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Yusen Logistics makes the most of its network of 650 bases in 46 countries and regions worldwide to provide customers with optimized solutions, including ocean and air freight forwarding, warehousing, distribution services, and supply chain management. In order to meet the request of customers who wish to visualize and reduce greenhouse gas (GHG) emissions, the Company is introduces sustainable aviation fuel (SAF) for air freight forwarding services in Japan, leading the country in environmental responsibility KPMG Consulting helped designing this service model and preparing for its implementation.

[Interviewees]

Ms. Irene Tung, Head of Supply Chain Solutions Group, Yusen Logistics Global Management Limited
Mr. Kevin Chia, Deputy Head of Air Freight Forwarding Group, Yusen Logistics Co., Ltd.

Naohiro Kaneko, Partner, KPMG Consulting Co., Ltd.
Yusuke Nakano, Associate Partner, KPMG Consulting Co., Ltd.

郵船ロジスティクス トン氏、チア氏

Right: Ms. Irene Tung, Yusen Logistics Global Management Limited/ Left: Mr. Kevin Chia, Yusen Logistics Co., Ltd.

Air transport service using SAF to contribute to sustainable logistics

It is estimated that the greenhouse gases (GHG) emitted in the logistics business sector accounts for nearly 15-20% of total GHG emissions in the world. For this reason, reducing GHGs emitted during air, road, and ocean transport is becoming one of the important issues in realizing carbon neutrality by 2050.

SAF utilization is attracting public attention as a means of reducing GHG emissions during air transport. SAF is a general name for sustainable aviation fuel manufactured from recyclable raw materials, including waste oil such as used cooking oil, plants, and waste plastics, rather than kerosene produced from petroleum (conventional jet fuel).

One benefit of using SAF is to contribute to reducing GHG emissions (Scope 3) for shippers that utilize the services of SAF-uplifting airlines. In general, airlines who uplift SAF will issue a certificate, showing as environmental value, the amount of GHG emissions reduced through the use of SAF compared to kerosene-based jet fuel. Using such a certificate as evidence, shippers can claim the amount of GHG emissions reduced for air transport activity.

Besides offerings directly from airlines to the downstream, forwarder-oriented services utilizing the environmental value brought about by SAF have already begun. Yusen Logistics has started to work on such services in Japan earlier than market peers in the country.

“We are providing one-stop solutions to optimize the supply chain management of customers. In order to not only respond to conventional needs for faster, less expensive services but also help customers meeting the new challenge of realizing carbon neutrality, we have launched new services using SAF,” said Ms. Irene Tung, who oversees the Supply Chain Solutions Group at Yusen Logistics Global Management Limited.

郵船ロジスティクス トン氏

Ms. Irene Tung, Yusen Logistics Global Management

Yusen Logistics is a forwarder that provides freight forwarding services to transport cargoes on behalf of shippers. While not operating as own means of transport, its role is to transport shippers’ freight by entering into agreements with airlines/shipping companies. Launched by Yusen Logistics in April 2023, “Yusen Book-and-Claim” is an add-on forwarding service in which the company uses the environmental value generated from airlines who use SAF as part of the aviation fuel for the respective amount of freight transported by air, and allocate to shippers with their desired amount of reductions (SAF allocations).

[Service Model of "Yusen Book-and-Claim"]

Case Study: Yusen Logistics Co., Ltd._Figure1

Source: KPMG Consulting

“Many airlines have already started to uplift SAF. The SAF procurement cost is extremely high, at several to ten-odd times that for kerosene, but SAF helps reducing GHG emissions by about 80%. Since SAF is one of the few measures that are expected to be effective in realizing carbon neutrality for air transport, the Japanese government has set the goal of replacing 10% of conventional aviation fuel with SAF by 2030. It can be said that "Yusen Book-and-Claim" is a pioneering service in Japan that will contribute to achieving this goal,” said Naohiro Kaneko, Partner at KPMG Consulting.

Issuing Yusen Logistics’ own certificates to visualize GHG emissions during air transport

In addition, Yusen Logistics has actively worked to realize carbon neutrality, including opening to the public “CO2 e-calculator,” a system to calculate GHG emissions during transport.

