Pulse Insights: Reducing the Carbon Impact of Trade: Where Supply Chain Design Can Help

At a time when supply chain leadership must already balance pressures such as cost, lead time, and resilience, adding carbon considerations may feel like yet another constraint. Environmentally efficient networks, however, bring opportunities to reduce unnecessary movements and better manage exposure to fossil fuel price fluctuations.

The challenge is significant. 2026 data from the European Climate Foundation shows that international trade now accounts for more than 20% of global greenhouse gas emissions. Traded emissions have also grown 10 percentage points faster than overall emissions since 1995 to date, with countries with high import dependence seeing imported emissions account for 40% or more of their carbon footprint this year.

The issue is also becoming commercially relevant. This year, the EU’s Carbon Border Adjustment Mechanism has introduced definitive reporting and financial obligations for importers of specific carbon-intensive goods, based on embedded emissions. Japan’s Green Transformation Emissions Trading System has also entered its mandatory phase, requiring large businesses with specific emissions thresholds to participate, and other countries are also tightening or introducing new regulations.

The practical question now is: how can the industry design supply chains that reduce emissions, while still meeting cost and service expectations? And, beyond redesign, how can changes in transportation energy advance emissions reduction goals and drive a greener industry?

Eva James, Advisor on Sustainability at APL Logistics, explains how businesses can tackle both of these questions by looking at logistics decarbonization across three emissions drivers:

1. Transport activity
2. The energy activity consumes
3. Emissions from the energy source

Where Supply Chain Design Makes the Biggest Difference: Transport Activity and Energy Consumed

Some of the biggest emissions reduction opportunities come from decisions made further upstream in the chain. James stresses, however, that no place is too small to start.

Designing efficient supply chain networks

Carbon reduction is often a low-tier consideration in supply chain decisions, well behind cost and lead time. Decisions made for other strategic reasons, however, such as sourcing diversification or resilience, can also have positive carbon consequences.

Near-sourcing, for example, reduces the distance products travel, although overall emissions benefit will vary by transport mode and fuel source. Alternative sourcing can also shift the balance between manufacturing and transportation emissions in a favorable direction. Designing the supply chain so that the need for costly measures such as emergency air freight and significant rerouting is reduced can simultaneously lower emissions over the life of a supply chain.

By including carbon in network design decisions, the emissions implications of chosen sourcing and logistics options are always visible. For APL Logistics, this has meant bringing emissions estimates into network design proposals alongside cost, service and resilience considerations, helping shippers understand the carbon implications of different options and ways to reduce the footprint of a preferred design.

Operating networks efficiently

Once a network is designed, logistics optimization through consolidation, full container utilization, efficient routing, and appropriate modal choices can further reduce its carbon footprint, simply by improving how efficiently goods move. Measuring both absolute emissions and transport emissions intensity (for example, CO₂e per ton-kilometer) also helps distinguish that volume changes from changes in network efficiency.

But James stresses that, while supply chain design and logistics optimization can meaningfully reduce transport activity and the energy consumed, achieving deeper decarbonization at the energy source level will require a shift away from fossil fuels in transportation.

Where Greater Change Is Needed: Decarbonizing Energy

Initial investment costs can be a legitimate (and intimidating) barrier to immediate “green” fuel and transportation adoption for supply chain leaders.  Fortunately, decarbonization efforts and greater business resilience can again reinforce each other, as recent energy market disruption highlights.

With the recent disruption in the Middle East, steep diesel cost increases have heavily impacted trucking operations. GlobalPetrolPrices.com data reveals that the Philippines, for example, saw diesel prices surge by 57% between the onset of the conflict on February 28, 2026, and August 2026. Looking at EV-based freight transport can limit exposure to this price volatility while reducing emissions. As James notes, “Do you want to be handcuffed to diesel price fluctuations? Or can you learn from it and electrify? People want to diversify their suppliers — why not diversify energy sources alongside them?”

Electrification is one part of the transition. Businesses can also encourage the transition from fossil fuel reliance by advocating for greener fuels, and lower-emission lanes in carrier and procurement discussions. These demand signals encourage logistics providers to invest in lower-carbon solutions and support better pricing parity. Logistics partnerships with a “green” network further support decarbonization efforts on the lanes or corridors used regularly.

James also highlights that book-and-claim models, now recognized by SBTi V2.0 for ocean shipping, can help build demand for lower-carbon shipping as scalable greener capacity develops. Their use must meet the relevant integrity requirements.

Making Carbon Part of Supply Chain Design

Currently, the opportunity for supply chain leaders lies in bringing carbon into the same cost, service, and resilience decisions they are already making. Better network design and efficiency offer meaningful carbon reductions now. Meanwhile, a shift away from fossil fuel-reliant transport and discussions with providers and carriers around carbon reduction activities can create the pressure needed for deeper, industry-wide decarbonization.

If you’re looking to support decarbonization goals in your supply chain, APL Logistics’ team is ready to support you.
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Disclaimer: This article is issued for general information purposes only. APL Logistics accepts no responsibility for any information contained within this article and disclaims and excludes any liability in respect of the contents or for action taken based on such information.

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