Kenyan coffee, Egyptian cotton sheets, German steel knives, Chilean sea bass, Florida orange juice, New Zealand apples, and Fijian spring water available in American stores exemplify the vast distances between suppliers and American consumers. In fact, the American Apparel & Footwear Association estimates that the United States imports nearly 98 percent of all apparel items.1 But the globe-trotting “Made in …” labels of apparel and other products reveal only the very tip of the proverbial iceberg. That German steel knife might be made from Brazilian iron ore, Kazakh chromium, Chinese molybdenum, and South African vanadium processed in a furnace heated by Russian natural gas.
A simple T-shirt can easily involve shipments moving more than 10,000 miles. The shirt may begin as cotton grown in western China near Urumqi, Xinjiang. Bales of cotton would then travel about 2,400 miles to the apparel manufacturing cluster in Shanghai. From there, shipping containers filled with shirts would go by ocean freighter some 6,500 miles to Los Angeles. In Los Angeles, a truckload of shirts may then travel to the shirt maker's distribution center in the Imperial Valley, Chicago, or the East Coast, as far as 2,800 miles away. From the manufacturer's distribution center, the shirt would travel hundreds of miles to the retailer's distribution center and then hundreds more miles to the retailer's store.2
And that's just a simplified version of the transportation path of a simple shirt. More complex apparel involves shipping various natural and artificial fibers from several countries, weaving the fibers in one country, cutting the fabric in a second, and sewing it in a third. Buttons, zippers, sewing thread, and dyes might come from other countries. Some products could have as many passport stamps and frequent flier miles as a seasoned traveler. In fact, given that the single largest export leaving from Los Angeles for China is raw cotton,3 a Texas cotton grower's T-shirt made with his own cotton may have traveled nearly 20,000 miles to go from his fields to Chinese factories and back again.
Around the world, thousands of ships, hundreds of air freighters, and millions of rail cars and trucks carry $18.8 trillion in annual global merchandise trade4 and carry even more in domestic trade. A careful look at any of those hardworking vehicles will reveal the telltale shimmer of hot, CO2-rich exhaust gases streaming from their engines. Of all global carbon emissions, 5.5 percent—an estimated 2,800 megatons5—comes from logistics and freight transportation, according to World Economic Forum estimates. More than half of it comes from over-the-road freight transportation.6
The lion's share of the impact of the materials’ movement in a given product's supply chain depends on the decisions of shippers, who are either the senders or the receivers of the goods and who dictate the transportation particulars. To a lesser extent, the environmental impact depends on decisions of carriers, who are the operators of transportation fleets. The shippers are the suppliers, manufacturers, distributors, and retailers who are the beneficial owners of the goods. They decide how much gets shipped, where it goes, how it is shipped, when it can be picked up at the origin, and when it must be delivered to the destination. Carriers manage the conveyances, the movement of cargo on those conveyances from origin to destination, the operating conditions of the vehicles, and the fuels they put into vehicles. They move the freight and deliver it in accordance with the shippers’ instructions. In some cases, the same company takes on both the shipper and carrier roles, such as when a manufacturer or retailer operates its own fleet of trucks.
“One of the really great aspects of the freight space, and one of the reasons we think that freight is particularly ripe for carbon reductions today, is that there is such good synergy between cost and carbon reductions,” said Jason Mathers, program manager, corporate partnerships program at Environmental Defense Fund (EDF).7 Burning fuel is both the primary source of the environmental impact of transportation and a dominant cost factor in transportation economics. Thus, a greener transportation network is a cheaper transportation network, making fuel-saving initiatives easy eco-efficiency successes.
A shipment's journey of ten thousand miles begins with a single footstep, but the carbon footprint of that journey depends on the shipper's dictates on how the cargo moves, especially, as mentioned in chapter 2, on how fast it moves. The Natural Resources Defense Council (NRDC), an American NGO, illustrated the significant impact of these transportation decisions by detailing an apparel maker's hypothetical choices for shipping cotton and T-shirts from the Chinese cotton-growing region of Xinjiang to consumers in Denver, Colorado, in the United States. The shirt maker might choose truck or rail for the overland journey within China, air or ocean freight to cross the Pacific to Los Angeles, and then truck or rail for the overland journey to Denver. Based on these scenarios, the NRDC calculated that whereas the truck–air–truck option takes only about a week, the rail–ship–rail option takes four or five weeks. However, the former had 35 times the carbon footprint of the latter.8
Although vehicle emissions do vary significantly across different vehicle models and operating conditions, faster modes of transport generally use significantly greater amounts of fuel and have much higher carbon footprints. A 500 mph air freighter emits about 10 times more CO2 per ton-mile than a 65 mph truck, and the truck emits about 10 times more CO2 per ton-mile than a 20 mph ocean freighter. In addition to the carbon footprint differences, the various modes differ in other types of environmental impacts. Ocean freight has higher sulfur emissions, diesel truck and rail engines emit more particulates, and jet engines have higher NOx emissions.9
Shippers can reduce their transportation footprints and costs by shifting from faster modes to slower ones.10 Continental Clothing Co., for example, slashed greenhouse gas (GHG) emissions for some of its products by 90 percent by implementing a “No Airfreight” policy.11 Similarly, in 2008, Levi Strauss altered its international shipping routes to use less air and truck transport and more ocean and rail. Although the policy was motivated by cost concerns, many routing changes also decreased GHG emissions by 50 to 60 percent. JB Hunt, one of the largest US motor carriers, estimates that it saves 200 gallons of fuel and 2 tons of carbon emissions for each full truckload that it shifts to rail.12 In 2011, United Parcel Service Inc. (UPS) saved more than 2 million metric tons of emissions by shifting some delivery volume from air to ground, and another 800,000 metric tons of emissions by shifting volume from truck to rail.13
Fiji Water Company changed its distribution patterns to reduce both costs and carbon footprint. Instead of shipping water to Los Angeles and trucking it to the major eastern US population centers, the company used ocean shipping through the Panama Canal to the Port of Philadelphia.14 The new route reduced emissions by 33 percent while simultaneously cutting costs by 42 percent. However, the new route increased distribution lead time by about two weeks, but owing to the relatively predictable levels of demand for the bottled water, this resulted in neither a significant increase in inventories nor a degradation in level of customer service.15 The company also uses a square bottle design for more efficient transportation.16
Carriers can also affect their environmental impact by changing how they operate their vehicles. When bunker fuel prices doubled in 2008, ocean carriers started “slow steaming,” operating vessels at less than their usual rated velocity. The nonlinear relationship between speed and drag means that slowing these vessels can save owners significant money and reduce GHG emissions. For example, operating a 12,000-TEU (twenty-foot equivalent unit) container ship at 18 knots instead of 20 knots can reduce fuel consumption by almost 30 percent per day of travel.17 Of course, spending more time at sea offsets some of these savings: A trip from the port of Shanghai to the port of Rotterdam takes 25 days at 20 knots versus 28 days at 18 knots, a 12 percent increase in the labor and asset utilization costs18 as well as increased inventory carrying costs for the shipper. It also increases travel time, adding 12 percent to the number of fuel-consuming days, which results in a net 22 percent fuel saving for the journey. The higher the cost of fuel, the more the savings on fuel justifies the added expense of a longer journey time. By late 2011, 75 percent of carriers surveyed had implemented slow steaming.19
The same relationship between speed and fuel efficiency extends to trucks. Limiting a truck's speed to 65 mph, instead of 75 mph, saves 15 percent on fuel over a trip.20 This motivated US President Richard Nixon to propose a limit on highway speed during the 1973 oil price spike and supply disruptions. The subsequent law limited truck and car speeds to 55 mph, leading to modest overall fuel savings.21
In 2006, Mike Payette, director of fleet operations at Staples Inc., investigated ways to reduce fuel, costs, and emissions of the office supply retailer's fleet of delivery trucks. He changed the control software in one delivery truck to limit its top speed to 60 mph, monitored fuel consumption for 45 days, and found that average gas mileage climbed from 8.5 mpg to 10.4, a nearly 20 percent reduction in fuel consumption.22 The retailer also tested an add-on aerodynamic nosecone, but it provided negligible improvement if the truck also had a speed limiter.
