12/18/2024
How Transitioning from Air to Sea Freight Cuts Cost & Reduces Emissions
GEODIS covers every aspect of supply chain, enabling customers with tech-driven solutions to optimise operations and reduce emission cost effectively.
A Shipper’s Guide to Modal Shift in Transport
In recent years, growing worldwide operations and customer bases have increased reliance on air freight. This dependency is becoming a financial burden and creating a conflict with sustainability commitments in the face of climate change.
As companies and the transport industry recognise the dual impact, there is a growing interest in adapting innovative strategies, such as modal shift, for a sustainable and long-term impact.
Florence Gautrais, Director of Global Ocean Freight at GEODIS, offers her expert insights and best practices on how companies can achieve a modal shift from air to sea freight, effectively cut costs and reduce emissions.
Evidence of Success – The Real World Impact
GEODIS customers transitioning from air to sea freight have substantially reduced the carbon dioxide intensity of their logistics operations. In a short span of time, customers have experienced reductions ranging from a few percent to as much as 20% to 30%, achieving targets , which can be approved by the SBTi after their assessment. The consistent decrease reflects that rethinking transportation modes and efforts to reduce reliance on air freight led to significant environmental benefits.
To put this into perspective, let us take the example of transporting goods over long distances. If one ton of goods moves by air, it would result in approximately 6 tons of CO2e emissions, whereas the same one ton transported by sea emits only 0.1 tons of CO2e. (Calculated using EcoTransIT World).
This stark contrast is like the difference made by using public transport vs. driving a car in a non-commercial setting, resulting in lower energy requirements based on the transportation method selected. In short, using sea freight compared to air transport leads to less fuel being burned and less carbon dioxide being emitted, which can be replicated across various trade routes globally.
Reconsidering the Long-Standing Practices
Businesses often rely heavily on air freight due to long-standing practices driven by historical trends and established operational norms.
Some company divisions consistently rely on air freight and are comfortable using it as the default option during uncertainty. They aim to get the product to the customers faster, but in the process, they lose focus on cost or environmental impact.
The approach is understandable, as timely delivery is crucial for customer loyalty and market competitiveness. However, high reliance on air freight often stems from improper planning and a limited understanding of the long-term impacts.
Shifting Perspectives on Air Freight
Today, businesses are increasingly becoming aware of the critical need to balance cost and sustainability initiatives. Transitioning from air to sea freight is one solution that enables businesses to reduce their carbon footprint while optimising logistics expenses.
Environmental Concern
The transport industry contributes significantly to global carbon emissions. Growing regulatory requirements, rising consumer awareness and the escalating impact of climate change have led businesses to realise that adopting sustainable practices is a strategic necessity for the long-term health of both organisations and the planet.
Rising Cost
Air freight often begins as a quick solution for businesses when they experience an unexpected surge in orders or delays in production. While it provides speed and reliability, heavy reliance on it results in a costly and unsustainable approach.
Lack of Visibility
Companies often base their logistics decisions on incomplete statistics, inaccessible data, or outdated information with no adequate source.
"We often encounter subjective discussions, people might say, 'I think we need to fly these parts in,' without realising that there might already be a shipment on its way by sea. This lack of visibility makes air freight seem the only viable option."
Florence Gautrais, GEODIS Global Ocean Freight Director
Strategies to Achieve a Modal Shift in Transport
Achieving change requires a strategic and collaborative approach, leveraging emerging technologies, learning, and communication to optimise operations.
Here are some of the best practices a business can adopt for a modal shift in transport.
Learning and Communication
The first step is fostering a culture of learning and open communication across the organisation. Educating the stakeholders on the financial and environmental impact associated with the high usage of air freight and shifting to cost-effective sustainable low carbon alternatives.
To facilitate cultural change, GEODIS encourages shippers to leverage networking opportunities to share insights and discuss everything from incoterms to modes of transportation with colleagues, partners and service providers.
Leveraging Technology
Earlier decisions were largely guided by intuition and limited information. With emerging technologies, companies gain a clear visibility and integrated view of their supply chain.
The visibility has empowered informed decision-making, enabling businesses to assess whether moving shipments via air freight is essential or not, transforming how they operate.
GEODIS’ IRIS 3.0 Freight Management Portal provides end-to-end control over global shipping activities.
Accountability Measures
Implementing a multi-level approval process ensures that air freight is used judiciously. The higher the cost, the higher the approval request should be in the chain. This approach will foster accountability among transport planners and the logistics team, encouraging more thoughtful decisions when opting for air freight.
Collaboration and Planning
In parallel, shippers can start making sea freight attractive by optimising contracts and working closely with suppliers. Shippers can streamline operations and minimise disruptions by aligning supplier timelines with shipping schedules.
In addition, by improving forecasting methods, businesses can anticipate demand, plan production schedules, and enhance transport planning to reduce the need for last-minute shipments requiring costly air freight.
Shippers, in partnership with the forwarder, are refining the processes, identifying new opportunities, and, when available, identifying alternative modes of transportation, such as rail from the Far East to Europe, to reduce carbon emissions in their supply chain.
They are considering emerging technologies to enhance visibility and improve planning in their supply chain. But for now, the priority is sticking to the newly established procedure and building on the progress.
Building a Culture of Sustainability and Cost-Efficiency
Through strategic changes, enhanced visibility, sign-off procedures, and a focus on continuous improvement, companies can successfully reduce their reliance on air freight, cut costs and reduce carbon emissions.
As companies continue to innovate and adapt, their experience will offer a valuable lesson for other organisations striving to balance financial performance with environmental responsibility.
Florence summed it up well:
"What our customers have done here is not just about meeting targets; it's about changing how they think and operate. It's about making good decisions for the company and the world. And that's something we are all proud of."
"Our customers have come a long way, but there's still more they can do. This journey is far from over, and we're excited to see where it takes them next."
Florence Gautrais, GEODIS Global Ocean Freight Director
How GEODIS Can Help Achieve a Modal Shift
- IRIS 3.0 Freight Management Platform: The platform creates the visibility required to manage complex logistics operations, offering insights into every milestone of your logistics chain with capabilities to quote, book, track, and report.
- Strategic Expertise & Valuable Insights: Our domain experts identify opportunities for modal shifts, pinpointing where and how transitioning to sea freight can deliver the maximum impact, enabling strategic decision-making with high awareness.
- Reliable Sea Freight Operations: GEODIS ensures timely information and consistent performance to support efficient and sustainable logistics solutions year-round.
Integrated Logistics Services: GEODIS offers a comprehensive solution by integrating technology-enabled sea freight, contract logistics, road freight as well as customs clearance. We offer solutions tailor-made to meet your specific requirements, enabling you to reduce reliance on costly and high-carbon air freight.
Connect with a GEODIS expert to learn how to drive a modal shift, optimise your supply chain, and achieve sustainability.
Alexander Höglund
Head of Sustainability, GEODIS Freight Forwarding
