Carbon Output Is Spiking Amid Red Sea Supply Chain Crisis. What Are You Going to Do About It?
Another sustainability crisis is brewing in the global supply chain.
Ongoing attacks on container ships in the Red Sea by Iran-backed Houthi rebels have caused major shipping companies and oil/gas firms to suspend shipments through the Suez Canal, one of the most active shipping routes in the world.
As a result, vessels are forced on a 3,280-mile detour around the Cape of Good Hope at the southern tip of Africa. This alternate route adds an average of 12 days and up to $1 million in fuel expenses for every roundtrip journey between Asia and Northern Europe.
Lost time and money—the factors supply chains feel most acutely—dominate press coverage of the Red Sea disruptions. But far fewer conversations have highlighted the ballooning emissions impact of the conflict, which currently shows no signs of abating.
Diverting cargo ships away from the Red Sea and around Africa requires burning more fossil fuels, causing greenhouse gas emissions to spike. For example, a trip from Singapore to Rotterdam roughly equates to a 40% increase in carbon emissions, according to Breakthrough calculations.
With a disruption of this magnitude, how can we collectively meet emissions reduction goals at a critical moment for climate warming benchmarks?
Geopolitical conflict isn’t the whole story. Climate impacts exacerbate maritime costs and emissions.
The Red Sea conflict is just one of many global factors impacting shipping. Halfway across the globe from the Red Sea, vessels are also diverting away from the Panama Canal. Prolonged drought in the region has severely reduced water levels, spurring the Panama Canal Authority to reduce the number of daily canal passages by a third.
A voyage from Asia to the Caribbean takes approximately 26 days via the Panama Canal. It’s estimated 4,000 ships will need to opt for other routes. One alternative? Travel west around the Cape of Good Hope, extending the average travel time to 39 days.
Approximately half of re-routed ships are expected to opt for this course, adding to the armada of ships circumventing the Red Sea. Under different circumstances, some container carriers may have chosen to redirect goods onto vessels headed through the Suez Canal, but that option is off the table for now.
In both the Red Sea and Panama Canal situations, shippers and carriers are at the mercy of forces beyond their control. Opting for long detours that generate more emissions is unavoidable for the foreseeable future.
However, making progress toward sustainability goals and requirements isn’t completely out of reach. It will just take innovative ideas and immediate action.
How to find emissions reduction opportunities you didn’t know existed
Unfortunately, you can’t just put progress on pause until the Red Sea region stabilizes and the drought ends in Panama. Because here’s the bottom line: Even if you’re working toward transportation sustainability goals that seem distant (e.g., with target dates of 2030 or 2050), you still don’t have time to lose.
Delaying action will only make starting harder. Besides, who knows what new geopolitical and climate challenges await in the years ahead?
It may not be easy to reduce scope 1 & 3 transportation emissions in 2024 given the global forces at play. But calculating your emissions baseline and understanding emissions reduction opportunities available in your network is achievable.
Think of your emissions output like a stock portfolio. Yes, the Red Sea trade line is down. But if you can reduce emissions in another part of your portfolio, you can make up the gap.
Maybe it’s by optimizing carrier selection. Or maybe it’s by moving truckloads to rail or alternative energy modes. Some opportunities may look like a drop in the bucket on their own, but the impact is visible once you zoom out and view them collectively.
To start moving the needle on emissions, you need two things: (1) A lane-level view of your entire transportation network and (2) a granular understanding of the emissions output attributed to each lane.
This tells you the emissions intensity of every lane in your network so you can calculate exactly how disruptions like the Red Sea conflict are impacting your emissions baseline.
From there, it becomes easier to identify opportunities in your network to offset that impact—and to measure the real outcome of your actions.
Knowledge is power. When you have access to your transportation data, you can build a more resilient and sustainable supply chain. Don’t delay emissions reduction progress or punt sustainability efforts to 2025. You have options. All you have to do is look for them.