Green Strategies examined how Kuehne + Nagel, the world’s leading ocean and air freight forwarder by revenue, can approach decarbonization of scopes 1, 2, and 3 greenhouse gas emissions. As a freight-forwarder, K+N maintains an asset-light business model, contracting with partners across sea and air logistics rather than owning their own vessels. Kuehne + Nagel owns a proprietary truck fleet, but most (98%) of their emissions are scope 3, resulting from their partnerships in sea and air logistics.
The team approached the problem by leveraging their knowledge of machine learning and financial modeling. By collecting data on relevant variables, they used neural networks to forecast service demand for the air and sea sectors as well as the prices of conventional fuels. They then fed the outputs of the machine learning models into the emissions and cost models. In the emissions model, the team forecasted overall emissions from forecasted demand using historical data from the company’s sustainability reports. They leveraged both the fuel pricing ML outputs and market research to determine the cost of these emissions.
With this model, Green Strategies recommend that K+N continue their plan of using HVO and BEVs to reach net zero in scope 1 GHG. As for scope 3, the cost of reaching net zero by 2040 is very high, so they recommended that they pursue a more cost-effective model which utilizes a combined timeline of SAF, hydrogen-synthetic fuel, biofuel, and e-methanol to maintain approximately current scope 3 emissions levels. This allows K+N to effectively hedge against rising logistics demand and associated increases in emissions, with a plan to reach scope 3 net zero by 2050. Throughout this process, we encourage K+N to leverage their market power through contracts and partnerships to strengthen non-fuel solutions, such as efficient vessel design, across the logistics industry.