Sustainable aviation fuel: The key to decarbonizing the airfreight industry

In the past few months alone, record-shattering heat waves ravaged western North America, scorching an environment unaccustomed to high temperatures. On the other side of the world, Turkey faces wildfires that have demolished areas along the Aegean Sea and Mediterranean coasts, following months of dry weather and unbridled heat. Meanwhile, severe flooding caused by heavy rainfall in Henan Province, China, turned roads into raging rivers with swift currents that caused widespread damage and displacement. These extreme weather conditions are nothing new but the tragic norm in the so-called Anthropocene Epoch, a proposed unit of geological time in which intruding human activities like deforestation and the burning of fossil fuels have significantly begun to negatively impact the Earth’s ecosystems and climate. In turn, these processes have accelerated climate change, showcasing the urgency for environmental protection, advocacy and change. Understanding that the growth of the airfreight industry comes with a responsibility to reduce its carbon footprint, most industry stakeholders are actively committed to reducing aviation’s carbon footprint through sustainability initiatives, investments in sustainable aviation fuel (SAF) and electric cargo aircraft , industry digitalization, waste management and more. The International Air Cargo Association (TIACA) published the industry’s first sustainability report in April, creating a “ground zero” assessment against which future progress in sustainability can be measured. A reported 90% of air cargo stakeholders see sustainability as a priority, and currently, carbon reduction and energy are among the main environmental focuses of air cargo companies. Aviation currently accounts for roughly 12% of all carbon dioxide emissions from transport sources, according to the Air Transport Action Group (ATAG). Considering the climate crisis, the airfreight industry is committed to exploring sustainability options in order to lessen its carbon footprint. “Although this is not a high figure comparing to many other industries, there are very limited sustainability strategies or viable alternatives to be applied to this industry comparing to, for example, the transportation industry,” Kenny Li, managing director at AWOT Global Express, told Air Cargo World . “Since the airfreight industry is projected to grow in the future, our carbon emission contribution will indubitably increase. That makes sustainability within the airfreight industry necessary.” The key to decarbonizing the airfreight industry While the pandemic initially slowed the pace of SAF investments within the airfreight industry, new SAF partnerships between carriers and freight forwarders have begun to blossom. Paris-based forwarder Bollore Logistics, ranked No. 9 on ACW' s Power 25, started its ‘Powering Sustainable Logistics’ corporate social responsibility (CSR) program in 2018, with the aim of providing a precise, measurable value of the company’s efforts toward reducing the environmental impact of the supply chain. Through engagement and objectives, Bollore Logistics aims to cut its carbon emissions by 43% by 2027. The company has already achieved a CO2 reduction of about 13% through a variety of ways since 2017, Maily Treluyer, project leader for eco-responsible freight procurement at Bollore Logistics, told Air Cargo World . In January, Bollore teamed up with Air France-KLM Martinair Cargo (Air France-KLM Cargo) to enable customers to power a percentage of flights with SAF, as well as launch a low-carbon airfreight route between France (CDG) and the U.S. (JFK). Later in July, local subsidiaries Bollore Logistics USA and Mexico took the initiative to begin offering SAF to its clients to reduce carbon emissions on airfreight operations on major trade lanes through a book-and-claim system. This includes, at minimum, Air France-KLM Cargo's major trade lanes or important routes out of Asia, Europe and America, Philippe de Crecy, vice president of airfreight Europe at Bollore Logistics, told Air Cargo World . “There is a lot of publicity around electric aircraft, hydrogen aircraft [but] this is not coming to the market before 2030, and we cannot stand still for nine years,” Treluyer said. “That is not responsible on our side, and that wouldn’t be accepted by our clients. Consulting [with] our clients, talking with airlines and auditing firms — that is [what] we have invested our resources in.” Bollore Logistics has also been working with customers concerned about their own carbon footprint, and so far, the forwarding company has three customers about to start concrete investments in SAF, de Crecy said. “[SAF investments] will start probably in the luxury goods industry, but closely followed by the aerospace industry,” de Crecy said. “The aerospace industry are the first ones who know the technical aspects of the future of aircraft engines, and they know that SAF is the first necessary step to engage a process, so they will probably [be] starting some SAF purchases in the coming months.” Industries under public pressure like automotive, high-tech and multinational companies with green agendas as well as companies from Central and Northern Europe, where sustainability has a high interest in public, have also exhibited a demand for SAF, Marcel Fujike, global head of products and services at Swiss forwarder Kuehne +Nagel, told Air Cargo World . Kuehne+Nagel has purchased 2.7 million liters of SAF so far