Carbon Neutral Shipping: What It Is, Why It Matters, and How to Offer It?

Do you know that the total energy-related CO2 emissions increased by 0.8% in 2024, hitting an all-time high of 37.8 gigatonnes (Gt) of CO2?

And the logistics and transport sector makes up over a third of global CO2 emissions. 

Logistics and shipping companies are aware of it and striving to minimize their carbon footprint. 

Further, customers these days are increasingly preferring brands that invest in sustainability initiatives. 

It leaves logistics businesses with no choice but to decarbonize their operations so they stay relevant.

In the pursuit of different approaches to achieve it, carbon neutral shipping has emerged as a prominent one.

This blog covers everything about it, including definition, importance, techniques, and implementation challenges.

So, let’s start. 

What Is Carbon Neutral Shipping?

Carbon neutral shipping means transporting goods in a way that reduces your net carbon emissions as close to zero as possible.

As carbon dioxide is the leading driver of global climate change, it helps protect the environment. 

There are two primary ways to do it:

• Minimizing carbon emissions while shipping products 
• Using eco-friendly measures in other business areas to offset the carbon footprint.

Why Is Carbon Neutral Shipping Important?

Why do I need to adopt carbon-neutral delivery in the first place?

Is it really worth my time and effort?

These questions may be common when you consider switching to carbon-neutral delivery. 

Below are the reasons.

1. Customers want it

Customers today prefer brands committed to eco-friendly and sustainable practices. 

See the stats that prove it: 

• 60% of online consumers across Europe and North America are interested in carbon neutral delivery. 
• Over 50% of urban consumers and 45% of consumers from households with above-average US incomes are willing to pay one or two dollars more for sustainable logistics. 
• Products making ESG-related claims averaged 28% cumulative growth over the past five-year period, versus 20% for products that made no such claims.

So, focusing on environment-friendly measures helps strengthen your brand reputation. Plus, it engages more customers, which means more revenue. 

2. Wins investors’ confidence

Following environment-friendly practices can engage a potential investor looking to contribute to carbon neutrality. 

Investors can be individuals, non-profit organizations, or even governments at times. It gives you the desired capital and support to grow your business. 

3. Helps stay competitive 

Major companies like Amazon, DHL, and UPS have already switched to carbon-neutral deliveries. You don’t want to lag behind them, do you? 

Therefore, eco-friendly carbon reduction strategies can help you stay relevant and competitive.  

4. Protects the environment

Near-zero or zero carbon emissions mean reduced global warming and significant climate change. The result: your planet stays preserved for future generations!

5. Saves on operational costs in the long run

While people often think carbon-neutral approaches can be costlier, it’s not exactly true. 

• Using electric vehicles for deliveries can minimize gas/fuel bills. 
• Optimizing routes reduces transit distances and associated fuel costs. 
• Energy-efficient warehouse lighting can cut down on utility bills.
• Smart packaging reduces wastage and saves on costs. 

So, carbon-neutral approaches don’t cost you a fortune! It rather helps lower your overall operational costs. 

How Do I Achieve Carbon-Neutral Shipping?

Two approaches for carbon neutral shipping: direct and indirect. 

The first one focuses on minimizing the carbon footprint, while the second helps negate the effect of carbon release. 

1. Direct (carbon reduction) techniques

Taking actions to lower the carbon emissions from the source itself is the direct approach. 

Here are some ways.

1. Optimized routes: The shorter your routes, the lower your fuel consumption. The lower your fuel consumption, the lower your carbon emissions. 

That’s where you need route optimization software to achieve it. It creates optimal routes to minimize miles, fuel usage, and idle time. 

Software solutions like Upper Route Planner can help you with that. 

Here’s how it helps achieve a greener shipping process. 

• Zero routing errors mean optimal fuel consumption
  Manual address entry errors can lead to inefficient routes that lead to wasted fuel. Upper lets you upload Excel or CSV files with addresses to expedite route planning while ensuring accuracy. Zero routing errors mean no detours and hence, no fuel wastage, and minimal emissions. 
• No detours and long routes with optimized multi-stop routes
  Why drive extra miles when you can avoid them? Plan up to 500 stops in seconds using Upper’s sophisticated route optimization algorithms. Optimized routes cut total distance, saving fuel and reducing emissions.
• Reduce trips and vehicles to minimize the carbon footprint
  Half-loaded vehicles waste fuel and time. Our route planner provides capacity optimization to assign jobs based on vehicle capacity, driver shifts, and route length. It maximizes trip utilization and reduces the number of vehicles required, helping reduce the carbon footprint per delivery.
• Avoid fuel-intensive failed deliveries or redeliveries
  Account for customers’ preferred time slots to minimize redeliveries and unwanted fuel emissions. Rearrange stops instantly with Upper’s drag-and-drop interface to accommodate dynamic changes, prevent empty miles, and fuel-heavy reassignments.
• Prevent idling and delays with driver tracking
  Can you reduce what you don’t track? Use Upper’s real-time GPS tracking to monitor drivers’ live progress and respond to delays or idling before they waste fuel, so there are minimal emissions.  
• 100% digital delivery documentation to save trees
  Still printing delivery slips? Collect e-signatures and photos instead to make your proof of delivery 100% digital. Using less paper means saving more trees to absorb greenhouse gases and counterbalance greenhouse gas emissions.

