Trends-December 2007

Greening the supply chain isn’t just good for the environment, it’s also good for business.

Efforts to create a more sustainable and efficient footprint for freight transportation in the United States and around the world are becoming more transparent thanks to the stewardship of supply chain visionaries.

In recent news:

FedEx will introduce 10 hybrid-electric/diesel vehicles to its European fleet, bringing its worldwide total of hybrid vehicles in revenue service to more than 100 in North America, Asia, and now Europe.

The new vans, supplied by Iveco, are being tested close to the manufacturer’s site in Turin, Italy, and will be the first hybrid-electric/diesel vehicles operated by FedEx in Europe. FedEx currently operates hybrid vehicles in the United States, Canada, and Japan.

“FedEx is making strategic investments in projects that will help drive the commercial development of new technologies for industry,” says Robert W. Elliott, president, FedEx Express, Europe, Middle East, the Indian Subcontinent, and Africa. “We expect these hybrid-electric vehicles to perform with increased fuel efficiency and decreased emissions.”

UPS has added 306 alternative-fuel vehicles to its “green fleet” by placing an order for 167 Compressed Natural Gas (CNG) delivery trucks and taking delivery of 139 new propane delivery trucks in North America. Additionally, the company has launched an initiative to use biodiesel fuel in its ground support vehicles at the UPS Worldport air hub in Louisville, Ky.

UPS will deploy the CNG trucks early next year in Dallas, Atlanta, and four California cities – Los Angeles, Ontario, San Ramon, and Fresno. They will join more than 800 such vehicles already in use in the United States.

UPS’s global alternative-fuel fleet now stands at 1,629 vehicles and includes CNG, liquefied natural gas, propane, and electric and hybrid-electric vehicles. The company also is working with the Environmental Protection Agency on a hydraulic hybrid delivery vehicle.

The carrier is launching its biodiesel initiative in Louisville with the support of a $515,000 federal grant that is helping offset some of the cost of building a fuel infrastructure at the airport. The infrastructure will provide a five-percent biodiesel blend of fuel to run 366 ground support vehicles starting early next year.

“Deploying alternative-fuel vehicles and exploring renewable energy sources such as biodiesel are just two ways UPS actively pursues its commitment to sustainable business practices,” says Robert Hall, UPS director of vehicle engineering. “We have always believed that working green and working smart are synonymous.”

Maersk Logistics has created a new carbon footprint reduction service, SupplyChain CarbonCheck, that consults to companies striving to reduce carbon emissions in their supply chains.

“An increasing number of customers are showing interest in their carbon footprint from supply chain-related activities and are asking us for ways to reduce it,” says Henrik Ramskov, global head of Maersk Logistics.

“Traditionally, efforts for reducing carbon emissions have focused on manufacturing processes and domestic distribution. For companies involved in international sourcing, however, the global supply chain holds significant potential for reducing carbon emissions – potential that has so far largely gone untapped.”

Once a company’s current carbon footprint is calculated, Maersk simulates carbon emissions for alternative supply chain scenarios and compares the results with the current footprint. This comparison reveals the potential for reducing carbon emissions, which the company can then evaluate in terms of implementation ease and cost savings.

Ryder System Inc. has launched its RydeGreen line of tractors and trailers, designed to reduce fuel consumption and greenhouse gas emissions. Responding to increasing market demand for cost-effective, environmentally friendly transportation solutions, the new line provides the latest technology and design to help reduce idling and improve fuel efficiency.

As part of the rollout, Ryder has partnered with Freightliner to offer two sleeper tractors, the Columbia and the Century. Both tractors are built to meet the demands of long-haul trucking and come equipped with special features that comply with the EPA’s new eco-friendly Smart Way designation.

Specifically configured trailer packages from Great Dane and Utility offer aerodynamic features and weight-saving options that further enhance fuel efficiency.

In addition, understanding the significant impact driver behavior has on fuel efficiency, Ryder provides online driver training programs to customers through Ryder Pro-TREAD.

Ryder Pro-TREAD includes courses that improve driving skills and performance, and teaches drivers simple techniques to reduce fuel consumption.

“With RydeGreen vehicles and Ryder Pro-TREAD training programs, Ryder is making it easier for companies of all sizes to comply with higher EPA 2007 emissions standards and improve the fuel efficiency of their fleets,” says Tony Tegnelia, president of Ryder’s U.S. Fleet Management Solutions.

The New York City Office of Emergency Management (OEM) recently awarded Menlo Logistics a contract to warehouse, manage, and distribute a large stockpile of emergency supplies that would be used in the event of a hurricane.

The program was implemented as part of the city’s Coastal Storm Plan and calls for a specialized warehouse facility to store emergency provisions and serve as the central point for the dispatch of relief supplies.

Menlo was hired by the OEM to design, staff, manage, and operate the facility with logistics specialists and systems established for rapid response to emergencies.

Since last May, Menlo’s team has been working in close cooperation with New York City’s OEM staff to identify a site, configure the 50,000-square-foot facility to house the supplies, and develop a response plan for relief operations.

This plan includes the preparation and delivery of emergency supply shipments to assigned evacuation areas prior to a major hurricane hitting the city.

Under the program, Menlo would be responsible for:

• Initiating ramp-up plans.
• Bringing in staff to process and stage shipments.
• Securing transportation resources in advance of deployment.
• Monitoring inventory draw-down and replacement needs.
• Acquiring additional supplies from vendors.
• Managing the response process to ensure that relief centers are continuously supplied with goods until the emergency passes.

In the aftermath of a hurricane, Menlo would also work collaboratively with the city to replenish and restock supplies within the warehouse.

The center is storing more than four million units of water, along with hundreds of thousands of “Meals Ready to Eat”, and other basic supplies such as first-aid kits, protein bars, personal care and comfort kits, diapers, baby formula, cots, and blankets.

As further evidence that stateside shippers and consignees are looking across modes to access capacity, reduce costs, and create more reliable transportation linkages, intermodal volume during the third quarter of 2007 was the second-best three-month period ever documented, according to the Intermodal Association of North America’s (IANA) Intermodal Market Trends & Statistics report.

Despite a difficult freight environment that included declining import traffic and sluggish domestic demand, third-quarter volume tracked 3,618,617 units, trailing only the third quarter of last year.

Volume fell 2.2 percent from last year’s level and rose 3.5 percent above the second quarter of 2007. Domestic container volume rose 10 percent versus 2006, accounting for relative growth.

“The domestic container gains are especially noteworthy because they were achieved at a time when long-haul truck capacity was abundant, retail sales as well as other economic indicators were weak, and key industries such as construction were slumping,” says Thomas Malloy, vice president of member services and business development, IANA.

The latest report reflects a change from recent years, when international traffic consistently rose at a rate of six percent or more, while domestic business increased at a slower pace.

International traffic fell 3.7 percent and domestic traffic rose 0.1 percent in the third quarter. Total intermodal volume for the year to date is 10,557,007 units, or 0.9 percent less than the same period last year.