Why data quality is critical for carbon emissions calculations and how Shippeo helps

Feb 28, 2024
Supply Chain
Innovation
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Carbon reporting is here to stay

Organizations are increasingly measuring their carbon emissions for a variety of reasons, from regulatory compliance and stakeholder pressure, to cost reduction, competitive advantage, and of course to help reach carbon neutrality goals. However, it remains a significant challenge for businesses to do this, as data can be difficult to extract, gather and have its reliability verified, for scope 3 emissions especially.

One of the key drivers are ‘Carbon taxes’, in their various forms, being introduced around the globe in efforts to combat climate change. For example, the EU’s Emissions Trading System now makes polluters pay for their greenhouse gas emissions, via surcharges collected by ocean carriers. These costs can vary between carriers (for example, Maersk charges three times what Hapag Lloyd does), and unless a shipper has a way to objectively measure and compare the actual emissions, it’s not possible to ensure they’re being charged fairly. With average prices up to around €70 per container, overestimations could inflate annual budgets significantly.

Many leaders in your organization will increasingly rely on carbon emissions data

It’s not just Chief Supply Chain Officers that have a vested interest in emissions data. Banks may make having robust carbon emissions reduction plans a condition for loans or credit lines. Since emission plans require emissions measurement, it’s becoming a relevant topic for CFOs. And for procurement, emissions data makes it possible to benchmark carriers against one another. Given the correlation between emissions and fuel cost, logistics leaders, who desire getting goods from A to B in the most efficient way possible, will be interested in having accurate emissions comparisons.

Not all emissions calculators are created equal

Although there are more and more services available for calculating emissions (including the more challenging scope 3 emissions), they have some important differences in methodology that can lead to varied results.

  • Carrier-generated: Many carriers now provide emissions calculations for the services provided, whether as part of their service or on request. However, methodologies used, time periods, and data granularity can vary, making it difficult to draw meaningful comparisons without a lot of manual adjustment.
  • Web-based emissions calculators: Web-based calculator tools make it possible to upload shipment data, such as route, distance, transport mode, weight, etc. However, these tend to be fairly rudimentary models leading to low fidelity calculations.

Overall, the biggest challenge to achieving accurate CO2 measurement is getting complete and accurate, high quality input data. This includes master shipment data, such as container type, truck size, engine and fuel type, and average fuel consumption. It also refers to visibility data, which could include shipment weight, exact routes or distances traveled, sequences of stops, and vessels used. If any of this data is inaccurate or incomplete, then the resulting calculations will be too.

Shippeo’s solution collects scope 3 data from a wide network of sources, including TMS, WMS, ERP systems, truck telematics, website scraping, shipping lines, vessel schedules and satellite AIS data.

Shippeo’s sophisticated Data Quality Engines then compare all of this data, determine which information is the most accurate and relevant, and transform it if necessary to smooth out errors. This means that AI/ML Engines are fed only the most accurate data, in turn producing reliable shipment journey data which can then be shared with Shippeo’s partner for freight emission calculations, Searoutes.

Searoutes relies on science-based methodology, schedule data, engine models and AIS-based machine learning routes to propose modeled emissions data for rail, barge, ocean, air and road freight. They offer vessel, service or carrier-specific emission data for the best possible accuracy for global freight. Searoutes is also certified GLEC-compliant by the Smart Freight Centre, and aligned with the ISO 14083 standard, and they were named best carbon calculator for freight by Drewry Consultants in 2023.

Better data makes the difference

The key benefit of a carbon emissions calculator leveraging more accurate and granular scope 3 emissions data is the ability to then convert insights into actions to reduce emissions.

Basic shipment tracking data with basic calculations applied to it will result in generic results that appear similar each time. Without seeing differences, you cannot test and take action. On the other hand, accurate, high quality data used in advanced calculations shows noticeable differences in results, giving the ability to pull what levers are available to reduce emissions, such as changing carrier or transportation type.

Once Shippeo shares the vessel and day of sailing, Searoutes surfaces relevant information based on historical data. In the example below, emissions are calculated for a 20-foot equivalent container traveling from Antwerp to Savannah. As you can see, there are very large differences between the various carriers and vessels - even the same vessel on different dates can cause a difference of more than 10% in emissions due to sailing speed.

The same happens for road shipments:

With this kind of information, specific requests can be made to carriers that can help reduce scope 3 emissions levels, such as instructing the use of certain vehicles, for example.

Accurate emissions measurement will allow you to assess and identify reduction strategies, simulate and assess the impact of each decision, and align these with your own objectives and operational imperatives. This information can also be useful for tender preparation and help mitigate carbon risk (such as ensuring fair costs are passed on related to EU Emissions Trading System). Examples of reduction strategies include supply chain mode switching, day-to-day optimization, and ‘insetting’, which is where organizations offset emissions within their own supply chain by having carriers use biofuels, for instance.

Other ways Shippeo and Searoutes improve data accuracy

Shippeo’s RTTV platform includes the Smart Tracking Analyzer, a decision support tool that performs in-depth root cause analysis for road tracking rate issues while suggesting remedies to fix those root causes. Tracking issues can be tackled further with ‘Quality Newsletters’, which are weekly emails to shippers and carriers detailing recent tracking rates, linking to the Smart Tracking Analyzer where they can find more information.

Users can also check how complete the carbon data received from carriers is, as incomplete data degrades the accuracy of calculations. Data completeness tools automatically check whether carriers are sharing all the required data, including shipments weights, cargo types, etc, to give context around what’s feeding calculations. Moreover, road shipment data insights are actionable, making it easy to follow up with specific carriers that aren’t supplying the data expected.

Road shipment data completeness dashboard (Available Spring 2024)

Ocean shipment data completeness dashboard (Available Spring 2024)

Searoutes + Shippeo = the ultimate carbon reporting solution

By combining Searoutes’ most advanced, sophisticated (and award-winning) calculations with Shippeo’s most complete and high quality data, users benefit from the best carbon reporting solution for transport on the market. Get in touch with one of Shippeo’s Carbon Visibility experts for more information, or download our Carbon Visibility guide today.

Why data quality is critical for carbon emissions calculations and how Shippeo helps
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Why data quality is critical for carbon emissions calculations and how Shippeo helps
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Why data quality is critical for carbon emissions calculations and how Shippeo helps
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