Logistics accounts for at least 7% of global emissions. Investors, consumers, and now regulators are putting pressure on companies to decarbonise these emissions. But how do you decarbonise logistics emissions?

Luckily, there’s a formula for it. It’s called the Kaya Equation.

What is the Kaya Equation?

The Kaya equation is a mathematical formula used to calculate the emissions of the logistics sector. It breaks emissions down into five key levers. By applying and pulling on any of these levers, companies can begin to decarbonise their logistics emissions. 

These five levers include: 

1. Transport Demand (ton-kilometers): The weight transported over a certain distance.
2. Modality: The contribution of each transport mode (air, sea, road, rail, inland waterways).
3. Load Factor: Average tons transported per vehicle.
4. Energy Efficiency: Energy consumed per kilometre travelled.
5. Carbon Intensity of Energy: CO2 emissions from energy production and consumption.

All five of these levers contribute to logistics emissions. By understanding these elements, companies can identify which of these levers they can pull to reduce logistics emissions while maintaining operational efficiency.

Lever 1: Reducing transport demand

Transport demand is the primary driver of CO2 emissions. Businesses can mitigate this through:

• Reducing distances travelled: Optimizing supply chains and using Transportation Management Systems (TMS) like Logixboard.
• Limiting transported tons: Implementing eco-design, repairability, responsible consumption, and reducing waste.

With the ITF projecting a doubling of transport demand by 2050, these strategies are crucial for aligning with carbon neutrality goals.

Lever 2: Modal shift for greener logistics

Switching from high-carbon transport modes to more efficient alternatives is an impactful strategy:

• Road to Rail: Reduces emissions by a factor of 9.
• Road to Inland Waterways: Cuts emissions by up to 5 times.
• Air to Maritime: Lowers emissions by a factor of 50.

The modal shift may also offer cost savings but requires advanced planning, collaboration with freight forwarders, and safety stock management.

Lever 3: Maximise load factor

A half-empty container nearly doubles emissions per ton transported. Solutions include:

• Consolidation: Grouping shipments to reduce empty space.
• Mutualisation: Sharing capacity across shippers.
• Densification: Optimising product design and container loading (ex. Ikea ships flat-pack furniture instead of assembling pieces).

Tracking load factors can drive continuous improvement, cutting costs and emissions.

Lever 4: Enhancing energy efficiency

Energy efficiency improvements are vital for decarbonisation. Key strategies include:

• Engine advancements: Modern internal combustion and electric engines.
• Speed reduction: Lowering speeds can cut fuel consumption by ~5%.
• Eco-driving techniques: Reducing fuel use by up to 15%.
• Aerodynamic enhancements: Minimising energy losses, especially for long-haul transport.

Shippers can support these efforts by partnering with sustainable carriers and leveraging industry initiatives.

Lever 5: Transitioning to low-carbon energy sources

Alternative fuels play a key role in long-term decarbonization. Sustainable biofuels, hydrogen, and electrification offer pathways to lower emissions, but they must be deployed strategically. 

Biofuels can serve as a transitional solution for aviation and maritime transport, while electric and hydrogen-powered trucks are emerging for regional and urban freight. However, these technologies require infrastructure investment and policy support. 

Businesses should focus on progressive adoption, integrating low-carbon fuels as part of their growth strategy.

Balancing cost, speed, and emissions

Expecting companies to optimise logistics to reduce emissions alone is unrealistic. Businesses also have deadlines and margins to meet. Optimising for all three is impossible.

However, optimising for costs and reducing emissions has led to the emergence of “slow logistics”. Slower, consolidated transport modes, optimised load factors, and improved energy efficiency create a more resilient and sustainable logistics system.

Companies that embrace these changes can reduce costs, improve environmental impact, and future-proof their supply chains. It requires careful planning, but it’s possible. Both the planet and a business’ bottom line can benefit from slow logistics.

How to start decarbonising logistics emissions

The first step to decarbonising any logistics is by measuring. You can only manage what you can measure. 

This is why forward-thinking logistics leaders like Forto, Logixboard, and V. Alexander are partnering with Lune to embed emission intelligence into their offerings. This means their end-users can inform effective decarbonisation strategies using accurate emission reporting. 

Using this data, and the Kaya Equation, companies can then take the following steps:

1. Set ambitious annual emission reduction goals that ladder up to reaching net zero emissions by 2050
2. Identify what levers you can pull to reduce emissions in a way that aligns with the business goals 
3. Formulate a strategy that exercises those levels
4. Implement those strategies by leveraging innovative solutions to drive meaningful emission reductions while maintaining business efficiency
5. Finally, compensate for unavoidable emissions using carbon insetting and carbon offsetting strategies.

Investors, regulators, and consumers are fueling the demand for green logistics. Companies shouldn’t be asking “Should we decarbonise?”; companies should be asking “Can we afford to be left behind?”. 

Using the Kaya Equation and Lune’s emission intelligence they can kickstart their decarbonisation journey today. For more insights into green logistics, download Lune’s free Greening the Supply Chain guide.