This article, is part of a series in which OECD experts and thought leaders — from around the world and all parts of society — discuss and develop solutions now and for the future. Aiming to foster the fruitful exchange of expertise and perspectives across fields to help us rise to this critical challenge, opinions expressed do not necessarily represent the views of the OECD.
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Prior to the last two years—and assuming you don’t work for an international logistics company—when was the last time you really stopped to think about the interconnectivity of global supply chains?
We often forget about the global movement of goods until there’s a holdup, like constrained air cargo capacity or recent congestion in ocean shipping, or when we are reminded of their criticality when people around the world need goods and relief supplies amid natural disasters or public health crises.
The logistics industry is not only facing the challenges of maintaining agile and resilient supply chains in times of need. Like every industry, we are also focused on the urgency of climate change, working to transition towards lower-carbon operations and to adapt to an already changing environment. Physical risks such as more severe and variable climatic events, including coastal flooding exacerbated by rising sea levels, will impact every company with a footprint spanning and connecting geographies. In other words, the future of our business depends on the future of our planet.
Read more: Resilient Trade Starts with Sustainable Supply Chains by Didier Bergeret, Director of Sustainability, The Consumer Goods Forum
Last year, FedEx announced an ambitious goal to achieve carbon-neutral operations globally by 2040. This plan includes electrifying our entire pickup and delivery fleet, using more sustainable energy sources and improving energy efficiency throughout our fleet and facility network.
But anyone involved with reducing emissions in hard-to-abate sectors like air transportation must be clear-eyed: such a massive transition will not happen overnight, given the lead time to develop sustainable transportation technologies and the limited current market availability of the technologies that do already exist. Plus, as the increased volume of air cargo flights during the pandemic demonstrated—supporting both critical healthcare supplies like COVID-19 vaccines and increased e-commerce shipments—we are likely to endure a period where shipping volumes continue to grow while the market for green transportation technologies catches up.
So as the private sector and policymakers work to accelerate the development and commercialisation of more sustainable transportation technologies—and as billions of consumers around the world rely on global supply chains to deliver goods—there are some lesser-known tools that can help make international trade less carbon intensive in the nearer term.
Here’s what is already available in policymakers’ trade facilitation toolkit to advance sustainability goals:
Modernise customs processes at the border: Improving the speed and efficiency of the border clearance process doesn’t just save time and headaches—it can have quantifiable benefits for emissions reduction as well.
- UN-backed research on climate-smart trade facilitation found that shifting to an electronic, single-window customs system in the island nation of Vanuatu reduced CO2 emissions by more than 5,800 kg in one year, by eliminating paper documents and reducing the number of car trips by officials to facilitate potentially unnecessary inspections. Improving efficiency of the customs clearance process may also have additional benefits at land-border crossings in particular. An analysis of the U.S.-Mexico border crossing at Nogales found that 100% enrollment in the Free and Secure Trade (FAST) programme by heavy-duty vehicles crossing the border into the United States could “achieve between 31-36% savings in emissions” from the reduction in idling time while waiting to clear customs.
- The pandemic forced advances in automation and digitisation of customs processes, and we should ride this momentum towards further modernisation for the benefit of the climate. Implementing climate-related trade policies need not result in a slower clearance process.
- Align with global trade principles: Protectionism won’t protect the planet. Sustainability measures should align with World Trade Organization (WTO) rules to ensure that climate-conscious trading partners and businesses can remain competitive against others, and prevent the tit-for-tat escalation in retaliatory tariffs that stem from non-compliance with WTO rules. A number of existing free trade agreements already have environmental components, which should be monitored for proper enforcement.
Strengthen supply chains for sustainable goods: Transitioning to more sustainable technologies often depends on sourcing inputs for things like EV batteries from other economies in the supply chain. Restricting trade may result in limited access to key inputs, making the supply chain anything but resilient. A stronger supply chain is a more diverse one, and establishing a more diverse supply chain requires flexibility to source inputs from many different trading partners. Trade instruments, whether through the WTO or established bi-laterally or plurilaterally, can provide an enabling environment to diversify supply chains. Trade can also help accelerate innovation by providing larger global demand for new products and services.
- Plus, expanding trade helps small- and medium-sized businesses sell specialised products that advance environmental or social goals, like recycled or upcycled products, fair trade products and more. Take the example of a recent Latin American FedEx Small Business Grant Contest winner: Argentinean fashion company Fracking Design recycles discarded plastic bags from oil companies in Vaca Muerta and transforms them into accessories for sale around the world.
Trade and the environment share a fundamental feature: global interconnectedness. While trade policy alone can’t mitigate the effects of climate change, connecting the world with goods and opportunities can be done in a more responsible, efficient and resourceful manner with the help of climate-smart trade policy.
Learn more using the interactive OECD portal for supply chain resilience