Changing the vehicle's top speed was very inexpensive because Staples only needed to change the vehicle's engine management software. Payette estimated it cost only $7 per truck for him to travel around the country and personally upload the new code into each vehicle. Staples’ savings were immediate: According to the company, the change paid for itself in $3 million of fuel savings annually.23 Staples did not even suffer any lost driver productivity because the time lost to slower speeds was offset by fewer fuel stops,24 a finding confirmed by studies in Europe and Japan.25
“If we have enough days in the supply chain, we can really be more environmentally friendly,” said Russ LoCurto, senior vice president of global logistics for Ralph Lauren. A slow-steaming ocean voyage from an Asian factory to the United States may take several weeks compared with the approximately 48-hour travel time using airfreight. Ocean shipping may significantly reduce shipping costs and emissions, but it adds weeks to the lead time and to in-process inventory carrying costs (while the conveyance is in transit). The added lead time for ocean shipping also requires the company to forecast sales further into the future. These forecasts are, inevitably, less accurate than the shorter-term forecasts that can be used to plan airfreighted shipments. The lower accuracy of the long-term forecast means the company must either accept a higher risk of lost sales or endure the costs of higher safety stock, including the risk of overstocked obsolete items.
Ralph Lauren focused its eco-efficiency efforts on switching as much of its store replenishment process as was practical to ocean freight instead of airfreight. The key was segmenting products by demand variability to determine which products could be sent by slower modes without taking on excessive inventory risks. For example, staple products, such as the company's signature Polo shirts, sell throughout the year, have relatively stable demand, and do not go out of style very quickly. As a result, Ralph Lauren can forecast demand for such items with sufficient accuracy over a longer term; adding a few weeks to the supply chain added little risk of lost sales or obsolete inventory. The global fashion company worked with Asian factories to build longer ocean shipping lead times into production schedules of these staple products.
In contrast, sales of seasonal or “fast fashion” garments experience the fickle whims of consumers, making long-range forecasting subject to large errors and resulting in high potential costs from overstocks or lost sales during their short selling season. Thus, the company continued to make and ship these garments as close as possible to their selling season and use airfreight as needed. Between 2009 and 2015, Ralph Lauren reduced its global air mix by 43 percent, reducing carbon by an amount equivalent to almost half of the company's footprint of its own operations.26
Many other companies shifted to slower transportation modes during the same period. Shifting freight among different modes, however—especially to slower modes—also requires coordination within the business and among transportation providers to ensure that shipments depart on time so that they arrive on time. To do this, Unilever implemented a “control tower” in 2009 to manage freight movements across 35 European countries. The system was built around an end-to-end transportation management system that delivers full operational visibility into the “three C's”: customer service, carbon footprint, and cost. An example of managing delivery time with slower modes is Unilever's “Green Express” train line in Italy, which delivers ice cream from its Caivano factory near Naples to its Parma distribution hub in Northern Italy. This collaboration between Unilever, Trenitalia, and the Italian Ministry for the Environment takes 3,500 trucks off the road each year but requires tight coordination. “We have the scale and capabilities to better manage our logistics networks, improving our service costs while taking one in five trucks off the road in Europe,” said Neil Humphrey, Unilever's senior vice president of supply chain for Europe.27
In addition to changing the carbon intensity of ton-miles by changing the speed, shippers can change the “miles” part of the ton-miles equation through local sourcing. This is especially true for food, where the concept of “food miles” has been popularized by several NGOs28 and environmental writers.29 Whole Foods, Walmart, and other retailers have programs to “buy local,” typically from suppliers in the same state or a modest distance of 100 to 200 miles from the store.30 In addition to saving on transportation costs and emissions, Whole Foods and others view “buying local” as a social responsibility strategy, supporting local small businesses.31
Local sourcing does not always reduce the total life cycle carbon footprint of a product, however. As mentioned in chapter 5, the carbon intensity of the local power grid or the need for energy intensive production techniques in the local climate (e.g., natural-gas heated greenhouses) might more than offset any environmental impact savings from reduced transportation. One study found that New Zealand lamb meat shipped 11,000 miles to the UK actually had one-quarter the carbon footprint of local British lamb, owing to differences in what the lambs are typically fed in the two locations—lower-quality British pastures required supplemental feed, unlike New Zealand's clover-rich pastures.32 Similar results were found for dairy and fruit products. Local sourcing may or may not be a good option; only a full life cycle analysis can tell for sure (see chapter 3).
Companies can also change the “tons” part of the ton-mile equation. For some products, the bulk of the items might be water or some other material that can be readily sourced in almost any location. Many beverage makers, for example, manufacture a concentrated syrup that is then shipped to a network of local bottlers for reconstitution and bottling for retail sale. Nevertheless, this strategy may involve a trade-off between reducing global CO2 emissions and increasing local water consumption. Companies such as Coca-Cola and Nestlé have been criticized for locating bottling facilities in water-stressed locations; however, the strategy reduces the carbon footprint of the companies by reducing the ton-miles of heavy, filled bottles of beverage. Chapter 8 describes the case of dry shampoo in which the company redesigned its product to entirely avoid ever adding water.
What is not inside the millions of shipping containers, rail cars, and trucks that move around the world contributes a significant percentage of their total life cycle impact. For most conveyances, moving empty space also consumes large amounts of fuel (about two-thirds the fuel consumption of a full truck for a 40-ton tractor trailer). Much of the time, vehicles do not carry a full load of cargo. Statistics from the EU suggest that trucks move empty 24 percent of the time and only 57 percent are completely full when carrying a load.33 Both shippers and carriers, as well as the environment, bear the costs of underutilized vehicles demonstrating, again, the congruence between environmental costs and financial costs in transportation.
As mentioned in chapter 2, the simple supply chain model focuses on the tons of goods flowing from suppliers to manufacturers to distributors and finally to retailers. But the trucks, containers, rail cars, and other vehicles that carried this cargo down the supply chain must return to pick up the next load. Often, they return empty; in many regions, very little freight flows from retailers back to suppliers. Reducing empty miles means finding what is termed “backhaul loads,” which are shipments that happen to be going in the opposite direction—from the vicinity of the destination back to the vicinity of the original origin of the truck journey.
Faced with this problem, the retailer Macy's and the large motor carrier Schneider National joined the Voluntary Interindustry Commerce Solutions (VICS) Association Empty Miles program.34 “The way the system works is retailers post empty miles,” said Joe Andraski, president and chief executive officer of the association. “Others can review when those movements are and match them with their shipping needs.” The VICS program and other programs like it help shippers (and carriers) identify instances in which the drop-off point of one shipper's load is close to the pickup point of another shipper's load so the truck does not have to wait or travel a long distance empty to get its next load. VICS is one of dozens of such online matching applications (including Uber Freight) that offer similar services for shippers and truckers. Shippers can post available loads, truckers can post available trucks, and both sides can search for nearby matches or participate in auctions that match loads to vehicles at a competitive price.
In the case of Macy's, the VICS program eliminated 21 percent of empty miles and saved the retailer about $1.75 million per year. “Filling empty miles with the VICS service is good for the economy, it's good for the environment, and it's healthy for those companies that know how to leverage it and leverage it effectively,” said Steve Matheys, chief administration officer at Schneider National. “The Empty Miles Service creates an opportunity for us to limit the environmental impact of our day to day business operations,” added Kevin Locascio, Macy's director of shuttle operations.35
In 2011, Ocean Spray opened a new distribution center for cranberry juice products in Lakeland, Florida. The center serves customers across Florida, Georgia, Alabama, and South Carolina, with products coming from Bordentown, New Jersey,36 which is 1,100 miles away. Ocean Spray was using long-haul trucks to move product from northern cranberry growing locations to southern customers.
