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A Shippers Guide to Estimating Carrier Emissions

A Shippers Guide to Estimating Carrier Emissions

By Clare Driscoll, MSSCM '21 | Dec. 2, 2021

An increased focus on sustainability has lead investors, consumers, and stakeholders to expect organizations to acknowledge, address, and report their environmental impact [1]. Research conducted by Redwood Logistics and Freightwaves found that 43% of shippers have a heightened focus on “creating plans for future strategy decisions” concerning sustainability [1]. For shippers, evaluating their carrier’s greenhouse gas (GHG) emissions can increase visibility of their supply chain’s environmental footprint, which can improve the development of their sustainability initiatives. If a shipper chooses to calculate their emissions, they can officially report them through SmartWay, an EPA program. In this article, we will present carbon emission calculation methods for shippers using full truckload (TL) and less-than-truckload (LTL) transportation.

It is important for shippers to understand the scope of their emissions. To calculate a carrier’s emissions, shippers need to know which scope their carrier’s emissions fall into. The following scope definitions are provided by the EPA [2].

  • Scope 1: Facilities and vehicles owned by the shipper (direct emissions) [2].
  • Scope 2: Purchased electricity, steam, heating, and cooling for shipper’s own use (indirect emissions) [2].
  • Scope 3: There are a total of 15 categories that are considered scope 3 emissions [2]. For shippers, their carrier’s emissions fall into Purchased Upstream Transportation and Distribution.

Until recently, organizations have focused on reporting their scope 1 and 2 emissions due to the difficulty of calculating scope 3 emissions [3]. The Greenhouse Gas Protocol — an organization that provides businesses and governments with emission standards, guidance, and more [3] — offers three ways to calculate scope 3 emissions for purchased transportation and distribution services: spend-based, fuel-based, and distance-based. Each option requires information gathered from shippers, carriers, and reputable secondary sources (which can be government databases or peer-reviewed databases, see more)[5].

General Approach

The Spend-Based Method is a general approach to calculating scope 3 emissions. It can be used for purchased goods and services including transportation. This method offers a broad understanding of a shipper’s emissions. Shippers can calculate these emissions by multiplying the total dollars spent on transportation by an emission factor. Emission factors can be found in the EEIO (Environmentally-Extended Input Output) database which generates emission factors for different industries and categories [5]. Although the spend-based method offers an easy approach to estimate a shipper’s scope 3 emissions, it produces less accurate results compared to other methods. This method excludes the volume of the products shipped, distance travelled, and the fuel efficiency of the vehicle transporting the goods, all of which can be applied to increase accuracy of emission calculations. Due to lack of accuracy, this method isn’t used to calculate emissions that are officially reported to SmartWay. 

Shippers using TL

For shippers using TL, the Fuel-Based Method is the most accurate method to calculate emissions. Fuel-based emissions are calculated by multiplying the quantity of fuel used by the emission factor dependent on the type of truck used. The fuel data can be derived from either the quantity of fuel used, fuel efficiency (mpg) and distance, or fuel spend, which can be pulled from aggregated fuel receipts, purchase orders, and/or carrier’s fuel efficiency data [5]. Like the spend-based method, the relevant emission factors can be pulled from the EEIO. This method is appropriate for full truckload as the shipper is responsible for all the fuel used in a move. Although this method produces fairly accurate results using fuel as the measurement of emissions, the use of fuel spend renders it sensitive to fluctuations in fuel prices.

Shippers using LTL

The Distance-Based Method is best for shippers that don’t need the full truck and instead share the truck with other shippers (ex. LTL). LTL shipments are not point-to-point. Instead, a shipment is picked up from a shipper, brought into a carrier’s network of terminals, and then exited from the network to arrive at its destination. Distance can be calculated as a weighted average of the paths typically used for an origin-destination pair. To calculate emissions with this method, a shipper can multiply the total volume of products shipped by distance travelled and an emission factor. Shippers can draw distance data from tracking a carrier’s network and/or online maps. Shippers can use on their own internal resources to determine total volume products shipped, and emission factors can be found on the EEIO [5]. The distance-based method lends itself to shippers using LTL because it uses the weight and distance travelled by the shipper, to capture their specific emissions in a move. Although this method addresses some of the needs of an LTL shipment, it can be improved by including fuel efficiency in the calculation and weight, instead of distance, as the allocation factor.

