Most people probably don’t give an awful lot of thought to how the things they buy actually get to them. But the reality is, pretty much everything we consume is touched in some way by a global and interconnected logistics industry that is truly behemoth. We are aware of package delivery trucks running about, but their presence is just the tip of an industry that by some estimates, constitutes as much as 10% of global GDP.
So, when you ponder that such a huge industry must use energy each time it moves goods around the planet, it is no surprise that businesses in the logistics game are keenly aware that efficiency and sustainability are not just factors of corporate responsibility, but business imperatives – the multiplier of small energy efficiency gains are just so tremendous.
UPS is certainly aware of this business imperative, which is clear from their 2010 sustainability report. The scale of the Atlanta-based company is quite impressive – in the process of moving 3.94 billion packages across more than 220 countries in 2010, they employed 400,600 people, operated 99,795 ground vehicles and 216 aircraft. While bringing in net revenues of $49.6 billion for the year, it seems everything they do, both operationally, and technologically, is to to chip away at inefficiency. So, where do they find incremental improvements?
It is from a combination of efforts. For their enormous ground vehicle fleet, one innovation is the introduction of a proprietary “telematics” system. The system involves the use of sensors placed in their trucks which provide both mechanical data, (by monitoring how a vehicle is performing), and behavioral data, (by monitoring how a vehicle is being driven). Drivers are given feedback from the data gleaned, allowing them to optimize their driving techniques. For example, telematics-equipped vehicles alone saved 260,000 gallons of fuel through the elimination of engine idling time. Furthermore, telematics, along with route optimization software – designed to reduce delivery miles – has enabled UPS to avoid 63.5 million driving miles and 68,000 metric tonnes of CO2.
Initiatives like these, therefore, have a big payoff. The company uses the term “rolling laboratory” to describe their attempts to improve efficiency. As Mike Britt, Director of Vehicle Engineering told me, not everything they try works out, but, many of things they have tried over the years are now in service.
Their “green fleet” now comprises 1,900 vehicles that use either alternative fuels or advanced vehicle technology. Such vehicles have driven over 200 million miles since 2000 and run the gamut of drive-train technologies: liquid propane gas (LPG), compressed natural gas (CNG), liquified natural gas (LNG), hybrid electric vehicles (HEV) as well as fully electric vehicles (EV). They are not trying to pick winners, rather, as Mr Britt explained to me, different technologies work best in different applications. For example, ethanol makes sense in Brazil (where they refine a lot of it), and EVs are gaining traction in China (where batteries are predominately made). LNG and CNG engines make sense in the USA, where delivery mileages are higher, and where the opportunity lies to displace foreign oil with domestic natural gas sources. In Germany, UPS has retrofitted diesel vehicles with EV drive trains, which proves economical there, where diesel is around $8 per gallon.
Half of the company’s CO2 emissions, however, come from its aviation operation – and here they use one of the industry’s youngest and most fuel efficient air fleets. In the future they have committed to the use of bio-fuels as they become available.
UPS’s customers too, demand a focus on sustainability. The company provides eco-responsible packaging assistance to shippers who want to optimize package size and reduce waste in this area. Also, a carbon-neutral shipping option is available to customers who wish to mitigate the climate impact of their shipping. This is achieved through customer fees being used to purchase carbon offsets (verified by SGS) and is augmented by UPS’s pledge to match $1 million in offsets purchased by customers during 2010/11.
Overall, in 2010, UPS’s sustainability efforts have rewarded them with a 3.3% reduction in fuel consumed per package delivered, while package volume increased 1.8%. This is good for business, but also, as Mr Britt explained to me, “as leaders of the industry, we are stewards to ensure, number one, for the industry, and also for UPS, that we operate in the cleanest way possible for the planet.”