From fulfilment houses to packaging and transportation, goods delivery around the world is both a logistical nightmare and a huge ethical challenge. The global supply chain has monumental repercussions on the environment, causing long-term damage to ecosystems and generating record-breaking greenhouse gas emissions. But some of the world’s largest shipping companies are studying methods to reduce the footprint of their operations. We take a look at the world’s major shipping companies to find how sustainable they really are.
3 Examples of Shipping Companies: Sustainable or Greenwashing?
Originally founded in 1994 by Jeff Bezos as an online marketplace for books, Amazon is now one of the world’s most valuable brands and e-commerce leaders and it is on track to become the largest delivery service in America, poised to surpass shipping giants UPS and FedEx. Within a few years, Amazon managed to quietly build a massive shipping operation that has hundreds of thousands of employees working on stowing, sorting, packing, and delivering goods from warehouses across the US, although it is already working on expanding to other markets around the world. The company deals with a remarkable number of orders: nearing 66,000 per hour and up to 1.6 million packages a day. To ensure smooth and efficient operations, Amazon employs more than 1.6 million people worldwide and nearly one million in the US alone, meaning that 1 out of every 153 American workers is an employee of the multinational.
Figure 1: Amazon’s Enterprise-Wide Carbon Footprint, 2018-2020
Considering its influence and the leading position it holds in the world’s e-commerce sector, Amazon is constantly under the scrutiny of environmentalists and climate experts, who often question the sustainability of its operations. According to its dedicated website, Bezos’ company is aiming to deliver at least half of its shipments with net-zero carbon by 2030 and is working to make all of its operations – from the fulfilment centre to its packaging materials and the mode of transportation – net-zero carbon. The company claims that more than 90% of its fulfilment facilities are powered by solar energy and rely on innovative and energy-smart robotics to move shipments around. As for packaging – which in 2020 accounted for the greatest share of greenhouse gas emissions by the e-commerce industry, nearly 45% of total estimations – Amazon is looking towards carbon-neutral materials. The company claims to have eliminated more than 1 million tons of packaging material and drastically reduced packaging-related emissions since 2015 as well as decreasing the weight of the boxes in which the goods are packed by over 36%.
Lastly, Amazon’s net-zero strategy addresses the last critical piece of the sustainability puzzle: transportation. The company’s plans to make shipment of goods emission-free include deploying 100,000 electric delivery vehicles by 2030, maximising efficiency on the road and reducing shipping distances by opening more delivery stations across the world. In order to fulfil its international shipping obligations, the business is also expanding its aircraft fleet for its cargo airline Amazon Air, which currently carries 96 planes. In July 2020, the airline signed a major deal, unveiling a partnership with Shell Aviation and World Energy for over six million gallons of sustainable aviation fuel (SAF), becoming one of the largest global businesses to commit to using SAF to cut down on emissions. Similarly, plans to use exclusively ships running on sustainable, zero-carbon fuel by 2040 were also recently announced.
While Amazon’s pledges are admirable, the company still has a long way to go. In 2020 alone, it was responsible for the equivalent of 60 million metric tons of carbon dioxide being released into the atmosphere, a 19% increase from the previous year. Furthermore, a recent study published by the New Climate Institute that analysed the green pledges of 25 of the world’s biggest corporations rated Amazon’s climate change strategies as ‘low’, as it found that the company routinely exaggerates or misreports its progress. While it is difficult to say if Bezos’ trillion-dollar company will keep its promises, these statistics are certainly not encouraging.
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2. United Parcel Service (UPS)
The American United Parcel Service (UPS) is an indisputable leader in the shipping industry and Amazon’s largest competitor, currently valued at USD$172 billion. Founded in the US in 1907, the company began expanding to other countries in the late 1970s, first to South America and Canada and reaching Europe, the Middle East, and Africa by the late 1980s. Today, it has operations across more than 220 countries and territories, delivering approximately 29.3 million packages each day.
Like most of its competitors, UPS has joined the net-zero bandwagon, pledging to reach carbon neutrality across its operations by 2050. Similarly to Amazon, however, its annual emissions from transportation and packaging have steadily gone up in recent years. As part of its net-zero plan, UPS aims to cut 50% of packaging-related emissions by 2035. Yet, while the company’s recycling rate of solid waste has nearly doubled between 2017 and 2020, from 232,309 to 412,758 metric tons, its total solid waste disposal rate has almost quadrupled in the same period, contributing to a significant increase in the company’s waste-related emissions.
