17 Years Later: Has Shipping Done Enough on Carbon Emissions?
Welcome to the 66th edition of The LogTech Letter, a weekly look at the impact technology is having on the world of global and domestic logistics. Last week, I unveiled my newest side project, a fictitious logistics-focused venture fund that will likely crash and burn. This week, I’m keying on a subject that’s looming over us like the Sword of Damocles: carbon emissions and what technology can do to help avert them in the world of freight.
As a reminder, this is the place to turn on Fridays for quick reflection on a dynamic, software category, or specific company that’s on my mind. You’ll also find a collection of links to stories, videos and podcasts from me, my colleagues at the Journal of Commerce, and other analysis I find interesting.
For those that don’t know me, I’m Eric Johnson, senior technology editor at the Journal of Commerce and JOC.com. I can be reached at firstname.lastname@example.org or on Twitter at @LogTechEric.
In 2004, I was a green-behind-the-ears reporter at the Long Beach Press-Telegram covering the ports of Long Beach and Los Angeles. I was 27, and my naivety was twofold: I was still learning what it meant to be a proper journalist, and I also knew so little (so very little) about logistics and transportation. I was thrown in at the deep-end, trying to understand how ports worked, why “shippers” were the cargo owners and not the container lines, and what a drayage driver was. I also had to figure out the arcane and obscure rules of how the longshore union worked as it was due to expand its ranks.
But looming in the background was a bigger story: trying to measure the ports’ environmental impact on Southern California. There were so many facets to the story, it seemed too large to actually tackle. Ship emissions (both as they steamed in and as they idled while unloading/loading), terminal emissions, truck emissions, traffic jams going into port terminals and on the vital Long Beach (710) Freeway that served as the conduit for goods movement to the rest of the region and country.
The various regulatory bodies (CARB, AQMD, SCAQMD, EPA), and the environment groups and neighborhood activists fighting port expansion to keep emissions in check. Let’s cast our minds back to this period: 2004 was a mere four years after Al Gore was narrowly defeated in the 2000 presidential election. Gore would go on to a barnstorming tour to warn that climate change was an existential threat for humankind. But we as a nation (and world, to an extent), got sidetracked by 9/11, and terrorist attack prevention become priority No. 1-1,000. That, of course, drew us into multiple foreign wars, but it also consumed vast amounts of public spending into homeland security. We literally let go of more than a decade of critical time to address our warming earth and the impact we have on that warming.
My reporting eventually turned into an eight-days front-page series (yes, eight straight days) that focused on causes, effects, regulatory spaghetti bowls, and potential solutions for international cargo-induced emissions. Remember again that these were the Halcyon days on the trans-Pacific trade, with double digit year-over-year growth in container trade, China’s accession to the WTO in 2001 the catalyst. It was seen by some in 2004 as absolutely vital to get a stranglehold on freight-related emissions before the Asia-North America trade pie got too big.
Now let’s fast forward to today. It’s 2021 and what tangible progress has been made since 2004? I’d argue very little. The Port of Long Beach’s container volume grew 40 percent in that period, to 8.1 million TEU in 2020. Los Angeles’ growth is similar. The pie keeps getting bigger. Ironically, my colleague Peter Tirschwell happened to write about the same subject just this morning.
Where do we go from here? From a purely international container logistics perspective, progress largely falls on the shoulders of vessel owners and operators. The troubling thing is that different carriers have chosen different alternative fuel options so far: there is no clear choice among LNG, ammonia, hydrogen, etc. That in and of itself feels like a looming problem, as consensus on the cleanest, most efficient fuel would help make the use of that fuel more affordable. If different lines choose different fuels, they need different infrastructure (production capacity and fueling networks) from one another. The more diffused that infrastructure is among different fuel types, the more expensive it is likely to be.
Fuel costs typically represent the most important variable of sailing costs, which (2021 aside) means the cost of container shipping to cargo owners is largely a function of what carriers pay for fuel. If/when the current demand environment normalizes, fuel costs could again become the dominant variable in freight rates.
Choices that shippers and logistics companies make as capacity buyers could induce some consolidation in thought around which alternative fuel will eventually win out. And here’s where technology comes into play. Procurement tools that allow capacity buyers to measure the carbon output of their transportation providers on a granular level - literally sailing by sailing, vessel by vessel, terminal by terminal - could eventually move the needle. We’re still so very far from where we need to be. And we’re still so far behind where I thought we might be in 2004. I wasn’t sharp enough at 27 to understand what impact, if any, that eight-part series might have, but I suppose I thought it might have had more impact than it did.
Accounting for which parts of global supply chains contribute most to carbon emissions is now a fundamental issue, not just for neighborhood activists and environmental groups, but for corporate entities. Technology has to play a role in helping shippers and logistics companies move the industry in the direction it has to go.
Relatedly, this is an issue we’ll be exploring in great depth at both TPM and TPMTech, which is now only three months away! Register here to attend.
Here’s a roundup of recent pieces on JOC.com from my colleagues and myself (note: there is a paywall):
Wrote Thursday about an interesting integration partnership between ocean visibility provider OpenTrack and logistics management platform Turvo. As OpenTrack CEO Kevin Valsi phrased it, “We have valuable content Turvo’s customers need, and they have the pipes to distribute it.”
My colleague Michael Angell wrote about the US Federal Maritime Commission’s interest in facilitating data sharing among US ports. This is no new idea, either here and certainly not in other regions, where data sharing between ports in a country or region are considered best practice. The challenge is in getting buy-in, not interest.
And here are some recent discussions, reports, and analysis I found interesting:
Freightos has started a multi-episode podcast series on the global shipping and supply chain crisis. Honored to play a part and encourage you to listen to the whole thing.
Another Freightos tidbit (they’re prolific): a blog on Maersk’s vertical ambitions and how they intersect with some other commerce tech giants.
This study on inventory management from E2open has great stats.
Convoy came out with a new concept Thursday, one which allows brokers to use its technology to get access to capacity connected to Convoy. I wrote a mini-thread about it…
and Convoy’s head of partnerships responded back with a follow-up…
Remember to subscribe to LogTech Live, my monthly show on the Let’s Talk Supply Chain Network. You can also access an archive of previous episodes at that link. The guest for my next show, on Dec. 3, features the CEO of one of the most talked about logistics technology firms out there. More details next week.
Disclaimer: This newsletter is in no way affiliated with The Journal of Commerce or IHS Markit, and any opinions are mine only.