All companies – from consumer products to manufacturers to retailers – can find significant cost and carbon emissions savings in their logistics network. The latest example is Caterpillar.  Its efforts were recently highlighted in Inbound Logistics – a leading industry publication.

Caterpillar, the world’s largest manufacturer of mining and construction equipment, cut carbon emissions and costs by switching to lighter-weight containers and consolidating inbound shipments of truck parts to its assembly facility. This Caterpillar story is the second in a series of EDF and MIT case studies about carbon-efficient logistics.

Caterpillar’s story is unique because it focuses on two key areas – inbound logistics and packaging. EDF has five principles for improving freight sustainability:

1. Support “Hot Spot” Clean Up.
2. Choose the most carbon-efficient mode possible.
3. Collaborate with other shippers.
4. Redesign your own network for efficiency.
5. Get the most out of each move.

The Caterpillar case demonstrates three of the five, but with a twist.

Redesign your network for efficiency

Caterpillar redesigned its inbound logistics network for efficiency. Inbound logistics, in this case, refers to the movement of truck parts to Caterpillar’s assembly facility in Decatur, Illinois from suppliers. Because the parts are coming from many suppliers, relatively infrequently, and in low volumes to an area that is not heavily trafficked, it means the network consists of individual shipments of parts from suppliers on trucks carrying small loads. This presents an opportunity for Caterpillar to reduce truck miles by consolidating inbound shipments from multiple suppliers within close proximity to each other.

Collaborate with other shippers

Caterpillar collaborated with suppliers to consolidate inbound shipments from multiple suppliers. Also, in order to make the switch from heavy steel containers to lighter-weight plastic containers that the parts are shipped in, there was significant collaboration between the logistics team and other teams within the organization.

Get the most out of each move

In addition to consolidating shipments, Caterpillar also looked at the packaging that these parts were shipped in and realized that by switching from steel containers to lighter-weight plastic containers, they could reduce carbon emissions by 16.5 percent.

The combination of reducing the weight of packaging and consolidating shipments enabled Caterpillar to reduce overall truck miles and maximize the utilization of trucks. Caterpillar demonstrates how despite challenges of a unique network, companies can still find significant efficiencies with effective collaboration internally and externally. And that is Caterpillar’s goal:

"Internally, we are looking at ways to make our own operations more efficient. Externally, we are trying to find ways to make our customers more efficient." -Terry Goff, Caterpillar's director of emissions regulation and conformance.

The first case study in the MIT-EDF series described how Ocean Spray Cranberries cut their emissions by 20 percent  in their northeast distribution system by collaborating with a competitor and switching from road to rail transport.

The Caterpillar case study tells a story of quite a different challenge – collaborating with suppliers as opposed to competitors and making packaging changes as opposed to switching modes.

But, both companies were both able to bring carbon emissions down, while saving money.

Carbon emissions from freight transportation are on track to increase by 40 percent over the coming decades. The good news is that we can work together through a combination of strategies – stronger policies that allow for the manufacture of more efficient trucks, trains and ships, and smarter operational logistics practices that allow companies to see lower transportation costs and sustainability benefits – to bring the curve down.

All companies can find significant cost and carbon emissions savings in their logistics network. All you have to do is look. You can start with EDF’s five rules.

To read the full MIT case study click here. To read the EDF summary version click here.

Subscribe to receive our blog updates by email, like our page on Facebook and follow us on Twitter.

A great piece in the Wall Street Journal caught my eye last week.  The article highlighted the impressive productivity gains trucking fleets have made recently. These, in turn, have led to a reduction in average truck miles of two percent from 2006. 

Two percent might not seem like much. But, by increasing the productivity of these assets, this change avoided over 8 million tons of carbon pollution last year.That’s no small feat.

As the article noted, these gains weren’t the result of a new technology or a superior truck. These gains were driven by operational improvements, such as  moving more goods per truck because of lighter weight and smaller packages, and better planning and routing so there are fewer empty trucks on the road. These are the exact types of operational strategies that comprise our Five Principles For Improving Supply Chain Efficiency And Sustainability.

When it comes to the carbon reduction potential of these  strategies, an 8 million ton reduction is just the tip of the iceberg.  Supply chain optimization and modal switches can save millions more tons. Collaborative logistics strategies have the potential to cut annual emissions by 200 million tons. These steps save companies money too – as Ocean Spray Cranberries has demonstrated.  We need to do all of these … and we need to do a lot more too.

For as important as these efficiency steps are, they are not going to be sufficient on their own. 