Shortly after the new distribution center opened, third-party logistics provider (3PL) Wheels Clipper approached Ocean Spray with an idea.37 3PLs provide an array of supply chain management services—typically integrated transportation, warehousing, distribution, and related information technology. Wheels Clipper was managing the movement of Tropicana refrigerated orange juice products from Florida to New Jersey using the CSX railroad. Noticing that Ocean Spray's facilities were less than 65 miles from CSX terminals, the logistics service provider offered to move cranberry juice products from New Jersey to Florida using the empty orange juice boxcars. This change could save Ocean Spray 40 percent in transportation costs and more than 65 percent in CO2 emissions.
The proposal, however, faced three major obstacles. First, Ocean Spray was already working with another 3PL for its long-haul truck deliveries. Shifting from road to rail would require changing the contract with the existing provider. Second, Ocean Spray had never used rail in that portion of the network. Rail boxcars hold twice as many pallets as regular truck trailers and require one or two extra days of travel time. This would require Ocean Spray to change its transportation dispatching and inventory planning practices, in addition to ensuring product integrity during the rougher rail ride. Third, Wheels Clipper was moving orange juice products for Tropicana, one of Ocean Spray's competitors. For the arrangement to work, the rival companies would have to share a logistics service provider and communicate frequently to plan the timing and size of shipments. They would also have to notify each other when empty boxcars were ready to be loaded with their competitor's product.38
Despite the obstacles, Ocean Spray could not ignore the savings. In February 2011, Ocean Spray agreed to collaborate. Within 12 months, it had shifted 11,500 tons of shipments from truck to rail. The shift converted roughly 616 truck shipments into 308 boxcars. Although the cranberries had to travel 20 percent farther to be trucked to and from the CSX terminal, carbon emissions were less than one-third of the old level. All parties benefitted. Both Ocean Spray and Tropicana (which avoided empty backhaul movements) reduced both their transportation costs and their environmental impact. “It took us a little while to work through [the program],” said Kristine Young, who leads the Ocean Spray sustainability efforts, “but it has been a huge success. Internally, we talk about how we can [identify] other high-volume lanes where we might be able to find rail opportunities.”39
For motor carrier transportation, a full truck traveling the shortest-possible route between the origin and destination (a “truckload” or TL move) is both the most cost-effective and most environmentally efficient use of that truck. Yet shippers often face situations in which the shipment does not fill the truck, which leads them to consider one of three alternatives. First, they could send the truck partially full, but that would result in a higher transportation cost (and a higher carbon footprint) per ton-mile. Second, they could wait until there was enough freight going to that destination to fill the truck, but that would degrade the shipper's level of service to its customers, increase its (and customers’) inventory carrying costs, and might be impossible in the case of perishable or time-sensitive goods. Third, they could use consolidation, in which shipments with different origins and/or different destinations are brought together in a tour, or “milk run,” to share the truck's capacity over some portion of the route to reduce costs and decrease the carbon footprint per shipment relative to sending partially full trucks directly.
Sometimes shippers can consolidate freight themselves by creating milk runs that collect materials from multiple suppliers or deliver goods to multiple customers, but that tactic depends on the shipper's patterns of shipments. The prevalence of small shipments—and the economic incentives to fill trucks—have spawned an entire transportation sector of specialized carriers, known as less-than-truckload (LTL) in the US or “groupage” in Europe. These carriers pick up shipments, consolidate those heading in the same direction into full trucks, and then hand off the shipments through a series of hub terminals until they reach the destination city where smaller trucks deliver the shipments to their final destinations. Parcel delivery companies (such as UPS, FedEx, DHL, and the USPS) use a similar model with smaller vehicles handling urban pickup and delivery (utilizing so-called milk runs), larger vehicles handling intercity movement, and a network of hubs handling the sorting, consolidation, and deconsolidation of the parcels.
The dichotomy between “direct” (such as TL) and “consolidated” (such as LTL) carriers exists in every transportation mode, be it container ships, air freighters, or railroads. Even in passenger transportation, one can distinguish between taxi services (as well as Uber, Lyft, and the like) on the one hand, and urban mass transit services on the other. The former typically takes a single passenger directly from origin to destination, whereas the latter consolidates multiple passengers in the same vehicle. Consolidation also enables the use of larger, more fuel-efficient vehicles for movements between hubs. Consolidated transportation is painfully familiar to every airline traveler who has changed planes in a hub airport rather than flying nonstop. (This led to the saying about the busiest airport in the world: “When I die I am not sure if I will be going to heaven or hell, but for sure I will be changing planes in Atlanta.”) Of course, the trade-off is that consolidation enables cost-effective, frequent service. So whereas LTL operations increase travel distance, travel time, and handling costs of a shipment, they compensate by more frequent departures, higher utilization, and lower costs (for small shipments). In addition, the carbon emissions per shipment are smaller compared with sending a large truck to carry a small shipment directly from origin to destination.
Unfortunately, much of the empty space in truckload transportation for partially loaded trucks owes to the industry's pricing structure. The competition between TL carriers leads to such low prices that even if a shipper has a load that can fill only one-third of the truck, it is cheaper, most of the time, to send it in a dedicated truck rather than to use an LTL carrier, resulting in a higher carbon footprint per ton shipped.
Suppliers of perishable or time-sensitive products cannot delay their shipments to achieve full conveyances—the products require high-frequency shipments of small orders. This was the dilemma facing Stonyfield Farm. The company was founded on the premise that it “serve as a model that environmentally and socially responsible business can also be profitable.”40
When Stonyfield examined its total carbon footprint, it found that transportation of the final product was the third largest contributor (accounting for approximately 6 percent of the company's footprint) behind milk (approximately 80 percent) and packaging (approximately 11 percent).41 While working on milk and packaging, Stonyfield carefully analyzed its outbound volumes, how it was shipping them, and where they were going. To collect the data, the company relied on Ryder Logistics, which operates Stonyfield's dedicated fleet and also manages the 30 for-hire motor carriers that Stonyfield uses.42 “By reviewing six months of data, we realized a significant opportunity in consolidating our less-than-truckload (LTL) network into our truckload network,” said Ryan Boccelli, Stonyfield's director of logistics.43
The company replaced the hub-and-spoke movements of the LTL network with more direct full truckload movements using multi-stop (milk run) deliveries in a destination region. Stonyfield also added time to subtract carbon. To enable full truckload delivery (on departure), the company instituted minimum order sizes for customers and began requiring 48 hours’ advance notice of order revisions.44 To further reduce its carbon footprint, the company also started to “think outside the truck,” Boccelli said. In 2009, Stonyfield began shipping products to the Pacific Northwest using Railex, a weekly, refrigerated railcar service for food products.45
Stonyfield's multifaceted efforts improved many transportation-related metrics that affect carbon footprint. By requiring larger trailers and virtually eliminating less-than-full truckload movements, Stonyfield reduced the number of truckloads of product shipped by 13 percent between 2007 and 2008.46 By consolidating loads, increasing order lead times, and rerouting, Stonyfield's fleet reduced empty miles by 15 percent in 2008.47 In 2009, the US EPA honored Stonyfield Farm with a “SmartWay Excellence Award.”48 Overall, between 2006 and 2010 Stonyfield and its transportation providers reduced outbound transportation emissions by 56 percent, Boccelli said.49
A significant fraction of the empty mile problem arises from longer-term imbalances between production and consumption regions. For example, trade imbalances, such as the one between China and the United States, mean that containers full of merchandise move from Shanghai to Los Angeles, but little cargo moves in the other direction, necessitating the return of empty containers. Imbalances in freight volume create imbalances in shipping costs: the cost of shipping a container of freight back to Shanghai from Los Angeles can be half the cost of shipping a container from Shanghai to Los Angeles.50 A carrier that knows its container or vehicle will be empty on the return journey typically offers that backhaul space at a steep discount and demands a premium for headhaul loads to destinations that offer little return freight.
