In recent years, businesses and consumers alike have become increasingly focused on the impact of business operations on the climate. Between recent legislature and collaborative initiatives like the UN’s sustainable development goals (SDGs), the incentives to prioritize sustainability are stacking up. As businesses across a range of industries are pushed into taking action, logistics is no exception.
According to MIT researchers, freight transportation alone makes up 8% of greenhouse gas emissions across the globe. Once you add warehouse and port operations, it totals roughly 11%– a number many are determined to bring down.
Despite the widespread effort to reduce the industry’s environmental impact, what some freight companies don’t realize is that this mission is more than just good karma– it’s also good business. Let’s talk about how focusing on cutting carbon emissions can help your freight forwarding company achieve long-term success.
What does it mean to “go green” as a freight forwarder?
Before we dive into the benefits of “going green,” let’s talk about what it means to adopt sustainable practices as a freight forwarder.
Across the logistics industry, there’s no shortage of operations that could be refined to reduce waste and pollution. Even now, some shipping companies are starting to take a closer look at their packaging options, route optimization, idling time, and more. For instance, in a collaborative effort with the UN’s SDGs, logistics giant Deutsche Post DHL Group launched an action plan to focus on six of the 17 metrics that included implementing clean first and last mile solutions.
However, sustainable practices can look different for freight forwarders compared to other stakeholders across the shipment lifecycle. If you don’t own or operate any equipment, you’re not necessarily in a position to limit emissions through your day-to-day operations. At the same time, since you’re not transporting your own goods, it’s not your decision to make the “green” choice at the expense of cost, transit time, or something else.
Because of your limited control in the shipping process, you can focus on enabling your customers with the tools they need to make sustainable decisions. This might include offering software to track their emissions, helping them compare environmental impact by route, or providing them with carbon reports during quarterly meetings.
You can also work with your shippers to define joint ESG metrics, or KPIs related to environmental, social, and governmental considerations. For example, you can aim to reduce emissions by 20% per shipment or increase fuel-efficient vehicle movements by 50%. By collaborating on sustainability goals, you’ll be able to more quickly make decisions based on their preferences.
How sustainability can drive business success in the freight forwarding industry
Open new business opportunities
Consumers are increasingly seeking products from manufacturers and retailers with a commitment to the environment. According to a study by First Insight, two-thirds of consumers said they’ll pay more for sustainable products.
This preference can even be observed when comparing business performance across companies. For instance, the consumer goods giant Unilever has a subset of Sustainable Living Brands with purpose and sustainability embedded in the core of the company. Analysts have found that those brands have outperformed the non-purpose-driven brands under their umbrella, growing 175% faster.
Over time, the shift in preferences resulting in this discrepancy has made its way to top decision-makers. Retailers are pulling on their suppliers and logistics providers to equip them with the tools they need to fulfill consumer demands. Now, as observed by a freight forwarder using the Logixboard platform, there’s a major push within the industry to understand the true impact of what goes on in the supply chain space.
This trend unlocks a major opportunity for forwarders to align their services with their customers’ and prospects’ environmental goals. By providing more sustainable offerings, you can position yourself as an attractive partner for businesses and consumers who value environmentally friendly practices.
Prepare for the future
As it stands, pursuing climate-forward initiatives in the current landscape puts you miles (pun intended) ahead of your competitors. However, many predict that it’s likely to change in the near future. As we’ve seen reflected in recent policies, reducing logistics emissions is becoming a top priority for businesses and governments alike. In other words, companies that don’t take action now will likely need to scramble to meet new policies down the line.
In the EU, for instance, lawmakers instituted a plan to cut net emissions by 55% by 2030 from 1990 levels and to achieve climate neutrality by 2050. In response, many carriers started phasing in fuel-efficient vehicles to curb emissions. However, some simply reduced speeds in a practice called slow steaming in order to comply with the new policies. As governments impose stricter requirements for the logistics sector, partnering with carriers who have optimized their operations for efficiency will be the bare minimum for conducting business.
Fortunately, there’s still time to build the connections and implement the technology you need to future-proof your operations. By researching sustainable options early on, you can position your company to stay ahead of evolving regulations and industry standards. This proactive approach prepares you for future market demands and ensures your business remains resilient and adaptable.
Attract and retain competitive talent
In today’s job market, employees are looking beyond traditional benefits and prioritizing mission-driven roles. According to a McKinsey survey, the pandemic served as an opportunity to reflect on personal values and purpose, especially among US-based workers.
Millennials– who will make up 75% of the global workforce by 2025– were three times more likely to say that they were re-evaluating work. Now, as logistics companies fight for talent in an aging workforce, appealing to this demographic is more important than ever.
Adjusting to these employee preferences doesn’t necessarily mean tearing down your entire business to put ESG metrics above all else. However, it does suggest that it might be time to invest in business operations that reduce your carbon footprint while also propelling your business forward.
By incorporating small environmental efforts into your operations, you can give your mission-oriented employees an opportunity to make a difference in their work. From there, you can emphasize your sustainability initiatives during recruitment and highlight the opportunity for employees to contribute to a greener future.
Not only will this attract skilled professionals who are committed to making a difference, but it can also help you keep them on board for longer. According to a study by the PR agency Cone Communications, 70% of US employees would be more loyal to a company that helps them contribute to social and environmental issues.
Getting started: Beginning your environmentally-friendly transformation
Incorporating sustainable practices into your operations is key to building a successful freight forwarding business. However, that doesn’t mean you need to jump in with a complete overhaul. Instead, you can start small by prioritizing what’s within your control.
When it comes to sustainability, your main responsibility is the same as it is across the rest of the shipping process: connecting your customers to the resources they need to execute a successful delivery.
If you’re just beginning your sustainable journey, the first step is providing your shippers with maximum visibility into the environmental impact of their options and decisions. By providing them with the tools they need to understand their carbon footprint breakdown, you can empower them to make the best decision for them and their customers.
To solve your customers’ sustainability needs, start by asking them what they’re looking for. Once you understand their goals and objectives, you can work with your technology and logistics partners to figure out how you can help.
Want to add more structure to your quarterly business reviews? Download our free QBR template for freight forwarders.