Fact of the matter is that emissions from freight transportation are projected to increase by nearly 200 million metric tons over the coming years.  For context, this increase is greater than what is expected in the commercial, industrial or residential sectors.  Freight already accounts for over half-a-billion tons of carbon pollution each year in the U.S.  We simply can’t afford to see such a significant growth in freight emissions.

So, how do we not only avoid this growth in emissions, but actually bring them down?  We need to pair increases in significant productivity gains with radically more efficient trucks.

Trucks are expected to account for over 80 percent of the increase in freight greenhouse gas emissions. Successful efforts to not only slow the growth in freight emissions – but actually reduce emissions from today’s levels, must improve trucks first and foremost.

Increasing the productivity of trucks is a needed step forward.  Every time a company gets more products on a truck or avoids an empty backhaul it equates to fewer trucks on the road. Using more carbon efficient modes is critical too.  Rail emits six times less carbon per ton mile than trucks. Ultimately, there will still be a lot of trucks on the road and we need for these to be as efficient as possible.

It was, therefore, great to also read in the article the interest truck buyers and truck makers have in more efficient trucks.  As the piece noted,

“Truck makers are pinning their hopes on more fuel-efficient vehicles to stimulate replacement demand, looking to emulate the success of auto makers in driving demand back to pre-recession levels.” And;

“A loaded heavy-duty tractor with a detachable trailer typically uses a gallon of fuel every 5 to 6.5 miles. Getting just one more mile a gallon saves thousands of dollars a year on the fuel cost for a single truck.”

How far can we push these trucks? Cummins and Peterbilt recently revealed that they built a truck for the DOE Supertruck program that "averaged 9.9 miles a gallon in road tests last fall."

Also, the CEO of Daimler Trucks North America (DTNA) Martin Daum recently called for his company to deliver a 10 MPG truck to the U.S. market. He noted that the company – which is the market leader for truck chassis and number two for truck engines – already manufactures a tractor that combined with a full trailer aerodynamic package can produce today a 9.3 mpg tractor-trailer today.

We have the technology to build radically more efficient trucks today. We also have the knowhow to use them much more productively. Let’s do it.

Subscribe to receive our blog updates by email, like our page on Facebook and follow us on Twitter.

Freight is an essential part of a globalized, modern economy. It is also responsible for eight percent of all U.S. greenhouse gas emissions. This is significant in itself, but even more concerning is that emissions from freight transportation are also growing. And fast.

The good news is that there are actions we can take today to reduce this growth in freight emissions and actually achieve significant absolute reductions in carbon pollution. These actions can be cost-effective and will enable freight to be moved more efficiently and responsibly.

The sustainable freight infographic below brings to life facts and figures that illustrate the challenge and opportunity freight presents us today. We need both strong new policies and bold corporate leadership to reduce freight emissions.

The most import fact of all that are presented below is this: it is in our power today to choose a future that embraces a strong freight transport sector that also dramatically cuts carbon pollution.

Subscribe to receive our blog updates by email, like our page on Facebook and follow us on Twitter.

Freight transportation's contribution to greenhouse gas emissions and carbon fuel consumption is set to rise significantly in the coming decades unless we do something to halt the trend now.

The good news is there's plenty that can be done, simply and effectively, with minimal capital outlay and rapid results. And a lot of companies are already taking advantage of a wide range of operational strategies that improve environmental performance and cut costs.

Our role at Environmental Defense Fund (EDF) is to raise the bar for environmental performance in logistics operations in the private sector. One of the ways we do this is by sharing success stories of leading companies that are choosing cost- and carbon-saving transportation strategies.

Last month EDF held a workshop at the GreenBiz Forum in New York titled "Smarter Moves: Practical Supply Chain Strategies." Jason Mathers was joined by Kristine Young of Ocean Spray and Edgar Blanco of MIT’s Center for Transportation and Logistics to discuss the case study we released in February.

On April 2, 2013 EDF will be participating in another panel discussion with some of our valued partners. This time we’ll be in Newport, RI at the CONECT (Coalition of New England Companies for Trade) Trade & Transportation Conference.

CONECT is a non-profit, membership-based association for businesses involved in international trade and/or transportation.  CONECT's 750+ members consist of importers, exporters, customs brokers & freight forwarders, 3PLs, ports, air/ocean/ground cargo transportation providers, banks, law firms, colleges, insurance companies and other related service providers active in international trade. CONECT’s members represent a range of significant stakeholders in the freight industry so this event is a prime opportunity for EDF to share practical advice on how to reduce carbon emissions throughout the entire freight system.

