In its 2008 Corporate Sustainability Report released earlier this week, UPS announced plans to cut emissions from its aircraft operations 20% by 2020. UPS Airlines is the ninth largest airline in the world, and account for 53% of its total emissions.
In 2008, UPS became the first shipping company to join the Environmental Protection Agency’s Climate Leadership Program. Partner companies in the program commit to reducing their environmental footprint by first conducting a comprehensive carbon inventory, setting aggressive emissions reduction goals and then annually reporting their progress back to the EPA.
UPS is also a charter member of the EPA’s SmartWay program, winning the SmartWay Environmental Excellence Award in 2008 for energy conservation and reducing emissions.
So UPS takes their environmental and social corporate responsibility seriously (as we’ve noted on several occasions at TriplePundit here, here, and here for a start), but how do they plan to reduce the emissions from their air operations by 20% in barely more than a decade? That was my first question upon hearing the news, because if the ninth largest airline can do it, why can’t others follow suit?
Engines, operations, fuel
In their sustainability report, UPS claims it has “the most fuel-efficient fleet in the package industry sector,” based on CO2 pounds per available ton mile (CO2lbs./ATM) where ATM equals one ton of cargo flown one nautical mile. The efficiency factor for UPS airlines in 2008 was 1.42 CO2lbs./ATM, a figure “far superior” than that of any industry competitor publishing efficiency data.
With this baseline established, UPS aims to reduce its air operations efficiency factor to 1.24 CO2lbs./ATM by 2020 – a 42% improvement between 1990 and 2020, and 20% from 2005 to 2020.
We’re still left with the question how, and UPS answers with a focus on three essential areas of focus:
- More fuel efficient aircraft types and engines
- “Fuel Saving Operational Initiatives”
- Introduction of biofuels
Past commitment leads to future goals
The aggressive goals UPS has for it aircraft fleet is made possible by its past commitment to efficiency.
“We have been able to stay ahead of the competition for more than 20 years because of a strategic commitment to make our air fleet as operationally efficient as possible, even when there were less capital-intensive options available,” the report states
Back in the 1980′s when all airlines were required to meet more stringent noise reduction regulations, operators had two choices:
- Buy and install “hush kits” that reduced noise at the expense of fuel efficiency
- “Re-engine” the aircraft, reducing noise and increasing fuel efficiency by 20%, this time at the expense of, well, expense.
UPS chose re-engineing, the option with the most up-front cost, but with better downstream results in terms of decibel level, fuel efficiency, and indeed, operating cost. Instead of working to play “catch up” now, UPS can build in its prior commitment of efficiency. All 51 727′s, the prominent aircraft in the UPS fleet at the time, were re-engined, a move that between 1985 and 2008 saved more than 50 million gallons of fuel and at least 479,000 metric tonnes of CO2 emissions.
Another example of that commitment is the decision in the 1980′s to begin purchasing 757′s instead of 727′s. The 757 offers a 30% improvement in fuel efficiency, so while competitors continued to opt for the initially cheaper 727, UPS again forged a strong foothold in greater efficiency and reduced emissions. Between 1985 and 2008, the phasing out of the 727 in favor of the 757 has saved the company one billion gallons of fuel and reduced CO2 emissions by 11 million metric tonnes. UPS retired the last of its 727′s in 2008.
With a modern efficient air freighter fleet (that also includes the 747-400, with the lowest cost per ton-mile of all freighters), UPS can build on it’s solid foundation for greater operational efficiency.
UPS will continue to improve it air network efficiency through a number of strategies:
- Lower flight speeds: By slowing down 30 of its cross-country flights each week by only a few minutes, UPS can save “several million dollars” in fuel costs
- Computer optimized flight plans: Computerized flight plans allow for minimum fuel burn based on destination, winds aloft, and other pertinent factors involved in flight planning. Again, UPS states this saves them “several million dollars” annually.
- Computer-managed taxi times: UPS has started using a system called the “Surface Management System” to track its aircraft while on the ground. The system helps to minimize taxi time and long waits in line for the active runway, saving as much as 250,000 gallons of fuel annually. Additionally, UPS (and many other airlines) taxi whenever possible on only one engine.
- More fuel efficient aircraft tugs: In partnership with the EPA, UPS is working to put more fuel efficient diesel engines in 92 tugs at UPS Worldport, the company’s air hub at Louisville International Airport.
Biofuels for the future
The company’s stated goals for introduction of biofuels in its airline fleet are a little more vague than with other aspects of its efficiency targets. This is understandable since biofuels in aviation is still very much in its initial testing phase. Even if a viable biofuel feedstock is available, there is as yet now means of scaling it for the general use of one airline, let alone an entire industry. Nonetheless, work in biofuels continues apace, and UPS states its commitment to incorporating biofuels into its long-range planning, saying in its report:
UPS has included biofuels in its long-term strategic plan for airline CO2 reduction when it becomes viable. We support efforts to promote the environmentally responsible development of aviation biofuels. We believe that biofuels for jets will become available before 2020.
The scope of the problem
The current CO2 inventory UPS just completed for the years 2007 and 2008 are at an enterprise level for its entire global activities and impact, including indirect global emissions from transportation and service contractors as well is UPS’ own operations. In other words, the inventory is in sufficient detail to cover Scope 1,2, and 3 emissions from all global business segments (Scope refers to reporting levels of the internationally recognized Greenhouse Gas Protocol developed jointly by the World Resources Institute and World Business Council on Sustainable Development).
Since almost all companies rely on resources that generate Scope 3 emissions (indirect emissions beyond those included in Scope 2, such as those produced from a company’s supply chain), a true enterprise level accounting of emissions that truly reflects CO2 impact requires such detail. UPS notes in its report that a 2008 survey by Accenture, only 10% of the companies surveyed actively account for emissions from their supply chains.
UPS is the only transportation company in the S&P 500 selected for the 2008 Carbon Disclosure Project, a further testament to the company’s leadership role in environmental stewardship amongst its peers.
Leading by example
Sure, there are certainly greener businesses to be in. Many featured here on TriplePundit. But just as the way of the future lay in visionary thinkers and entrepreneurs starting just starting out in their mission to find better, more sustainable ways to do business, so it is found also through the leadership-by-example from global behemoths like UPS.