Industry Comes Together to Harmonize Emissions Reporting
By Malcolm Ramsay
From Issue 4, 2024 of Breakbulk Magazine.
(6-minute read)
In an era where environmental sustainability dominates global agendas, the breakbulk shipping industry faces unique challenges, as a lack of standards and difficulty in comparing like-for-like between projects often hamper progress.
To tackle these issues, a group of industry experts recently collaborated to publish the first-ever methodology that harmonizes emissions accounting and reporting for the breakbulk sector.
The new framework, published by global non-profit organization Smart Freight Centre (SFC), has not only helped to identify key issues in emissions monitoring but also put in place some much-needed mechanisms for the industry to develop the next generation of reporting tools.
“Creating the report relied on interaction from across the breakbulk community,” Marcus Lomax, technical manager at SFC, tells Breakbulk, adding that “the report relied on interaction with actors along the physical supply chain, namely cargo owners, freight forwarders and carriers.”
The resulting ‘Breakbulk GHG Emissions Accounting and Reporting Guidance’ report was published in March and was designed to provide a framework that reflects the breakbulk industry’s specificities while also aligning with ISO 14083 and the GLEC Framework.
Developing a New Methodology
To ensure a comprehensive approach, SFC worked with experts from Bechtel, AAL Shipping, BBC Chartering, dship Carriers, DHL Global Forwarding, Kiewit, Fracht Group, Spliethoff and others. Lomax explains: “A lot of time was spent discussing the methodological principles for the accounting of transport-activity. It was important to come to an agreement on what unit should be used for the ‘quantity of freight’."
In the container shipping segment, emissions reporting is typically directly related to cargo tonnes, where tonnage is tied to the quantity of freight or TEUs (Twenty Foot Equivalent Units) carried. However, this approach quickly breaks down when applied to the heavy-lift sector, since the specificity of cargoes and projects means that valuable information is lost in this approximation.
Stephen Spoljaric from Bechtel highlights the key difference between measuring emissions in the container sector versus breakbulk: “Containers are, by definition, unitized. Understanding the amount of fuel used between point A and B is the numerator, and the number of loaded containers on that leg is the denominator, so the emission is equally distributed across all of the containers.
“But for breakbulk, we have the complexity of weight and volume… so unless you charter the entire ship, the ability to define the denominator is debatable.”
A Metric for Fair Allocation
This discrepancy led the collaborators to focus instead on revenue freight tonnes, a unit that takes whatever value is higher between a cubic meter or metric tonne calculation for the cargo in question.
“One challenge with standardizing reporting and monitoring across the breakbulk industry is the huge variation in ships and cargoes carried,” Felix Schoeller from AAL Shipping (AAL) tells Breakbulk. “Often the broad vessel classes do not expose the true emissions profiles of individual ships or the cargoes that they are carrying, and it is easy to make false comparisons.”
Lomax of SFC echoes this view, noting the “heterogeneous nature of the cargo” being transported in the breakbulk sector. “Neither a pure mass-based, or volume-based approach would be appropriate if we want to allocate emissions fairly,“ he said. “Revenue freight tonnes allows for a more even distribution of emissions between dense but heavy cargo and light but bulky cargo.”
This approach isn’t without problems, however, as there is no standard conversion between revenue freight tonnes and metric tonnes. This meant it was important that the emissions allocated using revenue freight tonnes were also reallocated to the metric tonnes of the cargo, allowing shippers and freight forwarders the ability to harmonize their multimodal emission and activity reports which is often based on tonnes.
“For breakbulk and projects, the spread of attributability per transported tonne is even more complex due to factors such as inducement ports and/ or vessel configuration allowing for more or less loading capacity to share (or not) the emission,” said Mario Hess, global head of customer solutions for deugro visiotrack. “We are already seeing different emissions values attributed to deugro-controlled shipments, although they are comparable in tonnage, distance and vessel type.”
Complexities in Emissions Attribution
As breakbulk ocean traffic typically has less predefined routes and port calls than container fleets, it can be a challenge to capture the specific attributable emissions. The various different ship types used in the breakbulk sector then adds further complexity for distribution of emissions responsibility.
Spoljaric explains: “At the time of fixing a charter, there may be a proposed vessel type, but the actual nominated vessel that is suitable for the transport could be very different from an emissions perspective. Because the allocation of emissions factors is typically distributed across an entire fleet, decision making based on surety of emissions outcomes is an area without precedent in the industry.”
