Despite the fact that air transportation only accounts for around 2.5 percent of global carbon dioxide emissions today, it is considered to be one of the more difficult sectors to decarbonize, meaning its impact will be increasingly felt as time goes by. On top of that, since emissions from the sector are growing at a faster clip than previously estimated, by 2050 aviation could consume up to one quarter of the world’s carbon budget; that is, the maximum amount of CO2 that can be emitted to keep global temperature rise within 1.5 degrees Celsius compared with pre-industrial levels.
Measures to address this problematic trend are therefore likely to gain increasing attention and importance as we move towards mid-century. Consequently, DHL Global Forwarding’s partnership with United Airlines to purchase sustainable aviation fuel (SAF) signifies a step in the right direction to address the impact that the air transportation sector will increasingly have on the environment if left unchecked. The CEO of DHL Global Forwarding U.S., David Goldberg, says in the press release that through this partnership, “We are very proud to take another step on our sustainability roadmap towards zero emissions.”
Freight forwarding as an industry is largely invisible to the average consumer yet is a vital one in getting goods from manufacturers around the world to their global marketplaces. It is a part of the broader logistics industry but distinguished by the fact that forwarders are typically non-asset-based operations: They don’t operate their own ships or aircraft but instead work with ocean and airline carriers to move products on behalf of their shipper customers. And it’s a huge multi-billion dollar industry, one projected to generate revenues of around $207 billion by 2026.
So, how partnerships operate in the forwarding business can bring about significant changes at scale. DHL Global Forwarding’s partnership with United Airlines, as a part of the Eco-Skies Alliance program, will purchase 3.4 million gallons of sustainable aviation fuel this year to reduce emissions. In doing so, this program will provide a mechanism for shippers to claim carbon offset certificates through DHL Global Forwarding’s “book-and-claim” mechanism.
Clearly, on its own, this program will not solve the problem global aviation is projected to cause. Nevertheless, it does offer a business model that is scalable and increasingly meets the demands of DHL Global Forwarding’s customers who in turn, are trying to make their supply chains more sustainable. In any case, it’s an innovation that can help to move the needle in the right direction.
Because there is a significant cost premium for SAF, book-and-claim is an opt-in program. Shippers who participate will pay a fee per kilogram of freight moved under the mechanism, which will contribute to the use of SAF regardless of whether their freight flies on planes using it.
At the end of the year, DHL will provide participating customers with a certificate showing their resultant carbon offset, which the company says will be fully audited. In turn, shippers can use the certificates in their own corporate responsibility or sustainability reporting. Though there is still work to be done to formulate SAF certification into a formally recognized standard, the World Economic Forum sees this concept as an industry frontrunner, according to DHL’s press release.
DHL Global Forwarding surveys its customers annually and the findings are instructive for the potential demand for this program. “Over 80 percent of customers are interested in sustainable solutions,” Bianca O’Brien, DHL Global Forwarding’s strategic programs and GoGreen manager for the Americas, told us, adding, “there is increasing demand from customers asking what we are doing and how we can help them.”
Consequently, the company expects robust demand for this program. Currently, book-and-claim is a pilot with select shippers but is to be made available to all DHL Global Forwarding customers later this year.
A point of interest is that DHL Global Forwarding describes the book-and-claim mechanism as a carbon “insetting” mechanism, as distinct from an offsetting one. Insetting describes a process where the degree of carbon avoidance is derived from within the industry sector directly.
“In 2018, less than one percent [of voluntary investment in carbon offsets] went towards decarbonizing transportation directly,” O'Brien told us, “[and] most of it goes to forestry.” The book-and-claim mechanism redirects this by allowing DHL Global Forwarding, via the use of SAF, to reduce the carbon footprint caused in the transportation process itself. Importantly, it’s worth noting that as well as avoiding fossil fuels, the sustainable aviation fuel itself will be derived from waste-based biofuels that do not compete with land use for food production.
According to the press release, the President of United Airlines Cargo, Jan Krems, sees SAF as a long-term, permanent solution for aviation in order to reduce carbon emissions. In addition, Deutsche Post DHL Group – the parent of DHL Global Forwarding - plans to increase the blend of SAF in its operations by more than 30 percent by 2030 and aims to give preference to working with carriers with strong environmental performance.
DHL Global Forwarding sees itself as an industry leader in making supply chains more sustainable. The company’s GoGreen division was launched in 2008, with one of its goals to be 30 percent more carbon efficient by 2020 - a milestone the company achieved a few years early, in 2016. O’Brien told us the organization also aims to have 80 percent of all employees GoGreen certified across the group so that a broad understanding of sustainability objectives is understood and applied within the company.
The parent company, Deutsche Post DHL Group, aims to reduce all logistics-related emissions to zero by 2050, claiming the group’s CO2 efficiency has already improved by 35 percent since 2007. This partnership with United Airlines will contribute towards these targets.
Image credit: Nick Morales/Unsplash
Phil Covington holds an MBA in Sustainable Management from Presidio Graduate School. In the past, he spent 16 years in the freight transportation and logistics industry. Today, Phil's writing focuses on transportation, forestry, technology and matters of sustainability in business.