How SDGs are transforming the freight forwarding business

Although the freight forwarding business is predicted to grow at a compound rate of 5.5%, the companies are not yet fully committed to the SDGs. Photo: TBS

Freight forwarding is a logistical service that facilitates the transportation of goods from one location to another, typically across international borders. This business acts as an intermediary between shippers and carriers, managing various aspects of the shipping process, such as documentation, customs clearance, and transportation coordination. 

By leveraging their expertise in shipping regulations, routes, and carriers, freight forwarders optimise the movement of goods, while ensuring compliance with relevant laws and regulations. They play a crucial role in streamlining global supply chains by providing efficient and cost-effective solutions for businesses seeking to transport goods domestically or internationally.

Today, the Sustainable Development Goals (SDGs) are driving the freight forwarding business towards greater sustainability and responsible practices. Companies in this sector are increasingly integrating environmentally-friendly transportation options, reducing carbon emissions, and promoting social responsibility throughout their operations. 

According to a study conducted by the Shenzhen Science and Technology Innovation Commission, China, fewer than half of the leading corporations in the transportation and logistics (T&L) sector demonstrate a commitment to the SDG framework. The freight forwarder (FF) business is an essential stakeholder in the T&L sector. 

Since 2015, FIATA (International Federation of Freight Forwarders Association), the global apex association of freight forwarders, has advised embedding logistics connectivity into the SDG process, which is the prerequisite to achieving sustainable development. The freight forwarder business sector encompasses many industries, including manufacturing, trading, retail, consumer goods, etc. 

Major global freight forwarders are aligning their ESG (environment, social, and governance) framework with some of the SDGs on sustainability issues.

How freight forwarder businesses are committing to SDGs  

Sustainability issues in general and SDGs in particular are essential aspects of the freight forwarder business. All major global freight forwarders' reports provide information on sustainability actions, or SDGs.

The freight forwarder (FF) business facilitates trade in various modes of transportation. The traditional role of assisting exporters and importers in shipping goods internationally through common carriers has changed. Nowadays, a freight forwarder may perform the roles of agent, contractor, and principal. 

The global freight forwarding market was estimated at $200 billion in 2022 and is anticipated to reach around $320 billion by 2032, growing at a compound annual growth rate of roughly 5.5% between 2023 and 2032. 

Only a few global top forwarders, including Kuehne + Nagel, DHL Supply Chain, DSV, DV Schenkar, Sinotrans, Expeditors, CEVA Logistics, Nippon Express, C.H. Robinson, Kerry Logistics, and others, are active in business sustainability issues.

The companies involved in the freight forwarder business opt for different models of sustainable management, for example — corporate social responsibility (CSR), environmental, social, and governance (ESG) criteria, and the triple bottom line (TBL) of economic, social, and environmental performance. 

ESG practices can achieve many SDGs, including reducing carbon emissions, improving working conditions, and promoting diversity and inclusion. In turn, ESG helps to accelerate the SDGs' achievement. 

For example, the Deutsche Post DHL Group ESG roadmap closely aligns with the six SDGs, i.e, 4, 5, 8, 11, 13, and 17 of the SDGs.  

DSV A/S is a Danish transport and logistics company committed to applying a sustainable approach, and its seven UN primary sustainability goals are 7, 8, 10, 12, 13, 16, and 17. 

DB SCHENKER, a German freight and logistics company, connected nine SDGs (3, 4, 5, 8, 9, 1, 12, 13, and 17) in their sustainability strategic framework based on their overall ESG strategy. 

Sinotrans Limited, a logistics company in China, follows the ESG framework for sustainability issues. Kuehne + Nagel AG is a global transport and logistics company based in Switzerland that directly or indirectly influences all 17 SDGS to keep businesses sustainable, and their focus was on the following SDGs: 3, 5, 6, 7, 8, 9, 10, 12, 13, 16, and 17 (2022). 

C H Robinson Worldwide, Inc is a freight transportation company management, brokerage, and warehousing company (USA). Its ESG report 2022 highlighted major sustainability issues the company works on, including climate action, people empowerment, and responsible business practices.

SDGs that the freight forwarding business should adopt 

It can be seen that, despite complying with SDG 17 (Partnership for the Goals), the freight forwarder companies only committed to a small number of SDGs. One possible conclusion is that businesses may have given collaboration and partnerships (SDG 17) more importance than other SDGs. 

This could be people's perceptions of the difficulty or expense of addressing other SDGs or people's ignorance of how their activities affect other objectives. Again, some companies need to directly align their ESG factors with specific SDGs. 

By incorporating ESG principles into their operations, companies can address issues reflected in the SDGs. Companies that integrate ESG principles and SDGs into their operations can lead to more comprehensive and impactful sustainability initiatives.

SDGs 3, 7, 9, 11, 12, and 13 directly relate to sustainable freight transport and provide a readily available framework for it. Not all 17 SDGs will be equally relevant to a company. 

However, it is crucial to consider the specific issues that may impact the business, taking into account risks to people and the environment, as well as beneficial products, services, and investments. This can be achieved by reviewing all 17 SDGs and their respective targets. 

How freight forwarding companies can engage more in the SDG framework

To be sustainable, companies involved in freight forwarding must take action on three dimensions of sustainable development, i.e, environmental, economic, and social considerations. Likewise, other business sectors may renew their interests to achieve the SDGs. 

Besides implementing the SDGs at the national and sub-national levels, the business sector is also essential to attaining them. This sector is responsible for 84% of GDP and 90% of employment possibilities in developing nations. 

It also plays a critical role in the quest for technological innovation. Thus, at every step of company development, the business sectors may connect their commercial value with the SDGs, not just a few SDGs.

Freight forwarder businesses may look at sustainable development from a broad perspective and align their operations with all SDGs, not just a few. By doing this, businesses can positively influence a wider range of social, economic, and environmental challenges and make a more meaningful contribution to global sustainability initiatives — an unprecedented consensus and firm pledge of 193 countries that freight forwarders may embrace more.

Sayeed M Hassan is a captain of Bangladesh Navy and current Director of Finance and Accounts, Bangabandhu Sheikh Mujibur Rahman Maritime University, Bangladesh (BSMRMU). 

Disclaimer: The views and opinions expressed in this article are those of the author and do not necessarily reflect the opinions and views of The Business Standard.