To compound this issue, there is also a risk if a carrier is unable to find completion cargo. In that case, the carrier may reserve their contractual right to apply a higher emissions responsibility to the shipper who made the initial booking, adding another layer of complexity.
At present, emissions accounting in the breakbulk sector is entirely reliant on the use of primary fuel consumption data and this means that shippers and freight forwarders are reliant on their carriers to report activity and emission data for their scope 3 reporting.
“Primary data is the gold standard when it comes to emission reporting and in particular detailed scope 3 reporting,” Lomax states. ”This should remain the way in which emission data is reported. However, it would be good to develop a standard list of non-carrier specific emission intensity values for general Scope 3 reporting for shippers and LSPs who do not have privileged access to primary data.”
The Path Forward: Innovation and Integration
While the new guidance acts as a template for comparison of emissions, all the stakeholders involved see decarbonization as a long journey that will require more fine-tuning and further harmonization of standards.
Hess of deugro notes: “The breakbulk sector would benefit from a universally-accepted emissions standard that is ratified by shippers, terminal operators and forwarders alike but different countries and regions currently have varying regulations and standards, leading to a fragmented approach that can be difficult for international operators to navigate.”
Despite these challenges, the industry is undoubtedly making progress, as Schoeller from AAL points out: “Looking back on the last 15 years, we can see that the industry has come a long way already. First-generation vessels from around the year 2000 were real gas guzzlers, but when you look at the new Super B-Class that we are currently launching, they are designed with efficiency and carbon footprint in mind from the outset and that makes monitoring and reporting so much easier.”
In many ways, decarbonization today is similar to how the industry approached safety many decades ago. Across the industry there is an expectation that breakbulk firms now approach safety as an absolute priority and that this is part of every evaluation process when making decisions.
“As the ability increases for companies to provide emissions information and promote targets to achieve in their path to decarbonization, minimum levels of expectations will start to be established,” Spoljaric from Bechtel states.
“Today, when we look at lost time incident recordable rates, we can compare between multiple companies. I believe that as other industries start to establish what “good” looks like, companies like Bechtel will collaborate and benchmark to help our clients determine their timelines and goals…and then implement plans to achieve this.”
This integration across industries and supply chains is already starting to be seen today, with Schoeller of AAL noting that blue chip OEMs are already “very focused” on decarbonization throughout their supply chain and that this pressure translates into demand for greater transparency and emissions reporting on every project.
Towards a Cleaner, Greener Future
Technology is expected to play a big part in improving transparency with a huge growth in the amount of data that the industry collects from operations forecast in the coming years. From fuel usage and efficiency versus idle time to weather impacts and routing information, the availability of data is booming, as new tools of analysis such as advanced Artificial Intelligence blossom.
“Most importantly, capturing this data will ensure emissions disclosures are fully auditable,” Spoljaric adds. “This allows companies like Bechtel to better support our customer’s initiatives and targets through valid, deliberate decisions in the supply chain.”
Mario Hess from deugro visiotrack adds that this data-rich approach extends not only to the vessels but to the cargo as well, through technology such as smart labels and real-time monitoring systems:
“The deployment of smart cargo labels, such as RFID and real-time condition recording tags, can drive more accurate and timely emission capturing. Utilizing big data analytics can help in processing large volumes of emissions data, identifying trends, and providing actionable insights for better decision-making.”
As the industry prepares for a cleaner, greener future, the development of a standardized methodology for emissions accounting and reporting represents an ongoing challenge, but one that the stakeholders are rising to.
As shippers, forwarders, and carriers continue to innovate and collaborate, the sector is well-set for the task and Lomax from SFC suggests that developing new pathways will play a crucial role: “The maritime sector in general is a hard transport sector to decarbonize. I think that the medium-term solution lies in the adoption of low-emission fuels. The emission profile of emission fuels can be democratized through a book and claim – mass balance or chain of custody approach.”
Decarbonization and the first ever methodology harmonizing emissions accounting and reporting in the breakbulk segment will be the topic of a main stage panel session at Breakbulk Americas 2024. “Ready or Not: A Decarbonization Case Study” will take place on Wednesday 16 October from 12:55-13:45.
Breakbulk Americas 2024 is on 15-17 October at the George R. Brown Convention Center in Houston, Texas.
TOP PHOTO: The AAL Limassol carries project cargo on its maiden voyage from China to Europe. Credit: AAL Shipping
