Shipping freight and its environmental impacts: Analysis of the environmental impact of document movement due to freight transport

A/Prof Marianne Vanderschuren and Ms Tanya Lane

ABSTRACT

Air pollution and climate change issues feature high on the current political agenda. In all fields researchers, politicians and practitioners are looking for ways to reduce the environmental impacts of current endeavours. Even though maritime transport is considered one of the more efficient modes of transport, it has its issues. The focus in maritime based environmental studies is mostly the type of fuel used, as it is often dirty bulk fuel. However, in this study, the focus is on the paper trail associated with maritime freight.

Carriers, using all modes of transportation, issue bills of lading when they undertake the transportation of cargo. A bill of lading is, in addition to a receipt for the delivery of goods, a contract for its carriage and a document of title to it. Its terms describe the freight being transported for identification purposes; stating the name of the consignor and the provisions of the contract for shipment.

The study found that the traditional way of handling the bill of lading in maritime transportation results in many trips that can be avoided. If the bills of lading are bundled, a fuel saving of between 67% and 90% is possible. Using a freight forwarder that makes use of electronic forwarding systems, provide a potential fuel saving of between 54% and 70%. The maximum saving (97%) is possible when freight forwarders use electronic forwarding systems and bills are bundled. Furthermore, results can be influenced by the choice of vehicle for transportation of the bills.

BACKGROUND

The environmental impact of maritime transport is mixed. On the one hand, sea shipping is relatively climate friendly. Emissions of greenhouse gases per amount of transport achieved are low compared to other modes. In absolute terms, however, greenhouse emissions from shipping are significant (CE Delft, 2006).

Emissions of greenhouse gases from sea shipping are rising, due to the increase in the global trading of goods. Large ocean-going vessels – cargo and container ships, cruise ships, and oil tankers – form one of the fastest growing, least regulated sources of air pollution in the United States and possibly worldwide. As more consumer goods are imported from Asia, cargo shipping is expected to double or even triple by 2020 – especially, in high traffic ports (http://www.bluewaternetwork.org/). Air pollution from all ocean-going vessels in US waters is expected to grow by 150 percent over the next three decades. A single cargo ship coming into New York harbour can release as much pollution as 350 000 current-model-year cars in one hour. In the Ports of Los Angeles/Long Beach, the 16 container ships each day in port produce as many smog-forming emissions as one million cars. In one port visit, a single cruise ship generates the emissions of more than 12 400 cars http://www.bluewaternetwork.org/

Currently, greenhouse gas emissions from shipping fuel combustion are not subject to any policy measures. Sea shipping is also an important source of air pollutants. The contribution of shipping emissions to air pollution is substantial, especially in coastal areas and harbours with heavy traffic (http://www.bluewaternetwork.org/). This study focuses on the land-side emissions generated by the transportation of documentation required for long-haul freight shipping.

DOCUMENT TRAIL

The bill of lading concept was unknown until the eleventh century. It was at this time that trade between the ports of the Mediterranean began to grow significantly. Some record of the goods shipped was required, and the most natural way of meeting this need was by means of a ship's register, compiled by the ship's mate. Although use of such a register probably began informally, it was soon, in some ports at least, placed upon a statutory footing. Its accuracy was paramount and, around 1350, a “statute was enacted which provided that, if the register had been in the possession of anyone but the clerk, nothing that it contained should be believed, and that if the clerk stated false matters therein he should lose his right hand, be marked on the forehead with a branding iron, and all his goods be confiscated, whether the entry was made by him or by another” (Aikens et al, 2006). By the fourteenth century, what was later to be accomplished by the receipt function of the bill of lading was being accomplished by an on-board record. As yet, there was no separate record of the goods loaded, as it seems that shippers still travelled with their goods and there was, accordingly, no need for one. This only changed when trading practices altered and merchants sent goods to their correspondents at the port of destination, informing them by letters of advice of the cargo shipped and how to deal with it. Merchants also began to require from the carrier, and to send to their correspondents, copies of the ship's register (Aikens et al, 2006).

Today, carriers using all modes of transportation issue bills of lading when they undertake the transportation of cargo. A bill of lading is, in addition to a receipt for the delivery of goods, a contract for their carriage and a document of title to them. Its terms describe the freight for identification purposes; state the name of the consignor and the provisions of the contract for shipment and direct the cargo to be delivered to the order or assigns of a particular person - the consignee - at a designated location.

There are two basic types of ocean bills of lading. A straight ocean bill of lading is one in which the goods are consigned to a designated party. An order bill is one in which the goods are consigned to the order of a named party. This distinction is important in determining whether a bill of lading is negotiable (capable of transferring title to the goods covered under it by its delivery or endorsement). Terms provide that the freight is to be delivered to the bearer (or possessor) of the bill, to the order of a named party or, as recognised in overseas trade, to a named person.