This creates incentives for companies with Asia-bound freight to look for ways to use these low-cost backhaul containers. For example, agricultural commodities, such as grain and oil seeds, have traditionally been shipped via bulk ships. Now a small but growing amount of these US-to-Asia agricultural exports go via container.51 The container that brought over T-shirts might take raw cotton back for the next shipment of shirts. An added benefit of the containerization of agricultural products is the preservation of the identity of the origin for each container-size batch, offering enhanced visibility into the exact source of the raw material.52
In general, shippers control the tons of freight, the approximate distance (through their sourcing decisions and their network structure), and the maximum allowable time in transit that affect transportation mode choice. Carriers, however, control the efficiency of these purchased movements between the shipper-defined origins and destinations. Vehicle choice, fuel choice, vehicle maintenance, driver behavior, and routing can all affect the environmental impact of a given freight movement.
UPS has long sought to reduce its energy use as part of its continuous focus on cost reduction initiatives. For example, after assessing the costs of delays and engine idling involved in taking left turns across traffic (in countries where vehicles drive on the right-hand side of the road), the company redesigned its routing software in 2003 to put a clockwise bias in the layout of pickup and delivery routes, increasing the number of right turns relative to left turns. The change reduced idling while waiting for oncoming traffic and led to faster completion of routes. In 2007, according to internal estimates, the policy saved the company 3.1 million gallons of fuel and 32,000 metric tons of carbon emissions.53
Many of the firm's most significant efficiency initiatives—such as the “reduced left turns” policy54 mentioned in the paragraph above—were adopted for financial reasons, even as NGOs were also encouraging UPS to evaluate its environmental impacts. “Years ago, the focus was to reduce energy because it saves costs. Well, now, it's reduced energy because it saves costs and reduces our carbon footprint,” said Scott Wicker, UPS chief sustainability officer. “The sustainability group really brings more focus to what we're doing.”55
Other UPS innovations were put in place to offer a higher level of customer service. For example, UPS My Choice is an online service that allows UPS customers to manage deliveries to themselves. The service allows the customer to reschedule a delivery, reroute it to another address, authorize the driver to leave the package with a neighbor, hold the package at a UPS customer center, and so on. While offering high customer service, the program also avoids multiple delivery attempts, thereby saving costs and reducing the company's carbon footprint.
The American Trucking Association (ATA) estimates that as much as 30 to 50 percent of truck engine operating hours do nothing to move freight—the truck is idling.56 At the Poland Spring division of Nestlé, a few simple steps reduced idling time by 70 percent between 2007 and 2009. “We didn't have to come up with elaborate rules,” said Chris McKenna, the fleet manager at Poland Spring. “We just made suggestions and asked them [the drivers] to use their own best judgment.” The company also posted a ranking of the 65 drivers in the break room. “Human nature—no one wants to be at the bottom of the list,” added McKenna. To provide an added incentive, the company gave gift cards to the top 10 drivers.57 Companies such as Coca-Cola, AT&T, and FedEx teach drivers to reduce fuel consumption in their fleets. They also reward drivers with recognition, special privileges, and sometimes money for better driving behavior. For Coca-Cola and others, a secondary outcome of improved driver behavior was a significant reduction in the number of road accidents.58
Many fleets use sensors and telematics devices on vehicles to continuously measure fuel consumption, vehicle activity, engine performance, and driver behavior.59 Vehicle telematics can collect data on drivers’ actions, such as heavy acceleration, using the wrong gear, or heavy braking. “UPS's telematics platform provides drivers with feedback in real time on their fuel-efficiency performance and suggests methods for improvement.”60 UPS estimates it reduced per-driver engine idling time from 122 minutes in 2011 to 48 minutes in 2012, saving the fleet 250,000 gallons of fuel.61 As with other examples throughout this book, such savings are only a tiny fraction of UPS’ total fuel consumption, but they are part of the general pattern in which companies implement many small changes that collectively can lead to significant reductions. Overall, UPS beat its 2016 goal of a 10 percent reduction in emissions (relative to a 2007 baseline) three years ahead of schedule.62 Other companies are deploying technology to control idling, such as the use of automatic shutdown on locomotives at BNSF and other railroads.63 The technology has even found its way into passenger cars employing automatic shutdown/start-up systems during idling.
In 2004, the US Environmental Protection Agency created the SmartWay program to improve the fuel efficiency of the transportation industry. The program spans multiple activities, including the development of tools for benchmarking operations, testing, equipment verification, and vehicle environmental rankings.64 Participating organizations include shippers (retailers, manufacturers, and distributors) and carriers (trucking companies, railroads, and freight airlines) as well as logistics service providers and governmental agencies.65 The program began with 15 motor carriers and grew over the following decade to include more than 3,000 carriers as well 600 shippers such as Nike, Whole Foods, and Chiquita.66
At its core, SmartWay offers tools to assess environmental impacts. Carriers (and shippers) can measure progress over time relative to industry peers. “Carriers collect information, such as fuel used, miles driven, truck and engine model year, and cargo payload and input it into the reporting tool to calculate freight environmental performance,”67 explains the EPA in a guidebook for its partners. In addition, any operator of a tractor or trailer that meets certain technical specifications can be certified as a SmartWay carrier.
Next, the EPA uses six metrics to rank all the assessed carriers within each sector and mode category.68 Although SmartWay does not verify information—it only aggregates carriers’ data at the fleet level—it does randomly spot-check the reporting when calculating the rankings. The rankings are published so shippers can use them when selecting carriers. Some shippers also commit to increase the share of their business with both certified and top-ranked SmartWay carriers,69 thereby providing market incentives for carriers to get certified, as well as to measure, disclose, and share their fuel-efficiency ranking.
Beginning in 2006, Chiquita became a SmartWay partner and boasted in its 2012 sustainability report that SmartWay-certified trucks handled 95 percent of the miles traveled in its North American operations.70 Ana Lucia Alonzo, director of continuous improvement and sustainability for Chiquita commented, “We are committed to SmartWay.” Similarly, Stonyfield Farm also committed to the program, shipping 100 percent of its freight using efficient SmartWay carriers, utilizing certified trucks that may be as much as 20 percent more efficient than standard trucks.71
At its 10-year anniversary on March 19, 2014, an EPA SmartWay Transport Partnership press release estimated the total savings achieved by the program72 at 1.4 percent of the diesel fuel used in trucking, with a corresponding savings on fuel costs and carbon emissions.73 An exhaustive study of major US trucking fleets found that the fuel-saving technologies with the fastest adoption included adding skirts to trailers, using synthetic transmission oil, and installing speed limiters.74 On average, the use of all these technologies reduced fuel consumption by more than 10 percent.75
The GHG Protocol uses a very simple model for truck emissions based on EPA estimates of the average CO2 emissions per ton-mile computed across vehicle types and operating conditions (the EPA uses 0.297 kg CO2e/ton-mile for this emissions factor).76 With this aggregate emissions estimation model, the total emissions are simply the product of shipment weight, distance, and the emissions factor. However, using such a simple model can give the wrong results regarding some emissions-reduction opportunities, such as when tailoring specific vehicles to specific conditions, including shipment size, driving conditions, congestion, topography, and altitude.
The Swedish nonprofit Network for Transport Measures (NTM) aims to develop higher-fidelity standardized calculations for all transportation modes.77 The NTM calculations and suggested fuel consumption factors are more specific to different vehicles, conditions, and fuels. For example, a 40-ton truck-trailer combination driving on a sea-level freeway is estimated to consume diesel fuel at a rate of 0.226 liters/km if empty. This figure climbs to a rate of 0.360 liters/km as the amount of cargo increases to full. A smaller, 14-ton truck consumes only 0.165 liters/km if driving empty on a freeway and 0.201 if full.
NTM's model assumes fuel consumption increases linearly with the load (starting with the weight of the empty truck), where the empty and full fuel consumption factors depend on the specific truck modeled. Emissions are then computed as the product of fuel consumption per kilometer from the graph, a fuel factor (e.g., 2.68 kg of CO2e per liter of diesel burned78), and the distance traveled in kilometers.
Shippers and carriers can use emissions models such as NTM's to plan transportation movements that minimize both fuel costs and emissions.79 For example, researchers at the MIT Center for Transportation and Logistics used stylized examples to show how re-sequencing a set of milk-run deliveries—so that the heaviest cargo would be delivered early in the journey—can yield environmental benefits. This scheme reduces fuel consumption during the remainder of the journey.
