Ocean delays turn desperate retailers to the skies, increasing emissions
Congestion at ports in the United States as well as Asia is causing major shipping delays and leaving retailers “desperate to get their goods to physical and virtual store shelves for the holiday season,” according to Eric Kulisch, FreightWaves’ air cargo editor.
Shippers are shifting cargo from oceans to air transportation to avoid delays. But this expensive ocean-to-air shift has ripple effects, including environmental ones. Moving freight via ocean vessel is much more efficient in terms of greenhouse gas emissions than moving it via aircraft.
“Port congestion and overstretched ocean networks everywhere, including the ports of Los Angeles and Long Beach, are pushing more shippers to shift high-value exports to air, especially in the run-up to the holiday shopping season,” Kulisch said.
He noted that congestion isn’t just happening on the U.S. West Coast. Factory and port closures and limited operating levels in Asia are contributing to shipping delays across the Pacific, increasing interest in faster shipping modes, Kulisch said.
“The current disruptions facing shippers are unfortunate, and especially so when backlogs and delays shift freight to modes with higher emissions. Switching from ocean to airfreight can increase absolute emissions by more than 20x per ton-mile,” said Tyler Cole, director of carbon intelligence at FreightWaves.
The emissions numbers
Even though it seems like ocean vessels pollute a lot, the emissions related to moving 1 ton of freight 1 mile are much lower when using ocean vessels compared to aircraft because of the large amount of cargo ships can move at once, Kulisch said.
Grams of carbon dioxide emitted per ton-mile of goods transported:
For every ton of goods that is shifted from ocean vessel to aircraft, 1,249 grams of additional carbon dioxide are emitted into the atmosphere, according to Environmental Protection Agency data. This means moving freight 1 ton-mile via air is more than 22 times more polluting than ocean transport in terms of carbon dioxide emissions.
Garnerville, New York-based e-commerce fulfillment company ShipHero’s entire sustainability focus is to ship ground instead of air, Aaron Rubin, co-founder and CEO, told FreightWaves in a previous interview. The company aims to provide two-day or faster shipping without using air transportation, saving emissions that are usually associated with fast shipping.
Moving goods via aircraft is not only more emissions-intensive than all other modes, it’s also more expensive. Rubin said that companies utilize slower modes of transportation when they can because it saves money. But port congestion and shipping delays are making retailers desperate to get their products in the hands of customers and to stock shelves for the holidays.
“If you don’t have product, you’re just going to put it on a plane because you need something to sell, and boats are taking forever right now,” Rubin said.
Collapsing cost spread, limited air cargo space
The large difference in price between ocean shipping and air cargo decreased dramatically this summer as container shipping prices skyrocketed. However, the limited availability of air cargo space is slowing this ocean-to-air shift down.
“Given the collapsing spread of costs for air versus ocean, we should expect to see more of these modal shifts. Shippers have always had to balance cost and service while reacting to market conditions. But the day is not far away when freight procurement decisions must balance cost, service and emissions in a total logistics cost. That certain future is why there is so much focus on aligning the industry around carbon accounting standards,” Cole said.
The International Air Transport Association recently said that air cargo grew by 7.7% in August, despite cargo space falling 1.6 points.
“With passenger belly space still in deficit because of limited international travel, retailers are trying to rent entire aircraft to move their product. And ocean rates are so high that airfreight costs are more easy to accept these days. The reality is that air isn’t a viable substitute for most ocean shipping because air only carries 1% of trade during normal times. There just isn’t enough space to handle what can ride on giant vessels,” Kulisch said.
The price per kilogram for air cargo is not a direct comparison for 40-foot containers, but the trends tell a compelling story.
Under normal circumstances, air transport is 10 to 12 times more expensive than ocean transport, Kulisch said. However, current supply chain stressors and backlogged ports have increased the cost of shipping goods in the Asia-to-U.S. lane tremendously. Kulisch noted that air rates were only five or six times more expensive than ocean rates this summer.
This trend, Kulisch said, is cooling down as the aviation industry continues to battle with limited passenger belly space. As companies face peak season with shipping delays, port congestion, air cargo space limitations and capacity constraints, Cole said emissions and environmental impacts will eventually join cost and time on the list of considerations when it comes to choosing transportation modes and carriers.
Source: Freight Waves