemented are:

  • Carbon emissions per year
  • Fuel consumption
  • Carbon emission per load

While many companies have external and internal motivations to meet sustainability targets, emissions do not rank higher out of the listed factors affecting their decision to use intermodal versus truckload transport alone. People working inside shipper logistics say cost and on-time delivery are the most important factors when choosing intermodal or truckload. Shipment visibility and emissions come in last.

Shifting current sentiments would require an improvement in intermodal level of service and cost, or shipper perception of intermodal service and cost. More education surrounding the environmental benefits of rail is the first step in changing shippers’ perspectives

Rail is beneficial and commonly used for transporting commodities long distances. But the prevalence of short haul road transport in urban areas can also be alleviated. Metro intermodal terminals moving freight via rail for part of the delivery journey provides numerous benefits to shippers and consumers alike. Reduction in road congestion being a critical one.

Though intermodal transportation is a common part of many companies’ shipping strategies, many do not intentionally leverage it to support their sustainability goals and commitments. Diverting even a portion of the shipments from truck transport to rail can help large companies reduce their carbon footprints and achieve cost savings.

A truly effective multimodal solution needs to be backed by a suite of solutions and services grounded in innovative marketplace technology, industry needs to transform into entrenched practices around pricing and booking freight across a variety of modes, including rail. Only in this way will shippers be given the reliability, flexibility, and transparency to the movement of goods to make decisions in line with their sustainability strategy. This would accelerate and reshape logistics for shippers and service providers of all sizes.

Technology solutions need to partner with shippers to understand transportation goals and commitments regarding cost, service, and sustainability. 

In addition, visibility, and access to an expansive network of carriers, including relationships with the nation’s largest rail providers is required to identify the best rates and routes to move required volumes and, in doing so, help shippers grow closer to net-zero greenhouse gas emissions targets. ν

Sue Tomic is Chair of SCLAA and serves on various Industry, Government and University Advisory Boards/Committees. In addition, Sue is a Non-executive Director/Board advisor, specialising in strategic transformation across companies in the Freight, Port and Landside Logistics sector.

For more information on the SCLAA, click here.

Send this to a friend