As for transportation, the company has invested more than USD$1 billion in alternative fuel and advanced tech and already operates more than 13,000 alt-fuel vehicles. In 2020, CEO Carol Tomé announced the purchase of 10,000 new electric vehicles and 3,000 low-emission delivery vans to ship its goods across the world with the goal of powering 40% of ground operations with alternative fuels by 2025. On the aviation fuel front, UPS claims that 30% of its aircrafts will be SAF-powered by 2035. They also recently announced plans to purchase highly efficient electric aircraft and invest in recharging stations to offer a second life for spent aircraft batteries. Considering how the company’ transport-related emissions have gone up consistently in recent years, the fact that UPS is now accelerating its green shift can be regarded as a positive progress. But it remains to be seen if its efforts will be enough to significantly lower them in the coming years.
Before Amazon began expanding its shipping operations, UPS and FedEx were the shipping giants of the US, holding a strong duopoly across the country. Despite increasing competition, FedEx Corporation – an American multinational focused on transportation and e-commerce founded in 1971 by Frederick W. Smith – is still one of the world’s largest express shipping companies. It currently employs more than 600,000 workers worldwide and ships on average 18 million packages every day, reaching USD$69.2 billion in revenue in 2020.
In March 2021, the company announced its goal to achieve carbon-neutral operations globally by 2040 with an initial USD$2 billion investment in vehicle electrification, sustainable energy, and carbon sequestration. As a leading company in the transportation sector – with a fleet of 680 aircraft, more than 200,000 motorised vehicles, and extensive worldwide ocean freight services – FedEx’s priority is addressing transportation-related emissions. The company is planning to build a 100% zero-emission vehicle fleet in phases, working towards converting 50% of all its global pickup and delivery vehicle purchases to electric by 2025 and 100% by 2030. The company also recently started an autonomous delivery vehicle in China in an effort to “drive more sustainable and intelligent logistics” in the country. Indeed, self-driving cars are a much more environmentally-friendly alternative to fossil fuel-powered ones and have the potential to reduce vehicles’ energy usage by up to 25%. Furthermore, in its net-zero plan’s outline, FedEx committed to investing in alternative fuels to reduce emissions and claimed it has already avoided over 13.5 million metric tons of CO2 emissions since 2012 through its Fuel Sense and Aircraft Modernization programmes.
FedEx is also making efforts to find more sustainable shipping packaging options. The company claims to be using 100% recyclable cardboard packaging which is composed of 45% recycled content. Furthermore, it says that nearly 70% of the solid waste generated in the company’s operations is sent to recyclers. FedEx also is investing in renewable energy to generate clean electricity to power its more than 5,000 facilities worldwide. According to its website, 26 on-site solar facilities currently operating across its buildings allowed the company to save more than 238 million kilowatt-hours of electricity in 2020 and avoid nearly 200,000 metric tons of CO2 emissions, the equivalent of more than 35,000 household electricity use for one year.
Lastly, the shipping giant is pledging USD$100 million to help establish the Yale Center for Natural Carbon Capture. There are currently 15 direct carbon air capture plants worldwide that combine to capture over 9,000 tons of carbon each year. Considering that the world emits about 43 billion tons of CO2 a year, carbon capture is still far from being an efficient solution to reaching net-zero emissions. Despite some experts seeing carbon capture and storage as one of the most effective ways we have in the short term, the technology is still incredibly costly and more research is needed to find more affordable and efficient ways to remove and store Earth’s excess carbon.
While the global supply chain is undeniably one of the greatest assets in modern times, it also poses one of the greatest threats to our environment. Shipping companies play a key role in the industry – contributing to more than 80% of global trade with 1-3% of the world Gross Domestic Product (GDP) – but they are also responsible for exceptional levels of emissions being released into the atmosphere every year. From the way they run their facilities to the packaging materials and transportation means they use to deliver hundreds of millions of products every day, shipping companies are looking at ways to drastically reduce their environmental footprint as they commit to reaching net-zero emissions in the coming decades.
Amazon, FedEx, and UPS have all made attempts to address the major problems related to the industry, from packaging and solid waste to transportation, and announced plans to reach carbon neutrality and presented solid strategies to cut their emissions. While Amazon seems to be the most transparent in terms of its current carbon footprint, with external research and studies reviewing the company’s impact and pledges, both FedEx and UPS are less so regarding the emissions they generate. In fact, most of their claims with regards to the impact of their operations have not been verified by independent sources, making it difficult to establish if their strategy is simply a marketing tool to greenwash. While publicly standing up for the sustainability cause is a crucial first step in the right direction, it is equally important that these companies are held accountable for their actions and that they can demonstrate the capacity to deliver their promises in the years to come.
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