The “Innovative Sustainable Logistics: Operationalizing Carbon Reductions in Your Supply Chain” panel will feature Peter Diehm of nora, Edgar Blanco of MIT, Cynthia Wilkinson of Staples, Ed Poloway of Ocean Spray and Jason Mathers of EDF. The focus of the panel discussion will be on providing practical examples of how Staples and Ocean Spray have improved the carbon-efficiency of their supply chain.

To learn more about what your company can do today to reduce transportation costs and freight emissions, join us at CONECT’s Trade & Transportation Conference. The conference will be in Newport, RI. If you are able to attend, mention that you heard about the event through this blog from EDF and you will receive the discounted member rate for the conference.

Subscribe to receive our blog updates by email, like our page on Facebook and follow us on Twitter.

The use of natural gas to power our nation’s freight fleet vehicles is a hot topic in these days of rising diesel and falling natural gas prices. There are several reasons to be excited about this opportunity, including operating cost savings, use of a domestic fuel source, and the potential for a reduction in greenhouse gas (GHG) emissions compared to diesel heavy-duty trucks. However, significant concerns remain with the development of new gas supplies, including the threat of fugitive methane emissions from natural gas vehicles and the fuel supply chain.

Methane is the main ingredient in natural gas and a GHG pollutant many times more potent than carbon dioxide (CO2), the principal contributor to man-made climate change. Even small amounts of methane leakage across the natural gas supply chain can undermine the climate benefit of switching to natural gas from other fossil fuels for some period of time.

In a paper published last year, EDF scientists and other leading researchers examined the impact of potential fugitive emissions on the climate benefits of a switch from diesel to natural gas heavy-duty trucks. The study found that, according to the best available data, methane leak rates would need to be below 1% of gas produced in order to ensure that switching from diesel to natural gas produces climate benefits at all points in time. They also found that – using the EPA leakage rate estimates at that time – converting a fleet of heavy duty diesel vehicles to natural gas would result in increased climate warming for more than 250 years before any climate benefits were achieved.

EDF is working with leading researchers and companies in a series of studies designed to better understand and characterize the methane leak rate across the natural gas supply chain. The studies will take direct measurements at various points across the production, gathering and processing, long distance transmission and storage, local distribution, and transportation. The first study, led by researchers at the University of Texas, is measuring emissions from natural gas production. Results will be released in the coming months.

This content was originally published on EDF's Energy Exchange blog.

Subscribe to receive our blog updates by email, like our page on Facebook and follow us on Twitter.

Corporations aren't paying enough attention to the massive global impact of their carbon emissions from transporting freight — yet there are simple steps they can take to reduce their shipping footprints.

Last month, EDF released the first in a series of case studies intended to draw attention to the significant potential for emission improvements and cost reductions from this sector.

The challenge

Freight transportation is a small component of the overall lifecycle environmental impact for most products. For example, it’s less than 5 percent for a pair of Timberland shoes, 8 percent for a six pack of Fat Tire craft beer, and 10 percent for an iPad. Companies have to prioritize where in their supply chain to focus on environmental improvements. It is natural for them to focus first on the largest contributors to their footprint.

Of course, every single product has a transportation footprint. So those percentages add up across the economy. Moving freight within the U.S. creates over 500 million metrics ton of carbon emissions each year.  Freight already emits more carbon pollution than lighting, cooling, heating, ventilating and powering equipment in all U.S. commercial office space. Worse still, freight emissions are projected to increase nearly 40 percent from current levels by 2040 — even with the enactment of the first-ever truck efficiency standards.

The good news

Companies that take a systemic metric-based approaches to freight sustainability are finding significant savings. Example number one is Ocean Spray Cranberries. By making smart process changes to one of its primary transportation and distribution routes, it reduced emissions for the route by 20 percent while cutting costs for the route by 40 percent.

To achieve these impressive results, Ocean Spray deployed three of EDF’s Five Principles of Carbon-Efficient Shipping. It chose the most carbon-efficient mode possible, collaborated with other shippers, and redesigned its network for efficiency.

As this case demonstrates, shippers — the consumers of freight services that don’t own or directly operate trucks, trains, ships or planes — have significant control over the environmental footprint of logistics operations. Their decisions on where products are made and stored, how they are designed and packaged, and how much time is allotted for transit have a tremendous impact on carbon efficiency.

The proof

EDF believes all shippers have a significant opportunity to advance their sustainability goals by improving their supply chain logistics.

Through this case study series, conducted in collaboration with Dr. Edgar Blanco of the MIT Center for Transportation & Logistics, we will demonstrate how several very different companies have been able to identify carbon- and cost-reduction opportunities in their supply chain logistics operations.