These researchers also worked with DHL in Mexico on assigning the right equipment to the right delivery tour in an urban area.80 Even with constraints of equipment availability, timing of the delivery, and many other factors, the actual test reduced emissions by 3 percent. Although small, the result was equivalent to eliminating the emissions of 12 vehicles as compared with the baseline.
A more comprehensive model of fuel consumption and CO2 emissions for trucking was developed by researchers at the University of California, Riverside.81 This model is one of the most detailed, accounting for engine performance (including friction, engine displacement, and tractive power), mass of the vehicle, speed, acceleration, gravity, road slope, and more. When taking all these factors into account, the above-mentioned MIT study demonstrated that the effect of road slopes can dominate and that calculations accounting only for distance, speed, and weight that assume flat roads are missing an important factor. In fact, for some road slopes, the CO2 emissions induced by the slope are substantially larger than the emission contribution resulting from the speed.82
In many freight vehicles, idling engines help maintain cabin temperatures, power the vehicle's ever-growing array of electronic devices, support departure readiness, or prevent cold weather damage to the engine. Unfortunately, these vehicles’ large main engines are especially inefficient at idle speeds in which almost all of the fuel's extracted energy goes to overcoming the big engine's internal friction. One solution, used by Walmart and others, is to add an auxiliary power unit (APU) to their long-haul trucks. The APU is a compact system containing a very small diesel engine, generator, and air conditioner compressor. Such devices have been used on aircraft since World War I to power airplanes while taxiing, during maintenance operations, and other non-flight requirements. Adding APUs to Walmart's trucks saved an estimated 10 million gallons of fuel per year, according to the Rocky Mountain Institute.83 The EPA estimates that long-haul trucks save an average of 8 percent in fuel costs and emissions by using APUs.84
An alternative to both engine idling and APUs is “shore power,” a term taken from the maritime world. With this method, the vehicle connects to the local electrical grid and shuts down all onboard engines. To reduce emissions and pollution at port areas, ocean freighters can be outfitted to use shore power while docked. However, the technology requires coordinated investments in both the vehicles and infrastructure. The Port of Long Beach in California invested $200 million to install shore power hookups. The port is also committed to increasing the fraction of vessels serving the port using shore power, aiming to reach 80 percent in 2020 (see the last part of this chapter).
Adding shore power to a container vessel costs between $500,000 and $2 million.85 Shore power is also expensive to use: $19,000 for three days of electricity in the Port of Oakland, for example. Moreover, shore power can add significant delays up to 13 hours to a ship's time in port, according to Lee Kindberg, director of environment and sustainability at Maersk Line. Because of these expenses and delays, carriers have retrofitted only a fraction of their fleets; as of 2014, Singapore-based APL had only added shore power to one-third of its container vessel fleet. Although limiting the number of retrofitted ships saves capital for the ocean carrier, it adds to its operating costs. The combination of having some ships outfitted for shore power and some ports that require it, while others do not, limits the flexibility of the shipping line. Because not all vessels can visit all ports, ship scheduling becomes constrained, reducing the line's ability to operate an optimal cost and service schedule86 (see the section “Taming the Brimstone Beasts of Maritime Shipping Emissions”).
In the long-term, innovations in engines and vehicles promise further gains in efficiency and reductions in emissions. When the Walmart Advanced Vehicle Experience (WAVE) concept truck drove from the Peterbilt Motors plant to a local airport for the unveiling ceremony in early 2014, it stopped traffic. “People were literally driving their cars off the road, trying to jump out and get pictures, and wanting us to stop so they could take pictures in front of it,” said Elizabeth Fretheim, director of business strategy and sustainability for Walmart Logistics.87 The narrow hatchet-faced cab placed the driver's seat in the center, perched on top of a teardrop-streamlined base that looked nothing like the utilitarian boxes of typical long-haul trucks.
The sleek sports-car-like sloping curves and advanced gadgets on the truck are all 100 percent functional—designed to avoid the fuel-sucking drag produced by the typical blunt-fronted truck.88 The vehicle's carbon fiber trailer saves 4,000 pounds,89 enabling the truck to legally carry that much more cargo. Nestled under the driver is a patented micro-turbine powering a battery-electric hybrid drivetrain. The air-cooled micro-turbine eliminates the weight and drag of a conventional radiator and can run efficiently on virtually any fuel, from natural gas to biodiesel. The development effort bundled innovations from 22 partner companies into one demonstration vehicle.90 Walmart estimated that WAVE can increase fuel economy by 55 percent over long routes and even more over short ones, when its battery and hybrid drivetrain take over.91
According to Darren R. Jamison, president and CEO of Capstone Turbine Corp., “Walmart said they were looking for the truck of the future. They didn't want what the technology could look like next year.”92 Walmart's Fretheim explained: “It gave the company a license to think outside the box. It gave us confidence … the ingenuity and the interest to pursue more bold innovation.”93 “It's important that we continue to work collectively on future innovations and challenge ourselves to look boldly at fleet efficiency in new and different ways,” added Tracy Rosser, senior vice president of transportation at Walmart.94 “It may never make it to the road, but it will allow us to test new technologies and new approaches,” concluded Walmart president and CEO Doug McMillon.95
Many other innovations currently on the drawing board have the potential to reduce fuel consumption, thereby reducing costs and carbon emissions. These include platooning, in which one or more trucks tailgate extremely closely to a lead truck using high-speed electronic control of engines and brakes. Tests estimate platooning would reduce fuel costs for the trailing vehicle by about 8 percent and that even the lead vehicle enjoys up to a 5 percent boost in fuel economy owing to reduced drag behind its trailer.96 Further technological developments that culminate in autonomous trucks can lead to fuel savings as a result of “always optimal” operation.97
In the air, Boeing developed the 787 aircraft to be 20 percent more fuel efficient than the 767 aircraft it is replacing. The savings come from using lighter materials (including 50 percent composites and 20 percent aluminum), new engines, lighter-weight batteries, and using electrically powered systems (instead of pneumatic systems that bleed high pressure air from the engines and rob the airplane of thrust).98
“One of the biggest challenges we face in the world today is how to meet the growing needs of a growing population while minimizing the impact that [it] is going to have on our planet,” said Maersk Line CEO Eivind Kolding. Maersk designed the biggest (at the time) container ship ever because, for transportation carbon footprints, as well as operating costs, bigger is paradoxically better. At the time, fuel costs were high and rising, creating a strong incentive to reduce fuel consumption. Maersk dubbed it the Triple-E, short for “Economy of scale, Energy efficient, and Environmentally improved.” With a hull as long as four football fields, the Triple-E can carry 18,000 TEU shipping containers while consuming 35 percent less fuel per container capacity than the already huge 13,100 TEU vessels entering service at the same time.
Everything about the Triple-E is massive. Two engines deliver a total of 86,000 horsepower to two 9.8-meter diameter 70-ton propellers. Each giant 910-ton engine has eight long-bore cylinders with a 3.4-meter stroke moving at a friction-reducing 74 rpm.99 In guzzling a staggering 1,800 gallons of bunker oil every hour, the ship seems to have a high carbon footprint. Yet on a per ton-mile basis, the fully loaded ship is more than 10 times more fuel efficient than even some of the most fuel-efficient trucks of its time.100
At $190 million apiece, a ship like the Triple-E merits investment in all the latest energy-conserving equipment, such as a $10 million heat recovery system that offers a 9 percent improvement on fuel economy and emissions.101,102 The ship was designed for efficient slow steaming of 22 knots from the start. “The lower top speed of the Triple-E vessels has a significant impact on the hull shape,” said naval architect Troels Posborg. “It means we can build vessels with a larger capacity below the deck.”103 The result is both lower fuel consumption and greater cargo capacity. The Triple-E uses less total engine power than Maersk's previous generation, the 14,770 TEU E-class vessels, but it can carry 22 percent more cargo. The Triple-E did not hold the crown for the biggest container ship for long after its March 2013 debut; in December 2014, China Shipping launched the 19,000 TEU CSCL Globe.104
Other modes favor larger vehicles, too. Trucks with larger trailers, double-trailers, and triple-trailers offer 20 to 32 percent savings per ton-mile compared with smaller trucks.105 And railroads in the US and EU are looking at efficiencies and other operating performance advantages106 of longer trains.107 Although their potential is promising, as mentioned earlier, larger vehicles deliver on their promise of a lower footprint per ton-mile only if their cavernous spaces are filled to capacity. “It's a simple logic, bigger is better,” said Ulrik Sanders, global head of the shipping practice at Boston Consulting, “if you can fill it.”108
As mentioned above, shippers (manufacturers, suppliers, distributors, etc.) determine the most important variables that affect the carbon footprint of transportation of their goods. They decide the origin and destination, shipment size, timing, and the carrier to use. Unfortunately, tracking transportation GHG emissions involves multiple methodologies across modes, countries, and programs.
