How does sustainability translate into decarbonization of the supply chain? (Mike Ferguson)

Mike Ferguson (2)

Supply-Chain Decarbonization Sustainability has become a buzzword for governments and a focus for investors. The concept of sustainability is based on meeting present needs without compromising the ability of future generations to meet their needs.

One of the three pillars of sustainability is environmental. This environmental pillar has translated into a shift towards net-zero carbon in transportation. This shift comes in conjunction with a 2050 net-zero emissions target in the Paris Agreement, and the International Maritime Organization (IMO) setting a 2050 target to reduce shipping-related greenhouse gas (GHG) emissions by at least 50% compared to a 2008 baseline.

Supply chain emissions are not static and, depending on the product, they may be distributed across multiple suppliers around the globe. Covid-19-related shutdowns (semiconductors) have complicated the supply chain and weather events have had a much more significant impact (plastics) during the pandemic. For many companies, just-in-time inventory has been replaced by just-in-case inventory and we have worked with shippers to implement inventory risk management strategies utilizing loaded railcar storage. Dealing with the additional supply-demand imbalances in the current environment makes it even more complicated to optimize logistics and materials from a carbon emissions perspective.

Commtrex has worked with a number of shippers who traditionally utilized highway freight transportation to explore moving their product(s) by rail to manage the lack of trucking capacity combined with the improved carbon emissions efficiency of rail. One of the few flexible options for supply chain decarbonization is the purchase of carbon offsets. We are experienced in environmental derivatives and are happy to work with members to manage the procurement of carbon offsets to improve supply chain decarbonization.