Are there emissions reductions ready to be harvested from your supply chain logistics operations?  Yes. The biggest challenge is knowing where to look. We hope that this case study series will help to direct you to undertake similar improvements in your supply chain.

Learn more about EDF's work in supply chain logistics.

*****

To learn more about the efforts of Ocean Spray or this case study series, sign up to attend the GreenBiz Forum being held in New York February 19-21.  Representatives from MIT, EDF, and Ocean Spray will hold a workshop, Smarter Moves: Practical Supply Chain Strategies, the afternoon of February 20th.

This content was originally published on Greenbiz.com.

Subscribe to receive our blog updates by email, like our page on Facebook and follow us on Twitter.

Our study found that using larger, more efficient container ships instead of the traditional truck/rail overland network for East Coast-bound cargo may not necessarily offset the increase in carbon emissions resulting from a longer waterborne distance traveled. Although the carbon effects may be negligible, localized air pollution is anticipated to rise in ports with projected growth in cargo volume. This includes the emissions of criteria pollutants that increase the risk for health impacts such as asthma and lung disease. Ports located in federal nonattainment areas, such as the Port of Houston, could be faced with additional traffic from the Panama Canal expansion that creates further air quality concerns (see our previous post on this issue). Although some ports, shippers, and carriers are working to improve their environmental performance, more needs to be done to ensure we leverage the opportunities from an enhanced Panama Canal.

Air pollution concerns are even more relevant now for Houston now that the U.S. EPA has strengthened the annual particulate matter (PM) standard to 12 micrograms per cubic meter. This change, projected to save thousands of lives, reinforces the need to understand future emissions scenarios and strategically improve air quality.

As our paper illustrates, short sea shipping may be one way to alleviate traffic and pollutant emissions along the East and Gulf Coasts. As the shipping sector evolves following Canal expansion, we are researching the impact of short sea shipping and other strategies to understand how they might mitigate some GHG and criteria emissions as well as increase reliability, network optimization, and time of delivery.

As carriers and shippers look to reduce their environmental footprint, our report demonstrates that a systems approach must be taken to fully understand the effects of route selection, modes, and distribution networks. An intermodal strategy can best take advantage of infrastructure developments such as Canal expansion, provided that we carefully consider all of the costs and benefits. We continue to evaluate the impact of an expanded Panama Canal for the Houston region, and are working tirelessly to ensure that any growth is smart growth.

Subscribe to receive our blog updates by email, like our page on Facebook and follow us on Twitter.

Each year, emissions from corporate freight logistics in the United States amount to nearly 500 megatons of carbon dioxide. If U.S. freight was a country, it would be the 11^th largest carbon emitter in the world.

However, logistics is an area of tremendous opportunity for companies to reduce carbon emissions. There are many operational strategies that can help companies reduce their carbon emissions and reduce their costs.

Join us for a webcast hosted by DC Velocity on Thursday, December 13 at 2pm EST to learn more about sustainable logistics.

EDF’s Jason Mathers will explain why sustainability should part of corporation’s long-term logistics strategies, outline EDF’s five rules for cleaner freight and provide examples of how companies are already making logistics choices that reduce both their costs and carbon footprint.

Register here.

Subscribe to receive our blog updates by email, like our page on Facebook and follow us on Twitter.

As a new member of EDF’s team focusing on reducing emissions from freight transportation, one of the ways that I have been learning about the transportation and supply chain industry has been by attending conferences. Over the past couple months I have attended four events including: Retail Industry Leaders Association (RILA) Sustainability Conference, Council for Supply Chain Management Professionals (CSCMP) Annual Global Conference, National Association of Energy Managers (NAEM) EHS Management Forum and a workshop on the future of U.S. trucking policy at Resources for the Future.

Even though the focus of the conferences ranged from retail to trucking, these events made it clear to me that sustainability is getting increasing attention in the freight transportation and supply chain discussion. This is good news. Freight transportation – which makes up eight percent of U.S. greenhouse gas emissions – is an area of tremendous opportunity for reducing carbon emissions.

So why is freight sustainability getting attention? I have a few ideas.