“Our current environmental goal is to achieve net-zero emissions for all of the services we provide to customers by 2050. The important direction is to make all means of transport such as air, ocean, and road more efficient and at the same time with reduced GHG emissions,” added Ms. Irene Tung.

Such an advanced attitude led to an initiative in which Yusen Logistics provided services using SAF earlier than any other forwarders in Japan. However, the content of the "Yusen Book-and-Claim" service immediately after its original launch was not satisfactory enough to Yusen Logistics.

郵船ロジスティクス チア氏

Mr. Kevin Chia, Yusen Logistics

“At first, together with SAF allocations, we delivered the documents provided by airlines which certified the amount of GHG emissions reductions. However, since the basis for calculating emissions varied from one airline to another, this could potentially cause confusions to customers. Therefore, we considered whether we could issue our own GHG emissions reductions certificates, aggregating information from each airline.”

Thus said Mr. Kevin Chia, Deputy Head of Air Freight Forwarding Group at Yusen Logistics, who was involved in developing the "Yusen Book-and-Claim" service.

Issuing a GHG emissions reductions certificate independently required third-party certification to support its content trustworthiness. In order to acquire such certification, Yusen Logistics requested support from KPMG Consulting, which has an extensive track record in SAF-related consulting.

Explaining the reason Yusen Logistics chose KPMG Consulting as a partner of this project, Mr. Chia recalled, “KPMG Consulting responded most proactively and specifically, and we highly evaluated such a swift response. They understood the circumstances of SAF in Japan, not to mention trends in Europe and North America, which were both more advanced in SAF, and we felt they were reliable.”

Bringing the total strength of KPMG together to sort out challenges for accounting and tax process

Thus, Yusen Logistics started to deliver its own GHG emissions reductions certificates as a refined service of “Yusen Book-and-Claim,” in January 2024. This represented a Japanese forwarder’s pioneering initiative.

“We aim to become the world's preferred supply chain logistics company. To that end, we will actively take on new challenges earlier than anyone else in the industry. I believe that the ability to issue more user-friendly GHG emissions reductions certificates to customers independently is a major factor for distinguishing Yusen Logistics from others,” said Mr. Kevin Chia.

In addition to third-party certification for GHG emissions reductions certificates, Yusen Logistics asked KPMG Consulting for various kinds of support when expanding its "Yusen Book-and-Claim" service scope. One of the extended support was to sort out challenges for the handling of accounting and tax process for the SAF environmental value procured from airlines.

“The SAF price includes not only the value of fuel itself but also environmental value, which shows how much environmental impact can be reduced by using SAF. There is no established international rule to calculate such environmental value, presenting challenges for accounting and tax process,” explained Yusuke Nakano, Associate Partner at KPMG Consulting.

KPMG Consulting worked with KPMG AZSA LLC and KPMG Tax Corporation to support in designing the end-to-end business processes and IT tools associated with the provision of the "Yusen Book-and-Claim" service by comparing environmental value with economic value and related systems in Japan and abroad.

”This is a high-profile service that affects the entire value chain from fuel manufacturers and airline companies to forwarders and shippers, but since the business scheme was still being developed, a wide range of issues, including accounting and tax affairs, needed to be examined. We are very honored that we were able to involve ourselves in supporting Yusen Logistics’ challenging initiative at the dawn of this new business area as it was expected to continue undergoing changes in the future. We hope that we will be able to contribute to ensuring the sustainability of the logistics business as typified by SAF utilization in the years to come,” commented Kaneko.

As there are still many uncertainties around SAF in Japan, including its systems, Yusen Logistics took an advanced stance and already started to provide SAF-related services.

Ms. Tung said, “Yusen Logistics’ initiatives toward net-zero emissions and the areas in which it should meet customer needs are not limited to air transport. In the future, as a supply chain logistics company that develops business globally, we will continue to consider services like "Yusen Book-and-Claim" in ocean and road transport as well. We hope that KPMG Consulting will continue to offer useful suggestions.”

郵船ロジスティクス トン氏、チア氏、KPMG 金子、中野

Back right: Naohiro Kaneko, KPMG; back left: Yusuke Nakano, KPMG/ Front left: Mr. Kevin Chia, Yusen Logistics; front right: Ms. Irene Tung, Yusen Logistics Global Management

KPMG Consulting will contribute to realizing a sustainable society by providing comprehensive support to Yusen Logistics and other customers.