Although this historic, international bill of lading process is under discussion, currently it is still responsible for many road based trips accompanying international cargo trade. Electronic transport documents are, in theory, already available with regards to some transport modes and operations. However, they are far from being widespread in day-to-day business. The electronic format proves to be more problematic when its application concerns negotiable transport documents, i.e. when transport documents are evidencing title (bill of lading). In the absence of a uniform legal framework, electronic alternatives to documents of title have only been developed on a contractual basis.

An alternative to the bill of lading is the waybill. A waybill is a document issued by a carrier giving details and instructions relating to the shipment of a consignment of goods. Typically, it will show the names of the consignor and consignee, the point of origin of the consignment, its destination, route, and method of shipment, and the amount charged for carriage. Unlike a bill of lading, which includes much of the same information, a waybill is not a document of title. Most freight forwarders and trucking companies use an in-house waybill (or house waybill as it is commonly known). These, typically, contain 'Conditions of Contract of Carriage' terms on the back of the form. These terms cover limits to liability and other terms and conditions.

An e-waybill is an electronic version of a waybill, which has become very common as many shipments are ordered through the internet. The driving force behind the movement to the digital waybill has been the lowering of printing costs for shipping companies in the North American market. The European market has also benefited from cost savings through the reduction in telephone and fax costs due to the increased usage of the digital waybill. Although the e-waybill is quite common in some regions, it is not the industry standard in South Africa.

Does a waybill replace a bill of lading? Or do you need both? Why are there waybills?

CONVENTIONAL INTERNATIONAL PRACTICE

The ocean bill of lading is, currently, still used for international trade. Cargo shipped by sea and air are both legally obliged to use bills of lading. Figure 1 provides a schematic overview of the number of times that the bill of lading changes hands. The bill of lading could make as many as 13 physical trips. Furthermore, there will be one or two courier trips from bank to bank per transaction.

Cargo operation procedures are complicated, with various parties involved. An international literature review revealed that some institutions are looking into ways to reduce the time delays and administrative burden created by the bill of lading. To clarify the duties of transport and custom clearance, documentation is necessary at each step. Information flow is one bottleneck to the total time of cargo processing, which is critical to the performance of global logistics. To meet the requirement of cargo efficiency, and to reduce the role of human labour in documentation, information technology offers some solutions towards a paperless working environment. In the air cargo field, the Federal Aviation Administration (FAA) took the first step by authorising the American Truck Association Foundation (ATAF) to develop an Electronic Supply Chain Manifest (ESCM) system in 1997, to improve the labour intensive and low efficiency telephone calls in processing US air cargos. The objective of the system is to create a platform of interchanging electronic files among various parties, instead of paper documents delivered by human labour. A smart card system is also integrated to enhance the convenience of retrieving cargo information at receiving and delivering by ground transporters (ATA Foundation, 2000).

Figure 1 - Bill of lading movements in the import and export process

The efficiency and security of an internet-based ECMS was tested against a traditional manual paper-based system. ECMS was designed to save time and money by automating the transfer of cargo information from one mode of transportation to another. The ATAF deployed the system at O’Hare and JFK International Airports, and the Federal Highway Administration (FHWA) monitored the performance of the system for 2.5 years. The project

was carried out in three phases with the primary objective being to improve the efficiency of cargo data transfer between manufacturers, truckers and airline carriers. It was found that the ECMS reduces the amount of time and paperwork required to transfer load and can improve operational efficiencies for shippers/receivers, trucking companies, and air cargo carriers (FHA, 2002). In the US, $1.50 to $3.50 was predicted to be saved with each transaction by using ESCM (USDoTOoA, 2003).

A study in Taiwan (Taiwan Data Processing Company, 2006) found that about 70% of the paperwork required is redundant and that the introduction of a similar ESCM system in Taiwan would generate a cost saving for forwarders (546 New Taiwan (NT) Dollars), the airlines (66 NT Dollars), the cargo terminals (6.26 NT Dollars), and customs (3.94 NT Dollars).

It can be concluded that improvement of the paper trail of the bill of lading will reduce the handling time and cost of shipping cargo. Moreover, it is postulated that there will be environmental benefits if the transportation associated with this paper trail is reduced.

SOUTH AFRICAN PAPER TRAIL PRACTICE

A single import into South Africa could potentially involve as many as 12 administrative trips, plus at least one courier trip, if a bank is involved in the process. The question is: what does this add to greenhouse gas emissions and energy consumption in South Africa, bearing in mind the number of shipments (bills of lading) dealt with on a daily basis?

