Climate-conscious shipping: How to navigate the evolving regulatory landscape
Sustainability in transportation and logistics continues to evolve and fluctuate as the end of 2024 nears. Upcoming international regulations, newly elected government leadership, and shifting policies will create a fluid environment for shippers and carriers, prompting global supply chains to adapt to newly emerging pressures and potential regulatory changes.
International regulations impacting shipping
Global shippers with climate goals will benefit from international regulations that either mandate sustainability disclosures or aim to accelerate the adoption of more sustainable freight transportation methods. Even companies without public climate targets will operate within regulatory environments that penalize environmentally harmful practices. The following key sustainability trends and regulations will impact global shipping in 2025 and beyond.
Disclosure mandates for global emissions reporting will continue
Throughout 2024, global companies have been preparing for implementation of the European Union’s (EU) Corporate Sustainability Reporting Directive (CSRD), even if they are domiciled elsewhere. Starting as early as 2025, CSRD will require many companies with a large European presence to report publicly on climate goals, progress, and data.
It is anticipated that more than 50,000 companies worldwide will need to comply with this EU mandate to report on people and the environment, including Scope 3 value chain greenhouse gas emissions, pollution, water, waste, and more.
Regional mandates will impact companies regardless of sustainability commitments
As of January 1, 2025, the ReFuelEU Aviation Initiative mandates a 2% sustainable aviation fuel blend for certain suppliers, airports, and airlines across the EU. Flights departing from EU countries will see a fee surcharge and reporting on the emissions benefits will be complex. The mandate will continue to increase, blending to 6% by 2030 and 20% by 2035.
Mandates will attempt to incentivize change at pace with regional goals
Market-based mechanisms will continue to drive sustainability in regions where decarbonization is a priority. In the EU’s pursuit of carbon neutrality, the EU Emissions Trading System (ETS) functions through a ‘cap-and-trade’ principle to limit total allowable emissions.
Shippers will continue to see price increases implemented by ocean carriers to cover the costs of compliance efforts if they do not adopt cleaner technologies or operate more efficiently. Because of this, transportation decisions should consider not only the company’s own climate aspirations, but regional climate aspirations within the area of operation.
Environmental mandates in the United States
As stated in the November Freight Market Update, President-elect Trump indicated a shift in supply-chain-related policy and a reduction in environmental mandates in the United States. To better track legislative trends and how they will change with the new administration, it's important to consider both the intended purpose of the regulations and how they aim to achieve their goals.
For example, not all mandates explicitly address climate change, but do motivate the reduction of greenhouse gases or encourage industry decarbonization through other goals, such as air quality or energy efficiency.
Purpose of regulations
How this is accomplished
Items above are summary examples of notable mandates but are not intended to be a comprehensive example of all mandates.
Key areas to watch as regulations shift
Shippers that choose not to change overarching climate goals should still anticipate how changing regulations will impact existing decarbonization plans. Here are a few things to watch for as the regulatory landscape shifts:
Changes to the ROI of near-term plans
Although renewable diesel prices are attractive or near parity to conventional diesel in some regions, it may become more difficult to prove a positive ROI in a business context. For example, President-elect Trump intends to increase access to oil and lower costs for diesel. Accordingly, alternative fuels or other pathways to decarbonization could become less accessible or financially attractive.
Adjusted cost or availability projections for ideal solutions
Forthcoming shifts in policy could include more stringent rules on electric vehicle (EV) tax credits and incentives. Although these benefits may not be eliminated, stricter guidelines could make sales or purchase of the technology less appealing. In the U.S., potential new tariffs on Chinese imports may limit EV availability due to high prices. Additionally, support for EV infrastructure may not be as expedient or robust, which may impact decarbonization timelines.
Increased need for shipper investment, less reliance on regulation
U.S. regulations like Advanced Clean Fleets (ACF) currently require a waiver from the Environmental Protection Agency (EPA). This rule provides exclusive access to zero-emission cargo trucks at California ports and rail yards by 2035 and is the companion rule to Advanced Clean Trucks (ACT). Shippers will need to be less reliant on regulations for market movement and more intentionally invested with carriers, infrastructure players, and original equipment manufacturers (OEMs).
Navigating these changes doesn’t have to be complex. C.H. Robinson can help navigate emissions reporting across all modes and provide insight on emissions reductions levers unique to your supply chain.