P3.1: Transportation Management
|CERES ROADMAP EXPECTATION|
|Companies will develop transportation criteria that incorporate distance requirements from site to market and establish decentralized and localized distribution networks.|
|Ocean Spray recently redesigned its distribution network by opening a new distribution facility to serve growing demand while also shifting its transportation to rail from road. Together these changes reduced emissions by 20 percent and saved more than 40 percent in transportation cost. Read more...
Check out Roadmap in Action for more examples of how companies are implementing the Ceres Roadmap.
Given that the greatest impact associated with transportation is air pollution, one of the first steps companies can take to improve transportation sustainability is to quantify air emissions (greenhouse gases, NOx, SOx) produced by the current and planned transportation modes. With this information, companies can begin to identify appropriate opportunities and strategies for emissions reduction and likely cost savings.
When creating or redesigning logistics networks companies should increasingly focus on creating more localized, denser centers of operation, that minimize distances traveled and provide for future growth. In addition to reducing sustainability impacts this approach creates a more resilient network that can withstand fuel shortages or sudden changes in demand. Companies should then leverage information systems to analyze and optimize their logistics networks and approach to vehicle loading. For example, Ocean Spray recently redesigned its distribution network by opening a new distribution facility to serve growing demand while also shifting its transportation to rail from road. Together these changes reduced emissions by 20% and saved more than 40% in transportation costs.
Companies should also seek opportunities to share logistics networks within regions and within and beyond their sectors to reduce the number and length of trips required. Baxter International Inc., a global healthcare company, partners with companies such as Donaldson Company, to co-load its shipments in Europe, resulting in a GHG emissions reduction of approximately 14 percent per shipment as well as reduced transportation costs across both companies.
HOW ARE COMPANIES PERFORMING?
In The Road to 2020: Corporate Progress on The Ceres Roadmap For Sustainability, we evaluated 600 of the largest U.S. companies on their progress towards meeting the expectations laid forth in The Ceres Roadmap for Sustainability. Using data compiled and analyzed by Sustainalytics, this expectation was analyzed to evaluate owned logistics and fleets, as well as outsourced logistics.
Of the 114 companies assessed for this expectation in the Automotive & Transportation, Food & Beverage, Footwear & Apparel, Retail and Technology Hardware sectors, just over 50 percent are taking steps to reduce the environmental impact of their own fleet and/or outsourced logistics. Of those companies, 16 percent (18 companies) are included in Tiers 1 and 2 indicating that they have implemented formal programs that include reduction targets. Tier 1 companies for this expectation, including PepsiCo, Kroger, UPS and FedEx, are setting and meeting specific targets that are lowering both their energy costs and environmental footprints.
Food & Beverage and Retail companies lead performance for this expectation, representing more than 80 percent of those included in Tiers 1 and 2. PepsiCo has set a corporate-wide goal of reducing its fuel consumption 25 percent per unit of production by 2015 (from 2006 levels). The company's Frito-Lay division is rolling out fully electric delivery trucks while PepsiCo UK & Ireland have started using low-emission vehicles with a goal of reducing nitrogen oxide emissions 60 percent by 2018.
Transportation companies’ emissions impacts are primarily through the use of their own fleets of vehicles, planes, ships and trains or access to such modes of transportation for their business. As the suppliers of transportation services to a wide range of companies, they are increasingly being asked by their customers to provide data on their GHG emissions and other sustainability impacts. UPS leads the transportation companies with a commitment to reduce its airline emissions a further 20 percent per ton-mile by 2020 (from 2005 levels), building upon a reduction of 10 percent since 2005. On the ground, the UPS fleet is now 20 percent alternative-fuel vehicles and the company utilizes telematics to improve vehicle, route and driver efficiency. FedEx’s fleet of electric and hybrid vehicles is also now at 20 percent and the company has established a goal of improving fuel efficiency of its FedEx express vehicles by 20 percent by 2020.
More than 25 percent of the 114 companies evaluated are undertaking activities to improve the environmental performance of third party providers. Target, for example, has taken measures to ensure that its contracted logistics providers do not travel empty from stores to distribution centers. By 2016, Target aims to improve the efficiency of its inbound logistics by 15 percent and outbound logistics by 20 percent (compared to a 2008 baseline).