To see how Upper works to help you achieve your sustainability goals, book a free demo or take a 7 days free trial.

2. Eco-friendly and consolidated packaging: Consumers are shopping online more than ever before. More orders mean more packaging materials. If this packaging material is non-biodegradable, like single-use plastic, it adds to the harmful waste. 

To avoid it, you can use eco-friendly biodegradable packaging materials, such as: 

• Seaweed packaging: Made from algae-based or seaweed materials, often used in food wrapping, sachets, and water-soluble films.
• Biodegradable packaging peanuts: It’s a better alternative to traditional non-biodegradable styrofoam packaging peanuts.
• Recycled paperboard: Made from recycled papers, it forms a good pick for sustainable packaging options.
• Mushroom packaging: Innovating in nature, it’s made by combining agricultural waste with mushroom roots (mycelium).
• Cellulose packaging: Made from natural sources like hemp, wood, and cotton, this packaging is moisture-resistant and suits food packaging.
• Corrugated paper: Used for shipping boxes and item wrapping, this paper is recyclable, biodegradable, and compostable.  

Some more biodegradable packaging materials are cardboard, paper, organic fabric, wool insulation packaging, and glassine paper.

Additional tips:  

• Provide your customers with an option to consolidate their order into a single package. 
• Use the smallest boxes possible to ship items.

3. Transform your fleet (deploy alternative vehicles): Consider investing in hybrid or electric vehicles to lower emissions. 

You can also look for fuel-efficient vehicles, such as: 

For instance, you can use: 

• Cargo bikes
• Electric bikes
• Scooters
• Drones
• eVans

These vehicles are silent and can carry significantly large packages. 

Another concept of using hydrogen instead of traditional fuel for heavy-duty transport vehicles is also emerging. While it’s still in a nascent stage, it can be a great innovation on the road to decarbonisation. 

4. Energy-efficient warehousing processes: How you power your warehouse or storage facility and execute operations matters. 

So, consider installing solar panels, LED lights, and electric-powered equipment like forklifts to cut down on energy usage. 

2. Indirect (carbon offset) approach

When reducing emissions isn’t fully possible, carbon offset shipping can help. It negates the impact of carbon released, supporting your sustainability goals. 

The simplest way is to buy carbon credits from governments, independent certification bodies, and marketplaces. 

These permits allow specific emissions, and the collected funds support projects that reduce or remove carbon. It, thus, neutralizes your overall carbon output.

Different projects include:

• Reforestation and afforestation: Reforestation means planting trees in areas where forests were present. Contrarily, afforestation means planting trees in new areas where forests weren’t there for a long time. 
• Renewable energy projects: Some companies install wind farms, solar panels, and geothermal power plants. Investing in these initiatives eliminates the need to install the entire setup. You can simply allocate a portion of your budget to them.
• Blue carbon: This carbon credit relates to offsetting carbon dioxide emissions across seas and oceans. It focuses on restoring and preserving coastal and marine ecosystems. It works on growing mangroves, seagrass meadows, and salt marshes that capture and store carbon to capture and store carbon. This, in turn, helps negate climate change. 
• Regenerative agriculture: It focuses on measures like no-till farming or cover cropping to extract carbon in agricultural fields and enhance soil health. 
• Waste-to-energy: This approach utilizes methods like incineration or anaerobic digestion to convert waste into energy and prevent landfill emissions. 
• Direct air capture (DAC): This method relies on chemical and physical processes to capture CO2 directly from the atmosphere. 

There’s an upgrade: direct air carbon capture and sequestration (DACCS). When a company extracts and stores CO2 for several purposes, like producing new materials or industrial usage, it’s DACCS.

Note: While this practice is useful, you must investigate and verify offset sellers so your money goes into the right hands.

• Check if a third-party agency has certified your carbon-offset program.
• Your project has well-defined parameters, so you know what you’re investing in.

Examples of popular companies in the carbon credit marketplace are Xpansiv, Toucan Protocol, and KlimaDAO. 

Amazon recently launched a carbon credit service, yet another step in its road to achieving zero carbon emissions by 2040. 

Some things you can do to offset your carbon footprint are: 

• Collaborate with logistics providers that offer carbon-neutral shipping options.
• Participate in community projects like tree planting whenever you have time.

How Do I Measure Carbon Emissions?

To decide how you can lower your carbon emissions, you should measure their levels first. 

1. Carbon accounting: 

Monitoring and measuring carbon emissions at different stages of your operations is called carbon accounting. 

The Greenhouse Gas Protocol Corporate Standard divides a carbon footprint into three ‘scopes’. 

Scope 1: These emissions are directly from the sources you own or control. Examples: company vehicles, fuel combustion

Scope 2: These are the indirect emissions from the energy you purchased. Examples: Electricity, heating, insulation

Scope 3: These include all types of indirect emissions in your supply chain, i.e., from suppliers and logistics partners. 