STUDY METHODOLOGY

This study quantifies the environmental impact caused by paper trail transportation requirements in the South African marine shipping trade. To quantify the documentary landside environmental impact of ocean based South African imports (originating from Europe, the Far East and the USA) a data collection exercise was first carried out. Data was provided by two of the largest shipping lines active in South Africa on the number of import related bill of ladings and waybills handled, destined for each of the following ports in 2008: Johannesburg, Durban, Cape Town, Port Elizabeth, East London and Pretoria. Johannesburg and Pretoria represent large markets for imported goods and are included as inland ports. The shipping lines involved have requested to remain anonymous. Furthermore, average travel distances relating to the various types of trips (accounting for typical origins and destinations associated with each trip type) in each of these cities were estimated. Trip types included in the study are listed in Table 1. All trips are modelled as return trips.

Table - 1 Various trip types

Shipping goods directly with shipping line: Origin Destination
Collect documents from client Forwarder Importer/Exporter
Collect original B/L if not available at time of first collection Forwarder Importer/Exporter
Pay charges to shilling line Forwarder Shipping Line
Deliver original B/L to shipping line, if not available upon collection Forwarder Shipping Line
Collect documents from bank (if involved) Consignee Bank
Shipping goods through freight forwarder: Origin Destination
Collect documents from client (not always necessary) Forwarder Importer/Exporter
Pay charges to shipping line Forwarder Shipping Line

Average vehicle operational fuel demand figures and carbon dioxide (CO2) emissions factors were obtained for three vehicle types: a regular car, regular motorcycle and a hybrid-electric car. The regular car and motorcycle values were averaged over a range of cars and motorcycles available in the South African market. The first hybrid-electric vehicle available in South Africa was the Toyota Prius. The Prius’s 2009 statistics were taken to represent hybrid-electric vehicles in this study.

The quantity of bills of lading, transport distances and fuel efficiency and emissions data were used to calculate the total volume of fuel required (litres) and the total volume of CO2 emitted (tonnes) in South Africa as a result of the transportation of shipping-related documentation.

RESULTS

In total 35 796 shipments are imported into South Africa using bills of lading per year. Another 49 506 shipments are imported using waybills. As indicated, various ports deal with bills of lading and waybills. Table 2 provides an overview of the bills per port included in this analysis.

Table - 2 Total bills per city

Port Waybill Ocean Bill TOTAL Percentage
Johannesburg 15 539 10 943 26 482 31.0%
Durban 19 122 14 165 33 287 39.0%
Cape Town 7 869 5 754 13 623 16.0%
Port Elizabeth 5 872 4 177 10 049 11.8%
East London 143 117 260 0.3%
Pretoria 961 640 1 601 1.9%
49 506 35 796 85 302 100.0%

The average travel distance by clearing agents/forwarders for a bill of lading per city, including the maximum potential number of return trips (4), is shown in Table 3. Distances are calculated as averages of the distance between the most predominant freight forwarders’ offices and the main shipping lines’ offices in each city. Documentation transport required for goods imported to Pretoria incurs the longest trips, as the shipping line offices are only located in Johannesburg.

Table - 3 Average travel distances per area

Port Average travel distance (km)
Johannesburg 219
Durban 110
Cape Town 149
Port Elizabeth 132
East London 65
Pretoria 361

Travel distance impacts on the energy and fuel demand per port. Figure 2 displays the implications of these travel distance differences. Even though Durban accounts for the highest number of bills (Table 2), it does not generate the highest level of emissions (Figure 2), because the average trip is shorter than in most of the other locations (Table 3). The reader needs to keep in mind that congestion levels also influence fuel consumption and CO2 emissions. However, this falls outside the scope of this study. South African average fuel consumption and emissions values were used.

Figure - 2 Percentage of bills (B/L) and emissions per port

There are various ways to reduce fuel demand and emissions during the bill of lading transportation process. Firstly, bills can be bundled and transported together. Secondly, it is possible to use more fuel efficient vehicles. Figures 3a and 3b summarise the fuel efficiency and emission effects of these interventions.

Figure 3A - Current fuel saving potential

Figure 3B - Current emission saving potential

Bundling bills obviously reduces the number of trips and, therefore, the total fuel demand and emissions. It is possible to bundle bills without negatively impacting on the release time of shipments. Furthermore, the choice of vehicle influences the fuel demand and emissions.

More fuel efficient cars or the move towards motorcycles will reduce the total demand for fuel, although the Toyota Prius is slightly more efficient. However, due to the type of technology in regular motorcycles, they produce more CO2 emissions than cars. The Prius is, clearly, the cleanest option.

THE ROLE OF THE FREIGHT FORWARDER

As mentioned, freight forwarders and trucking companies use an in-house waybill to accompany freight. The question is: does this reduce the fuel consumption and CO2 emissions produced? Furthermore, the literature indicates a reduction in energy consumption, emissions and costs can be effected through the use of electronic systems. It was decided to explore the difference between the energy demand when current practice (using a regular car) is compared to shipping goods through freight forwarders and freight forwarders using electronic systems (see Figure 4).

