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General Issue Category
(Industry agnostic)

Disclosure Topics (Industry specific) for:
Air Freight & Logistics

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GHG Emissions

Greenhouse Gas Emissions

Companies in the Air Freight & Logistics industry generate direct greenhouse gas (GHG) emissions that contribute to climate change. Emissions are generated from fuel combustion by both air and road freight operations. Given the altitude of the emissions from jet fuel, air freight makes an especially potent contribution to climate change. Management of GHG emissions is likely to affect air freight and logistics companies’ cost structure over time, as emissions are tied directly to fuel use, and thus to operating expenses. Fuel efficiency and the use of alternative fuels offers a way for companies to reduce fuel costs and/or limit exposure to volatile fuel pricing, future regulatory costs, and other consequences of GHG emissions. While newer aircraft and trucks are generally more fuel-efficient, existing fleets may be retrofitted. Capital investments in more fuel-efficient airplanes and/or vehicles and emerging fuel-management technology may potentially reduce ongoing fuel expenses and improve profitability. It can also help companies potentially capture market share of customers seeking low-carbon shipping solutions.

Air Quality

Air Quality

Companies in the Air Freight & Logistics industry generate air pollutants that may threaten human health. The industry’s primary air emissions include sulfur oxides (SOx), nitrogen oxides (NOx), and particulate matter (PM), which have localized negative effects on air quality. As regulators debate the most efficient mechanisms to reduce local air pollution from the industry, companies may be forced to increase operating costs or make investments to modernize their fleets due to regulatory pressure, customer demand, and rising fuel costs. Use of more expensive alternative fuels and mechanisms that filter emissions prior to release into atmosphere can also impact a company’s cost structure, requiring upfront costs but decreasing exposure to regulation over the long term.

Labor Practices

Labor Practices

The Air Freight & Logistic industry’s reliance on independent contractors, mainly for courier driving, has come under increasing regulatory scrutiny. Independent contractors may not be not covered under the same laws that protect employees, and companies may face regulatory sanctions for misclassifying employees as independent contractors. Companies may also face legal actions from employee and contractor claims regarding wage payments, benefits, and working conditions. This may also negatively affect their reputation and ability to hire and retain employees, reducing operational efficiency and increasing turnover costs.

Employee Health & Safety

Employee Health & Safety

Employees in the Air Freight & Logistics industry may be exposed to dangerous working conditions, including accidents resulting from mechanical failure or human error. Additionally, moving packages manually is a physical process that requires special training in order to minimize injury. While the fatal occupational injury rate for trucking workers is higher than average, worker safety issues in aviation are highly regulated, which raises the risk of fines or penalties when an incident occurs. Health and safety incidents may result in work stoppages and a range of costs, from medical expenses to workers compensation. Such incidents can also reduce productivity, and thus revenues, if employees believe their safety and well-being are not being prioritized. Finally, companies with poor safety records may also face increased insurance premiums and higher costs of capital, as well as reputational damage that could reduce revenue and market share. A company can mitigate these impacts by providing adequate protection and training for employees, ensuring mechanical equipment is safely functioning, and establishing a culture of safety within the workplace.

Supply Chain Management

Supply Chain Management

Many companies in the Air Freight & Logistics industry contract with large, complex networks of asset-based third-party providers to provide freight transportation services to their customers. Contracting is especially common among companies providing freight forwarding, logistics, brokerage, and intermodal services. These contractors range across all modes of transport such as motor carriers, railroads, air freight, and ocean carriers. Companies need to manage the relationships with their contractors in order to ensure that contractor actions that lead to environmental or social impacts do not result in material adverse effects on their own operations, such as decreased brand value. At the same time, companies that are able to offer low-carbon logistics solutions may capture market share from customers seeking to reduce the carbon footprint of their shipments.

Critical Incident Risk Management

Accident & Safety Management

All modes of transportation pose safety risks. In some cases, mechanical failure or human error may lead to accidents with significant environmental or social consequences, including regulatory action and lawsuits from impacted communities or customers. While the stringency of regulatory requirements may vary by the region of operation, companies that maintain the highest safety standards throughout their global operations can minimize the risks of safety incidents that affect their reputation and profitability.

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