While you can easily measure Scope 1 and 2, Scope 3 is more complex to measure as it’s difficult to collect data. However, advanced tools like carbon calculators can help measure them.

2. Establish SMART targets

Once you collect the emission data for each scope, define Specific, Measurable, Achievable, Relevant, and Time-Bound (SMART) goals. 

Let’s say you decide on reducing Scope 1 emissions by 25% over three years. Maybe you can consider electrifying 50% of your fleet for that. 

3. Assess your carbon footprint

Carbon footprint assessment goes beyond measuring your direct and indirect emissions. It includes measuring those from your partners and suppliers.

For instance, if you partner with a middle-mile delivery partner, that counts as part of your carbon footprint. 

4. Use the right measurement tools  

There are two measurement techniques: direct and indirect calculation.

A. Direct measurement:  

• Infrared gas analysers (IRGAs): IRGAs rely on a light source to pass a beam of infrared light through a sample gas. 

Gases like CO2 absorb certain wavelengths, which leads to reduced light. A detector measures the concentration of gases and shows the reading. It provides accurate measurements of CO2 and H20 concentrations. 

Rapidox 1100-A analyser is a good example. 

• Non-dispersive infrared (NDIR) sensors: These are low-maintenance sensors often used to monitor gas concentrations continuously. They are often more suitable for indoor environments, such as offices or factories.

B. Indirect calculation:

There are two techniques:

• Emission factor approach: Multiplying activity data (e.g., fuel consumption) by standardized emission factors (e.g., CO2 per litre of diesel) to calculate it.
• Mass balance method: It monitors carbon inputs/outputs in the process, such as calculating emissions from fuel carbon content.

5. Utilize worldwide standards and metrics

These two standards are widely used worldwide.

• GHG Protocol Corporate Standard: This framework serves as a global benchmark that classifies emissions into three scopes: 1, 2, and 3. It provides calculation tools for industries like manufacturing and transportation. 
• ISO 14064 (International Standards Organization 14604): This framework guides you on how to quantify, monitor, and report GHG emissions. 
• ISO 14064-1: Focuses on guiding organizations on quantifying and reporting GHG emissions and removals. 
• ISO 14064-2: Focuses on the project level. This part focuses on the project level and guides organizations that aim to sequester or reduce carbon emissions. 
• ISO 14604-3: Focuses on validating and verifying GHG inventory or reduction statements. 

6. Deploy carbon calculators

Consider using different carbon calculators and software to track, measure, and record carbon emissions data. 

These insights into total emission and reduction figures help determine your future course of action and revise your strategies. 

Challenges of Carbon Neutral Delivery And Ways to Overcome Them

1. Cost constraints

While carbon-neutral delivery can be profitable over time, it requires a significant upfront investment. 

Whether it’s buying electric vehicles, installing renewable energy sources, or using sustainable packaging, everything comes at a cost. If you are on a tight budget, it can limit scalability. 

Solution: Approach government bodies, NGOs, and organizations that finance green shipping and often offer grants. 

2. Technical infrastructure limitations

Switching to carbon-neutral shipping practices is not a one-day job. 

You need a complete setup – charging stations, alternative fuel, routing software, integration with carbon calculators, and more. 

If you don’t get them all, your adoption may slow down. 

Solution: Collaborate with infrastructure providers and local authorities to expand your charging/fueling network. Find out the sources of alternative fuel that you can tap into. 

3. Data measurement issues

Tracking and reporting emissions, especially across complex delivery networks, isn’t a cakewalk. Setting targets and monitoring progress can turn tricky. 

Solution: Use digital emission tracking tools and standard reporting frameworks for accurate and transparent measurement. 

4. Supply chain complexity

You can track your organization’s emissions, but have limited visibility over your partners’. It makes your data inaccurate and incomplete at times.

Solution: Continuous collaboration with suppliers and logistics partners is key. Set your sustainability targets, request emissions data, and fetch reduction plans from them regularly. 

5. Policies keep changing

Environmental regulations and standards keep varying over time and across regions. It leads to uncertainty, making it hard to create a long-term plan for carbon-neutral delivery. 

Solution: Stay aware and informed via different channels, such as government guidelines and industry groups. Consult sustainability experts to create flexible strategies that you can easily change as per evolving laws. 

6. Inefficient logistics routes

Manual routing or legacy mapping systems don’t suffice as they create suboptimal routes. This leads to unwanted long distances and thus, higher emissions.  

Solution: Use AI-powered routing software like Upper to optimize routes. Train your drivers on fuel-efficient driving practices, including avoiding overspeeding and rough braking to minimize higher emissions. 

7. Picking the right offsetting company 

Making fake or exaggerated sustainability claims, termed as greenwashing,  is common. So, picking the right and reliable offsetting company that genuinely cares about the environment can be tough. 

Solution: Ensure that an independent third-party agency has verified your offset project. Ask for testimonials and reports to cross-check their claims and veracity.