Figure - 4 Fuel demand for various scenarios

Shipping through a freight forwarder appears to save almost 55% of fuel demand, due to the reduced number of trips they require. If the forwarder uses electronic forwarding systems, another 35% saving is possible. As previously described, further savings are possible if bills are combined. The maximum saving can be as much as 97% (29 529 vs. 988 745 litres of fuel) when freight forwarders use electronic systems and bundle 10 bills of lading. In all three scenarios, both the freight forwarder and freight forwarders using electronic systems demand less fuel than the Prius would under the current regime. Carbon dioxide emissions savings follow the same trend (see Figure 5).

Figure 5 - CO2 emissions for various scenarios

CONCLUSIONS AND RECOMMENDATIONS

This study explores the potential to reduce the fuel consumption and CO2 emissions associated with the transportation of freight documents (bill of ladings and waybills). The calculations indicate that there are various ways to reduce fuel consumption and CO2 emissions, such as the combination of bills per trip, the use of more fuel efficient vehicles, the use of freight forwarders and the use of electronic systems (effectively, to replace the bill of lading). Table 4 provides an overview of the potential savings.

Table - 4 Potential fuel/CO2 saving; ( ) = CO2 if different to fuel savings

Potential saving 1 bill/trip 3 bills/trip 10 bills/trip Motorcycle 1 bill/trip Prius 1 bill/trip
Current 0% -66.7% -90.0% -39.6%(+5.1%) -40.5%
Freight forwarder -54.1% -84.7% -95.2% -51.8% -72.7%
Freight forwarder + 90% electronic -70.1% -90.0% -97.0% -68.6% -82.2%

The bundling of bills provides a saving of 66.7% and 90% respectively. The selection of more efficient vehicles, however, needs to be done carefully. Although motorcycles (currently available) will reduce fuel consumption, the CO2 emissions will increase, due to inefficient fuel burning technology. Clean cars, such as the Toyota Prius, however, will reduce both fuel consumption and CO2 emissions.

The use of freight forwarders and the use of electronic forwarding systems provide a potential saving of 54.1% and 70.1% respectively. The maximum saving (97%) is possible when freight forwarders use electronic forwarding systems and bills are bundled.

It is recommended that the international freight industry explores the possibilities of implementing fuel and CO2 saving methods. While doing this, it needs to be kept in mind that a combination of saving methods is more effective than applying measures in isolation.

According to the United Stated Environmental Protection Agency (www.epa.gov) a saving of 500 tonnes of CO2 is equivalent to reducing the number of passenger cars on the road by 98 vehicles for a year. It is worth the amount of carbon that can be sequestered by 12 821 tree seedlings over the first 10 years of their lifetime. Similarly, a 1500 tonnes of CO2 emissions saved (which is less than the potential savings suggested in the proposed scenarios) equates to the annual greenhouse gas emissions from 294 passenger vehicles and the carbon to be sequestered by 38 462 tree seedlings grown for 10 years.

Given a coastal fuel price of R10.47 and an inland fuel price of R10.77 as from 2 November 2011 (www.cef.org.za), the value of 600 000 litres of fuel to be saved is equal to between R6.282 million and R6.462 million. This also equates to a 3774 reduction in the number of barrels of oil that have to be imported by South Africa.

It is important to remember that the data used in this study only pertains to that of two major shipping lines and that, if the proposed suggestions were to be implemented throughout the entire maritime freight import and export industry in South Africa, the total savings could amount to a substantially higher amount.

The indirect environmental impacts from the resulting impact on congestion and the production and distribution of the energy source (petrol) required for these trips are also not included in this study. Also, the emissions of other air pollutants (such as NOx, SOx, CO, PM10 and VOC) associated with transportation were not included in this study. These are all areas of interest for future research to determine the full extent of the externalities of maritime cargo transportation.

ACKNOWLEDGEMENT

This research was instigated, funded and supported by Megafreight. Without the data that was made available and the verbal clarifications provided, this research would not have been possible.

REFERENCES

Aikens J., Q.C. Richard and M. Bools (2006), Bill of Lading, EDITION: Lloyd's and the Lloyd's Crest, 1st Edition, ISSN: 1 84311 438 0

ATA Foundation (2000). O’Hare Cargo Security Access System: Testing the Effectiveness of Biometric Smart Card Security. June, 2000

Taiwan Data processing company (2006), An evaluation study of paperwork requirements for international air cargo shipments and the effects of the implementation of an Automated Electronic Chain Manifest system.

U.S Department of Transportation Office of Affairs (USDoTOoA, 2003), U.S Secretary of Transportation Mineta Announces Successful ITS Operational Test for Intermodal Freight, February, 2003. http://www.dot.gov/affairs/briefing.htm