In an attempt to provide a unified methodology, the Smart Freight Center,109 a European-based nonprofit, convened the Global Logistics Emissions Council (GLEC). The GLEC developed a methodology across the multi-modal supply chain.110 The methodology covers all modes of transport and combines existing methodologies and standards from each mode (air,111 inland waterways,112 sea,113 rail,114 road,115 and transshipment centers116). Many of the mode-specific methodologies also incorporate SmartWay processes. The GLEC adheres to the Greenhouse Gas Protocol's framework of Scopes 1, 2, and 3 for corporate emissions data, ensuring that the total equals the sum of the parts. For example, a carrier's own Scope 1 and Scope 2 emissions are part of the Scope 3 emissions of the shipper or the logistics service provider (LSP) hiring the carrier's service. The scoping framework enables shippers to make transportation choices based on consistent emissions information.
In addition to improvements in mode choice, conveyance utilization, routing, and fuel-saving vehicle features, shippers and carriers can reduce their carbon and emissions footprints by choosing different fuels. UPS, for example, had more than 5,000 alternative-fuel vehicles on the road as of 2014, including ones powered by compressed natural gas, liquefied natural gas, propane, and electricity. By 2017, UPS was planning to power 12 percent of its ground fleet with renewable fuels.117
Local requirements, as well as fuel availability and prices, determine carriers’ choices. “As the world is changing and growing, different parts of the world have specific expectations as to how we address issues of congestion and climate change and air quality, so the requirements may vary based on where we are doing business,” said Rhonda Clark, chief sustainability officer at UPS. UPS continues to try out new fleet solutions, such as using electric vehicles for short-range city deliveries in areas with high fuel prices.118
The laws of chemistry and thermodynamics dictate the limits on the lowest possible CO2 emissions required to produce a kilowatt-hour of energy from different kinds of fuels. From this standpoint, natural gas outperforms diesel, and diesel outperforms coal. But chemistry doesn't tell the whole story. Some fuels involve hidden GHG emissions even before the fuel goes into the tank. In theory, natural gas power plants emit less than half the carbon dioxide of coal. In practice, natural gas is by itself a potent GHG: If even a small percentage escapes during the extraction, refining, delivery, and use of natural gas, the carbon footprint benefits may be negated.119,120
Similarly, environmentalists worry about hydraulic fracturing—the enhanced fossil fuel extraction technology more commonly known as fracking. NGOs such as Greenpeace have expressed “grave concerns” over issues of carbon, water use, contamination, health effects, and the secret chemicals injected into fracking wells.121 Despite US EPA declarations that properly managed hydraulic fracturing wells are safe,122 NGOs protests persist because key elements of well operations are exempted from EPA oversight.123 The NGOs, however, do not take into account the political, security, and economic benefits of fracking to countries like the United States and others.
The sooty black clouds billowing from a ship or truck's exhaust pipe vividly illustrate the other pollutants, besides CO2, emitted by various vehicles. Sulfur compounds, a common contaminant of heavier fossil fuels such as diesel and bunker oil, burn inside vehicles’ engines to form sulfur oxides (SOx). The high temperatures in vehicles’ efficient engines also convert atmospheric nitrogen into nitrogen oxides (NOx). Both SOx and NOx are serious respiratory irritants, contributors to acid rain, large contributors to global warming, and have become regulated air pollutants. The world's approximately 90,000 ocean vessels emit about 20 million tons of SOx per year. This is 250 times more than the SOx emissions of all the more than 900 million124 cars in the world put together.125,126 In fact, The Economist reported that just 15 of the biggest ships emit more SOx and NOx than all the cars in the world.127 Coal-fired power plants, and some manufacturing processes, such as ore smelters, oil refineries, and chemical plants, also emit SOx and NOx.
The MARPOL (short for “marine pollution”) Convention is a growing set of international regulations created by the UN's International Maritime Organization (IMO).128 Adopted in 1973, enacted through a protocol in 1978, and entered into force in 1983, MARPOL addresses maritime pollution by oil, noxious liquid substances, harmful substances, ship sewage, and garbage through a series of annexes. In 2008, the IMO129 adopted the MARPOL Annex VI, which enacted tight standards regarding sulfur and nitrogen exhaust emissions from oceangoing vessels.130 After January 2015, vessels could no longer use fuel containing more than 1,000 ppm (parts per million) sulfur in designated emissions control areas (the previous limit was 10,000 ppm).131 In February 2017, the EU decided to include shipping in its emission-trading scheme starting in 2021; compliance will require expensive retrofitting of ships. Other modes of transportation, such as trucking and railroads, face similar or even more stringent local government restrictions on sulfur, mandating ultra-low-sulfur fuels of less than 15 ppm.132
For operations in some maritime Emission Control Areas (ECAs), both MARPOL and local regulations define much tighter restrictions.133 Unfortunately, low-sulfur grades of marine fuel, such as marine gas oil (MGO),134 increase operating fuel costs by 50 percent, making it uneconomical for full-time use. The low-sulfur fuels also create many safety and reliability risks for older fuel-handling systems and engines designed for high-sulfur fuels.135 Ironically, the push for low-sulfur emissions in European ECAs might lead to more overall pollution by making fuel-efficient short-sea shipping more expensive than trucking.136
What could be better than a fuel that promises to be both carbon neutral and immediately usable without needing investments in new vehicles with new engines? Across some 87.4 million acres of US farmland,137 beams of bright yellow sunlight are transformed into rows of bright yellow corn kernels. After harvesting the corn, massive factories pulverize the grain, convert the cornstarch into sugar, and then convert the sugar into ethanol that may be used as a renewable fuel substitute for petroleum-derived gasoline in many types of engines. Around the globe, ethanol makers’ most commonly used feedstocks are corn and sugar cane. However, the diesel engines used in trucks, railroad locomotives, and ocean vessels, as well as aircraft jet engines, rely on heavier fuels and must use other biofuels instead of ethanol.
At first glance, biofuels such as ethanol look like a perfect solution to the carbon footprint problems of gasoline-based transportation. The same amount of carbon dioxide released during the burning of biofuels was pulled out of the air during the growth period of these plants and thus, in theory, biofuels could be carbon neutral. But in practice, the production of biofuel relies on GHG-emitting energy sources (e.g., electrical power, natural gas for boilers, and fossil-fueled vehicles) and generates other GHGs, such as methane or nitrogen fertilizer emissions. Furthermore, life cycle assessments by the IPCC concluded that corn-based ethanol increases food supply risks.138 The corn needed to fill the 25-gallon gas tank for a single car could fill the stomachs of almost 400 people for a day.139 In short, true substitution of biofuel for fossil fuel means that the world's 1.2 billion vehicles compete with people and wildlife for food, land, and water.