To address the weaknesses in the distance-based method, we offer the LTL Line-Haul Method that allocates emissions based on the proportion of a vehicle used by a shipper. This is best used for the line-haul portion of an LTL move — when the shipment is within the carrier’s network of terminals. To further improve accuracy, it uses distance and fuel efficiency factors. Specifically, shippers calculate emissions by multiplying an emission factor by the weight of shipper’s products divided by total weight on truck and by the shipper’s distance traveled divided by fuel efficiency. The proportion of shipper's weight on the truck can come from the shipper’s internal resources and the carrier’s average utilization of trucks in certain lanes. The distance travelled can be drawn from the carrier’s network and/or online maps. The fuel efficiency can be pulled from carrier’s fuel efficiency data, and the emission factor can be found on the EEIO.

To best capture the emissions of an LTL shipment, we recommend using both the Distance-Based Method and the LTL Line-Haul Method. Use the Distance-Based Method to calculate pick-up and delivery emissions and the LTL Line-Haul Method for the line-haul portion. Once, each method is calculated, add the emissions together to receive total emissions for an LTL shipment. Distance data can be drawn from tracking tools that carriers provide. These tools allow visibility of when and where the shipment is picked up, moved throughout the network, and delivered. This data can be used to separate distances for each method used for the total emission calculation. While the methods listed above include one or two factors of a shipper’s emission, this last approach accounts for all three parts of their emission — distance, fuel efficiency of the fleet, and the proportion of the vehicle used by the shipper — creating a more accurate emission calculation.

Example 

A pallet is shipped from Milwaukee and enters the LTL carrier’s network at the Chicago terminal. It moves through the Atlanta terminal, Tampa terminal, and exits the Miami terminal to be delivered to its destination, Kendall West, a suburb of Miami. Historical data shows the pathway between terminals described is taken 50% of the time, the other pathway used bypasses the Tampa terminal. It just moves through the Chicago, Atlanta, and Miami terminals. The pallet is 150 lbs (0.068 tonnes) and 5% of the vehicle’s capacity. The vehicles fuel efficiency is 6.2 mpg.

In this scenario, the Distance-Based Method would be used to calculate emissions from Milwaukee to the Chicago terminal and the Miami terminal to Kendall West. The distance between Milwaukee and Chicago is about 93 miles, and the distance between Miami to Kendall West is about 24 miles.

Distance-Based Method = (93 + 24 mi) x (0.068 tonnes) x Emission Factor

The LTL Line-Haul Method is used to calculate the distance the pallet travelled through the LTL’s network. The average distance of the two pathways will be used as distance travelled. The distance between of the first pathway is 1,455 mi, the distance of the second pathway, bypassing Tampa, is 1,382 mi. The average of the two is 1,418.5 mi.

LTL Line-Haul Method = (0.05 vehicle utilization) x (1,418.5 mi / 6.3 mpg) x Emission Factor

The sum of the LTL Line-Haul Method and the Distance-Based Method equals the total emissions for this move.

The pressures for organizations to disclose their environmental footprint will continue to grow, requiring shippers to account for their scope 3 emissions, specifically their carrier’s emissions. When considering which method to use, it is important for any shipper using LTL or TL to examine the accuracy of their emission calculations, and seek a method that will improve the accuracy of their calculations. The methods provided above offer a road map for shippers to determine which method best suits their needs and accurately captures their emissions.

Sources

[1] Redwood Logistics. (2021, October 5). White Paper: Consumers Demand a more sustainable supply chain. FreightWaves. Retrieved October 11, 2021, Link.

[2] Environmental Protection Agency. (n.d.). Scope 1 and 2 Inventory Guidance. EPA. Retrieved October 11, 2021, Link.

[3] About Us | Greenhouse Gas Protocol. (n.d.). Retrieved October 11, 2021, Link.

[4] Greenhouse Gas Protocol. (n.d.). Technical Guidance for Calculating Scope 3 Emissions. Link. 

[5] Greenhouse Gas Protocol. (n.d.). Technical Guidance for Calculating Scope 3 Emissions. Link.