and is committed to having net-zero scope three carbon emissions by 2030. While Bollore Logistics and Kuehne+Nagel currently offer SAF options through Air France-KLM Cargo flights, both forwarders are currently working with other airlines to provide the broadest SAF offer possible on airfreight operations. Meanwhile, Guangzhou-based AWOT Global Express is one of the five Chinese freight forwarders to recently join Air France-KLM Cargo’s SAF program in July to help provide green options on routes connecting China with Europe and South America. AWOT is a new entrant to Air Cargo World ’s most recent Power 25 list and ranked at No. 22 in terms of transported airfreight tonnage. Air France-KLM Cargo, an early pioneer in SAF investments and No. 12 in Air Cargo World’s most recent Freight 50 ranking of the top freight airlines, is just one of the growing number of carriers implementing sustainability initiatives to reduce the airfreight industry’s carbon emissions. In March, Kuehne+Nagel collaborated with American Airlines to help customers reach sustainability goals through the purchase of SAF. Meanwhile in April, United Airlines launched its Eco-Skies Alliance program , which includes the collective purchase of approximately 3.4 million gallons of SAF this year. So far, more than a dozen major freight forwarders and shippers have joined United’s program, including DHL Global Forwarding, CEVA Logistics and DSV Panalpina. As more carriers and shippers continue to enter partnerships or programs that support the greening of the airfreight industry, AWOT’s Li noted that the SAF market is becoming wider and larger. “Ten years ago, ‘environmental protection’ and ‘climate change’ were two rather new terms that not many people are aware of, therefore, very few companies would choose SAF, an expensive fuel, over the conventional jet fuel,” Li said. “On the other hand, with the effects of climate change showing up all around the world and threatening many people’s livelihood, more commercial companies are willing to pay extra money to save the environment and fulfill their social responsibilities, making SAF a more popular choice in the market.” Greener skies ahead While the use of SAF among air cargo stakeholders has become increasingly popular, there is still much work to be done as price premiums and insufficient production levels provide challenges that hinder the widespread use of alternative fuels. To combat these challenges, industry stakeholders emphasize the need for government incentives regarding the research, production and adoption of SAF to make the alternative fuel more accessible. Currently, the premium on SAF is roughly 55 cents to 70 cents per liter, Kuehne+Nagel’s Fujike said. Regions that are currently providing SAF incentives or subsidies are the Netherlands, U.K., and the U.S. state California. When SAF is not subsidized, the premium goes up to $1.80 to $2 per liter, or around five times the price of kerosene. Currently, the price of kerosene is roughly $0.48 per liter, according to the latest spot price data from the U.S. Energy Information Administration. “We would really appreciate if governments would put some incentives because this is also a matter of commitment from the countries, and air transport is a big part of the CO2 emissions of Europe,” Treluyer said. “This is not an issue to tackle country by country. It’s an issue to tackle region by region and worldwide … so that would be really helpful to get some incentives to make it more competitive.” The European Union recently proposed a blending mandate that promotes the use of SAF, Kuehne+Nagel’s Fujike noted. However, although demand would heavily increase due to government incentives, such as the proposed one, the low production levels may lead to supply shortages. “As long as we don’t have any different production technologies commercially available, then there could be a certain supply shortage, but only if governments start subsidizing SAF on a larger scale than today,” Fujike said. “That might then lead into higher pricing. Then, of course, this entity initiative might die out if the prices are going up again.” The financial setbacks caused by the pandemic may have had a negative impact on the adoption and research of SAF, Bollore’s de Crecy acknowledged, but the pandemic’s impact on airfreight rates made the premium of SAF less noticeable. “All in all, [considering] the 50% rate increase in air cargo transportation, the premium of SAF is somewhat less important because the basic rate is higher,” de Crecy said. “If we consider the average rate on the market three years ago, the premium of SAF would be a challenge because it will be more than double the transportation cost. [That] is not the case today with the average yield created by the pandemic.” While the premium on SAF is still very high, de Crecy further noted that this is only the beginning of the story, and the price of SAF should decrease due to the increase in investments in a few years. “Sustainability has a cost, but the solution is out there — we don’t have to wait for groundbreaking aircraft,” Bollore’s Treluyer said. “We just need [our clients] to help us make the first step and commit to chasing biofuels.”

Sustainable aviation fuel: The key to decarbonizing the airfreight industry

Listen: DB Schenker’s Kumar on decarbonizing the airfreight industry

Copa Airlines converts own 737-800s

Copa Airlines converts own 737-800s

Cargo Facts Free Newsletters

Cargo Facts Connect Podcast

Follow Us

Welcome Back!

Retrieve your password