Both ethanol and biodiesel can also be synthesized from cellulose extracted from inedible plant material such as agricultural waste, switchgrass, or wood, which mitigates the competition between hungry people and thirsty vehicles. Although cellulosic biofuel enjoys a more abundant range of feedstocks, serious technological obstacles have caused the industry to lag badly behind expectations. In 2007, the United States had mandated that 500 million gallons of cellulosic biofuel would be produced in 2012,140 but production as late as the first part of 2016 was only running at a rate of 4 million gallons a year.141
Nonetheless, companies continue to pursue these fuels. Beginning in 2017, FedEx plans to buy 3 million gallons a year of cellulosic renewable jet fuel (out of a total of 1.14 billion gallons/year burned by the company's aircraft142) made by Red Rock Biofuels from leftover woody biomass.143 Fulcrum Bioenergy aims even higher: It signed a long-term deal with United Airlines to produce biofuel from municipal waste for less than the prevailing cost of fossil fuel at five hub airports.144 Ultimately, the system could produce a total of 180 million gallons of jet fuel per year. “Investing in alternative fuels is not only good for the environment, it's a smart move for our company as biofuels have the potential to hedge against future oil price volatility and carbon regulations,” said United's executive vice president and general counsel, Brett Hart.145
Beginning in 2005, the US government embarked on a legislative and regulatory push to move the nation's transportation systems toward renewable fuels. More than 60 countries embarked on similar crusades,146 all with the twin aims of improving energy security and reducing the net release of GHGs into the atmosphere. In support of the American version of this plan, legislators agreed on renewable fuel requirements, supported renewable energy startups, and subsidized domestic corn ethanol.
In 2011, a combination of market conditions and government policies in the United States and Brazil led to a perverse situation in which American firms sold subsidized corn-based ethanol to the Brazilian market and Brazilian firms sold sugar-based ethanol to the American market.
Brazilian sugarcane converts more effectively into ethanol than does American “dent corn”147 (aka “field corn,” which is generally grown for industrial uses and animal feed) because of the added steps in converting cornstarch into sugar prior to fermentation. According to the US EPA, sugar ethanol produced 61 percent lower emissions than traditional gasoline. In contrast, the EPA found that corn ethanol produced anywhere from 48 percent less all the way to 5 percent more emissions than did standard gasoline.148 That significant edge meant that the EPA classified sugarcane-based ethanol as advanced biofuel, unlike corn-based ethanol. Thus, it was not held to the 2010 cap placed on corn-based ethanol. As a result, American suppliers began buying sugar-based ethanol from Brazil. Between July and October 2011, American fuel suppliers bought about 40 million gallons of Brazilian ethanol. Meanwhile, Brazil faced a domestic ethanol shortage (due, in part, to those market-fueled exports) and imported 123 million gallons of American corn ethanol. Thus, as a result of policies fostering corn ethanol in the United States, each gallon of that fuel benefitted from a 45-cent tax credit—in effect transferring 55 million American tax dollars into Brazilian gas tanks.149
Geoff Cooper, vice president of research and analysis for the Renewable Fuels Association, dubbed the strange phenomenon the “Ethanol Shuffle.” “Picture the irony of a tanker full of US corn ethanol bound for Brazil passing a tanker full of sugarcane ethanol bound for Los Angeles or Miami along a Caribbean shipping route,” Cooper said in comments published in Ethanol Producer magazine. “Remember, this is all being done in the name of reducing GHG emissions. But what are the real GHG implications of the shuffle? And what are the economic impacts?”150
Despite recognition of this folly, US internal political considerations have been blocking any attempt to correct the policy, because ethanol policies have been a boon to corn-producing states. For example, ethanol production has added about $20 billion to Iowa's economy since 2002 and increased the value of farmland in the state threefold.151 Consequently, congressional efforts to correct the situation have gone nowhere.
Companies such as Frito-Lay, Coca Cola, and Duane Reade have invested in short-haul electric delivery trucks,152 mainly for urban deliveries. Large trucking fleet operators, such as UPS and FedEx, have only adopted electric vehicles on an experimental basis or where government subsidies mitigate the extra capital costs of these vehicles.153
Electric vehicles offer the potential of zero-emission transportation, but only if the vehicle owner recharges the vehicle from a zero-emissions source of electricity. Otherwise, electrification simply shifts emissions from urban vehicles operating in the midst of population centers to potentially remote power plants. Thus, while an electric vehicle in Norway might have near zero emissions because 95 percent of the country's power comes from renewable hydroelectricity,154 that same vehicle driven in Poland has significant emissions because 85 percent of Poland's power comes from high-carbon-emission coal.155 In the long-term, however, stationary power plants have more cost-effective opportunities for boosting efficiency, controlling pollution, and sequestering carbon than do mobile pollution sources, aka vehicles. Interestingly, fracking has actually helped lower the carbon footprint of electric vehicles in the United States by increasing the percentage of power coming from natural gas.156
Unfortunately, the high cost and poor energy density of batteries makes electric vehicles infeasible for most long-haul freight transportation, including ocean, air freight, or long-haul trucking. Long-haul trains in Europe, Japan, and other countries often run on electricity supplied by catenary-wires running above the tracks.157 In 2016, Siemens tested an electric truck concept that adapts catenary-wire electric technology to high-volume truck routes such as those associated with the ports of Los Angeles and Long Beach.158
All day every day, enormous ships glide into the ports of Los Angeles and Long Beach (LA/LB) to dock. Once the thick cables lash the ship to the dock, long-armed cantilever cranes pluck thousands of 20- and 40-foot-long containers from the ship's deck and load them onto rail cars and trucks to begin the process of distributing the cargo across the United States. In 2013, the combined LA/LB port complex ranked as the ninth busiest container port in the world.159 In addition to delivering cargo, the ports deliver one million jobs to the Los Angeles area and generate more than $17 billion in direct and indirect sales in the local area.160 Combined, the two ports handle 20 percent of America's incoming freight containers.161 There is, however, an environmental price to be paid by residents living in proximity to the port complex and similar large-scale logistics clusters for this economic largess: It makes places like these ports a focus for environmentalists’ actions.
The size and scale of the Los Angeles/Long Beach port complex is no fluke. The economics of transportation—the cost efficiencies of large vehicles and consolidated flows—often lead to hub-and-spoke networks. In many cases, such hubs develop around mode-change terminals, be they rail yards, ports, or airports. The natural nexus of activity at the hub then attracts more logistics and other industrial activities to grow into a logistics cluster. Logistics clusters are found in places like Shanghai, Singapore, Rotterdam, Memphis, São Paulo, and hundreds of others around the world.162
Such clusters, with their high hub-to-hub freight flows, improve the cost efficiency (and lower the environmental footprint) of global logistics for four reasons. First, the higher flows in and out of such a hub allow the use of larger conveyances, directly reducing CO2 per ton-mile. Second, such conveyances are more likely to be filled, improving capacity utilization, which, again, reduces the carbon footprint per ton-mile. Third, the high volume of freight increases the frequency of cost-efficient (and eco-efficient) services from every origin feeding into the cluster and to every destination getting freight from the cluster. The higher frequency of service reduces schedule delays and enables shippers to switch to slower, less-costly, lower-footprint modes of transportation such as rail and intermodal. Fourth, the presence of several transportation modes within the cluster location lets shippers subdivide shipments into slow and fast modes rather than send entire shipments on a faster mode because some portion of a shipment has a tight deadline.
Some governments, such as Germany's, encourage and support the development of logistics clusters in order to shift more freight from trucking to rail (mainly using intermodal movements).163 Rail shipments produce about one-third to one-half of the carbon footprint of trucking.
Yet, even as the logistics cluster in the Los Angeles basin reduces the global environmental impacts of freight movement, it increases the local impacts. From this beehive of activity arises a black cloud of diesel exhaust from the many ships that visit each year164 and the thousands of trucks that work in the port.165 In 2011, the ports of Los Angeles and Long Beach collectively handled 5,364 vessel calls,166 including 14.2 million TEUs of containers.167 On average, the 16 foreign vessels that unload at the ports every day produce exhaust equivalent to about one million cars, as demonstrated by the NRDC in a YouTube video.168
The ports’ activities contributed to poor air quality in the South Coast Basin Air District, which has been consistently ranked among the worst in the United States.169 “The vessels, the cargo-handling equipment, the trucks and the trains—all were contributing to the degradation of air quality and the health impacts associated with that,” said Bob Kanter, environmental director for the Port of Long Beach.170 The downside of one area handling 20 percent of US inbound container traffic is that it gets a 20 percent share of the nation's emissions associated with that traffic. The impacted community,171 home to more Americans than any other metropolitan area except New York City, took notice as the port grew in size.
