Freight transportation and its resulting carbon emissions have come sharply into focus as companies progress towards environmental sustainability. A CPG company with worthy environmental goals brought in Chainalytics to help dramatically reduce the emissions of their distribution network.
The customer knew there was ample room for improvement, but the absence of a dedicated or private fleet and the many carriers in the network made reducing carbon emissions easier said than done. While they did have a good idea of where those carriers ranked in terms of carbon emissions, the company had no practical method for applying this information to the carrier selection process.
The transportation team realized that they couldn’t directly control their carriers’ operations, but they did have control over which carriers they used. With the help of Chainalytics’ transportation practice, the team incorporated carbon emissions into its decision support framework for truckload procurement. This allowed the company to simultaneously evaluate its future carrier mix based on cost, environmental impact, and other operational factors.
The approach: structuring the bid based on cost and emissions
The organization asked Chainalytics to help them manage their transportation sourcing events and challenged us to develop a method that incorporated their goal of reducing carbon emissions into their decision-making process when selecting truckload carrier partners.
The transportation team provided us with the final list of carriers invited to their truckload sourcing event and identified the incumbent carriers for each lane being sourced.
The project, and the company’s ongoing efforts, are preventing the emission of 20,170 metric tons of carbon dioxide – that’s 44.4 million pounds of greenhouse gases that would otherwise be contributing to climate change – every year. Rob Achtzehn, Director, Transportation Consulting Practice at Chainalytics.
Our transportation practice developed a way to calculate both baseline and bid emissions at the load level, by lane and carrier, using publicly available U. S. Environmental Protection Agency (EPA) SmartWay data.
We added calculations to the bid optimization tool showing the percent difference and metric tons difference between the carriers’ CO2 emissions on lanes where they bid versus the baseline CO2 emissions. We identified these calculations at the load level.
Finally, we added a constraint to the bid tool that allowed the team to perform a sensitivity analysis to see what happened to the carrier mix and cost as they reduced their CO2 emissions. It also allowed them to see how the CO2 emissions compared to their existing baseline and the cost impacts of those reduced carbon emissions.
On track towards nearly 20% fewer emissions
As a result of this approach, the customer reduced their CO2 emissions by 19% through their truckload procurement program. “This project is preventing the emission of 20,170 metric tons of carbon dioxide – that’s 44.4 million pounds of greenhouse gases that would otherwise be contributing to climate change – every year,” said Rob Achtzehn, a Director in the Transportation consulting practice at Chainalytics.
Through the analysis, they understood the cost impacts as they worked to reduce their transportation program emissions and ultimately reduce their overall program costs. They can now quantify the reduction in CO2 emissions, and the transportation team can contribute to the corporate sustainability goal.
Using publicly available Smartway data, any company can incorporate this approach into their sourcing events and analyze the cost impact of reducing carbon emissions. Reach out to us and see how Chainalytics can help you implement these techniques and shrink your company’s carbon footprint. Using one-of-a-kind tools and approaches like digital assets and managed analytics services, we consistently deliver actionable insights and measurable outcomes to our clients.
