Factoring CO2 Emissions in Transportation

Editor’s Note: The following is an excerpt of “Factoring CO2 Emissions in Transportation,” an e-book by Adrian Gonzalez published by Manhattan Associates. The report highlights results from a survey conducted with members of Indago’s supply chain research community and Manhattan Associates’s TMS Product council that explored supply chain professionals’ challenges in tracking CO2 emissions in logistics operations. 

Transportation is one of the largest sources of greenhouse gas emissions for most companies. Per ton-mile, trucking produces more CO2 emissions, on average, than other modes of freight transportation (except for air cargo). Do you currently measure CO2 emissions per shipment? What is the primary driving force to measure the CO2 emissions of shipments? Does your transportation management system take CO2 emissions into consideration in mode, carrier, and/or equipment selection?

We asked members of our Indago supply chain research community — who are all supply chain and logistics executives from manufacturing, retail, and distribution companies — as well as members of Manhattan Associates’s TMS Product council, those questions in a July 2023 survey.

Only 12% of the respondents currently measure CO2 emissions per shipment, but another 24% plan to start within the next 12 months. For those companies currently measuring CO2 emissions per shipment, they are all doing it “To support our company’s overall sustainability goals.”

More than half the respondents (59%) said that their transportation management system (TMS) does not take CO2 emissions into account for mode/carrier/equipment selection; surprisingly, another 16% said that they don’t use a TMS. 

However, most of the respondents (60%) believe that it will be either “Extremely Important” (22%) or “Very Important” (38%) for TMS solutions to have sustainability related capabilities in the next few years; only 6% said it will be “Not important at all.”

So, what do these results tell us?

First, the results suggest that we are still in the very early adopter stage when it comes to considering CO2 emissions in mode/carrier/equipment selection. This is particularly true in the United States, where most of the survey respondents reside. Comments posted by the survey respondents point to several reasons why this is the case:

“I am not willing to pay a higher rate to select a carrier with lower CO2 emissions. The only thing that will change that is a mandate from my company’s C-suite or the government.” 

“We are currently not prepared to pay higher rates. ESG regulations will likely force us to do it at some point.”

“I think rates will ultimately be the deciding factor in selecting transportation mode and carrier, and if reduced emissions carry a higher price tag, then I think those options will be considered secondary for overall spend. If the government mandates measuring CO2 emissions for shipments, then that would change things.”

Simply put, in the case of trucking, if the choice is between a lower CO2 emissions carrier and a lower rate carrier (everything else being equal), almost all companies would choose the lower rate carrier. Cost remains the dominant decision factor. “The problem is always the cost,” said one executive. “I believe that each company will be more committed to CO2 emissions when external factors force them to change.”

That said, although many enterprises are currently not factoring CO2 emissions into their transportation operations, the data and feedback from the survey indicate a growing expectation that measuring CO2 emissions of shipments will become necessary soon. This shift is driven by the sustainability goals of companies, as well as increasing government regulations and customer requirements.

For additional insights and analysis from the research, please download the e-book. Also, watch the Indago ResearchCast below featuring Adrian Gonzalez and Manhattan Transportation expert Bryant Smith discussing the challenges and progress in tracking CO2 emissions in logistics operations and how modern transportation management systems are helping enterprises take a step towards a greener future.