• From a climate change perspective, emissions from freight are significant. Freight emissions will make up the largest part of growth in transportation CO₂ emissions over the coming years.
• From an environmental health perspective, freight transportation has significant air quality impacts. Trucks, trains and ships are among the leading emitters of pollutants such as particulate matter, nitrogen oxides and other toxics that are extremely dangerous to human health.
• From a corporate sustainability perspective, companies are thinking more and more about their supply chain. One reason is that the supply chain is now very visible. Companies are under pressure from multiple stakeholders for increased transparency. Another reason is that when it comes to corporate responsibility, companies are thinking beyond recycling and energy efficiency to meet their corporate sustainability goals. As supply chains account for the largest segment of many corporate footprints, it is a priority area for improvement.
• Most importantly, it’s not just about mitigating negative impacts. Freight transportation presents an area of opportunity. There are freight strategies that can help companies meet their sustainability goals. This is because cost savings and carbon reductions are very much aligned in goods movement – operational changes that reduce carbon emissions also reduce costs. So it’s easy to make the business case.

Companies are adopting many of these carbon-reducing and cost-saving strategies. And even better – they are talking about it. At this fall’s conferences, I noticed several trends in what people are talking about when it comes to increasing sustainability of transportation.

• Increasing use of intermodal transport
• Minimizing empty miles
• Reducing packaging
• Collaborating with other companies

And there are many more. I’ll delve into examples of some of these strategies in future posts.

Freight sustainability is getting increasing attention for good reason – it’s a huge area of opportunity for both cost savings and carbon emissions savings. But what’s next?

Companies need to start by thinking about freight transportation as not just a cost center, but a key part of their sustainability strategy. While the best freight efficiency strategies for each company may be unique, there are clear financial and environmental wins for shippers when it comes to goods movement – don’t miss the boat.

Subscribe to receive our blog updates by email, like our page on Facebook and follow us on Twitter.

Being the parent of a toddler, sharing is a concept that I’m emphasizing at home a lot these days.  Turns out, it’s a good concept to remember at the office too.  A fantastic new report from the CELDi Physical Internet Project at the University of Arkansas details how if companies embraced the sharing of freight resources, “profits for participating firms would increase by $100 billion, carbon dioxide emissions from road-based freight would decrease by at least 33 percent  and consumers would pay less for goods.”

And that is assuming just a 25 percent adoption rate.

According to the report, the “transportation industry is largely segmented with over three-quarters of freight being carried using dedicated resources.” Meaning that manufacturers, consumer product companies (CPGs), retailers and other shippers most often want to move their goods on a truck that contains only their products.  This is the result of replenishment time pressures, delivery predictability,and order size requirements. This use of dedicated trucking, though, leads to a lot of underutilized trucks. Only 43 percent of current trucking capacity is being utilized, according to the report.

Think about that – nearly six out of every ten trucks you see on the highway could be taken off the road today with no impact on our overall capacity to move products.

The power to make this change lies most directly with the diversified manufacturers and CPGs.  By changing some of their practices, they can fundamentally transform how the movers of freight operate.

Specifically, the report calls on these shippers to adopt the specific changes below.

1. Embrace vendor-managed inventory, which enables inventory to be held closer to the point of sale (often retailers).
2. Reduce the minimum order size from a truckload level to a full-pallet equivalent.
3. Use standardized modular containers when making pallets.
4. Deploy different logistics models for replenishment stock – which is ideal for collaboration – and seasonal and promotional items, which are often better served with a dedicated freight model.
5. Procure freight services via a freight transportation “auction” specifically designed for collaboration.

By embracing these actions, CPGs and diversified manufacturers can unleash a wave of innovation that will push their overall distribution model towards a relay network approach instead of the hub-and-spoke model so common today. This will lead to less long-haul trucking and much more predictable short-haul freight. It will raise the use of intermodal transportation (i.e. rail-truck combos) by 90 percent.

Retailers and logistics service providers will need to work with the CPGs and the diversified manufactures to provide the flexibility and services to enable this transition. But, by working together, all parties have a significant opportunity to benefit.

Truck drivers will be home much more often.

Trucking companies will see a huge drop in driver turnover.

Retailers will receive higher levels of service in terms of more frequent deliveries.

CPGs will see lower overall trucking costs and a reduction in inventory carry costs.

All of this is possible while also cutting global warming pollution from the freight sector by 233 million metric tons a year – equivalent to over four percent of total U.S. emissions.

The biggest barrier to adopting the practices seems to be our will to push beyond the current ways of doing business.  As the report notes, “88 percent of companies believe that collaborating with carriers, suppliers and customers will lead to more economical supply chain processes,” yet “only 10-30 percent of companies collaborate in their supply chain in any form.”

$100 billion in annual savings and more than 200 million metric tons of carbon reductions are numbers too large for us to pass up.  Let’s all learn to become better sharers.

Subscribe to receive our blog updates by email, like our page on Facebook and follow us on Twitter.