Concerns about the environmental impact of the port on LA basin's citizens spurred both activist and government action. In 1998, the California Air Resources Board declared that diesel exhaust was a “toxic air contaminant”172 and a carcinogen.173 The ruling gave the NRDC the legal leverage it needed to bring a 2001 lawsuit against the ports on behalf of neighboring Los Angeles County residents.174 “As proposals for growth were starting to come in, the NRDC started doing the math, and they saw that the potential health risk was going to grow,” said Chris Cannon, director of environmental management for the Port of Los Angeles. “They basically stopped us and said, ‘Wait a minute, you don't have a plan here. You're asking us to bear the burden while you continue to grow and make all this money.’”175
In 2002, a three-judge panel halted the Port of Los Angeles’ plan to build an additional container terminal for the China Shipping Company. The suit contended that diesel emissions at the port already endangered residents’ health and that construction of an additional terminal would exacerbate this issue.176 The appellate court agreed and the judges immediately halted any and all port expansion plans.177 Responding to political pressure and community pushback of its own,178 the nearby rival Port of Long Beach also began to explore environmental programs in 2003.
As in the case of industry associations such as RSPO (see chapter 5), addressing the challenges facing the ports and the communities required collaboration between competitors and adversaries. The Ports of Los Angeles and Long Beach compete for ship traffic. But in response to the pressure from NGOs and regulators, both ports dropped their independent efforts to reduce pollution. In 2006, they partnered with each other, NGOs, and regulatory agencies to create the Clean Truck Program and Clean Air Action Plan.179 “We were always kind of at odds with the air quality regulatory agencies … and it wasn't helping anybody,” Kanter said. “So, we basically held out an olive branch and said, look, we have the same goals in mind here. … How can we do it and work cooperatively?”180 The plan not only represented unprecedented cooperation between two business rivals but also an unusual partnership with the NGOs and regulators that watched over both businesses.
The NRDC was not the ports’ only ally throughout the development of the environmental programs. The ports also received support from the West Coast Collaborative and the South Coast Air Quality Management District. Where the ports’ capacity or expertise fell short, these groups helped develop pollution-reduction programs while simultaneously planning for the ports’ future growth. In 2013, the South Coast Air Quality District helped develop regulations that would take effect only if the ports missed the goals they had outlined for themselves.181 The West Coast Collaborative helped by hosting a series of webinars on new technologies for reducing port and port-related emissions.182
The Port of Long Beach developed a strong relationship with environmental groups. “We had to walk the talk and demonstrate that we were good for our word, and we have. … So, we gained credibility with the environmental community, and we've continued to build upon that by engaging them,” said Kanter.183 Although the ports nurtured a good working relationship with their former attackers and brought other collaborators on board, the path to that relationship was not always smooth. In 2008, the NRDC and the Coalition for a Safe Environment threatened to sue the Port of Long Beach for not reducing its environmental impact fast enough (the sides ultimately settled out of court).184 “We don't always see eye to eye,” Kanter said, “but one of the things we found is that we needed to educate them about what we were doing and what our challenges were. The education aspect can't be understated. We meet monthly with representatives of all of our major environmental groups and some of the minor ones. … As a result, the resistance that used to translate into political pressure on us has backed off quite a bit.”185
For the 2003 injunction settlement, the Port of Los Angeles earmarked $50 million to fund a 50 percent reduction in diesel exhaust emissions from port operations by 2011.186 To do so, the ports, the state, the air district, and companies that worked with the ports invested hundreds of millions of additional dollars in pollution-reducing programs.187 The program also included guidelines and incentives to reduce ships’ exhaust both near and in port. The port asked ships to slow steam at 12 nautical miles per hour or less as they approached the coast. After the ships docked, the ships used shore power.188
The ports offered carriers several compliance incentives for their sustainability programs. For example, ships that slow steamed into port got up to a 50 percent reduction in docking fees.189 In addition, the ports created the Green Flag Award to publicly recognize companies with the best adherence to the new guidelines. According to Port of Long Beach's Kanter, the award-winning companies started using this in their marketing materials.190 By mid-2013, 99 percent of ship visits were compliant at the Port of Long Beach.191 Nevertheless, the biggest initiative of the LA/LB ports centered on the complete overhaul of the ports’ truck fleets, which were independently owned and operated.192
In 2008, the ports launched the Clean Truck Program to transform the fleet of older, “dirty” diesel workhorse dray trucks that hauled cargo to and from the ports day in and day out.193 At that time, approximately 16,000 trucks operated within the Port of Los Angeles alone, according to the Port's Chris Cannon. Those trucks were, on average, 11 years old, and many of them ran on minimal maintenance by small owner-operators who could hardly afford to buy a new vehicle.194
The ports used a “carrot and stick” approach to encourage a shift from old dirty trucks to new greener ones. In 2008, the ports added a $35 surcharge for every TEU picked up by a tractor trailer older than five years. The program mandated that all large trucks operating within port borders comply with the 2007 EPA emission standards for heavy-duty trucks. To help drivers comply, the port offers grants of up to $20,000 for drivers to purchase new vehicles. In total, the Port of Los Angeles awarded 2,200 grants totaling $41.6 million. The ports had planned to completely ban vehicles older than five years in 2012, but it never had to. Private carriers responded so quickly to the fees and incentives that they updated the entire 16,000-truck fleet before the end of 2010.195
The mandates did bankrupt some contract drivers, leading to community unrest over lost jobs.196 “To be honest, there were some people (private trucks) that should have never been in business,” Kanter said. “They were independent contractors, and they could drive that rig, even though it was held together by chewing gum and bailing wire. … Those guys were driven out of business.”197 Some of those drivers brought unsuccessful lawsuits against the ports. In a twist, the NRDC—the same organization that had sued the Port of Los Angeles—provided legal defense for the ports’ Clean Trucks Program.
The Clean Truck Program reduced truck-related diesel exhaust emissions at the two ports by more than 80 percent by 2010,198 which was faster than the plan's architects had promised. “We set out initial goals for the Clean Air Action Plan, and we blew right by them in about four years instead of five or six years,” said Christopher Patton, assistant director for environmental management at the LA port.199 By 2012, total ship, truck, and other emissions for the port had fallen by about 76 percent.200 The port invested almost $100 million in its clean air initiatives.201 Private businesses working within the port invested an estimated $1 billion, mainly in replacement trucks, according to Cannon.202
“But we don't say we've arrived. We have some long-term air quality goals called our ‘Bay Wide Standards,’ which we still must meet,” Patton declared.203 The standards include reducing port-related emissions of NO and NO2 by 59 percent, SOx by 92 percent,204 and diesel particulates by 77 percent, all by 2023.205
To achieve these new goals, both ports have continued their efforts. In 2010, the ports commissioned a hybrid-electric tugboat.206 In 2012, the Port of Los Angeles announced financial incentives of as much as $1,250 per port call for carriers that used cleaner, more efficient ships.207 In the same year, the Port of Long Beach tested electric vehicles on port grounds. In cooperation with Siemens, the port is testing an “e-highway” to electrically power trucks via overhead wires on the “heavily used and relatively short truck routes” that connect to rail yards less than 20 miles away.208
The ports’ leaders are under no illusion that they have a conflict-free partnership with the NRDC and others. “They have a job to do, and it's to always keep pushing us,” Cannon said, “and they've done a good job of pushing us. Every time we met one goal or requirement, then they wanted us to raise the bar, and we have progressively responded to that. Now, that may not always be the case, but they've been pushing us further and further in the direction of our stated goal, which is to become a zero-emission port. It won't be easy, but we welcome the challenge.”209
Around the same time that the LA/LB ports were going through their efforts to reduce their environmental impacts, other ports around the world were attempting the same. The International Association of Ports and Harbors (IAPH), in consultation with regional port organizations, created a mechanism to support ports’ environmental initiatives at its 2008 annual meeting in Los Angeles.210 Following the meeting, 55 member ports signed on to the C40 World Ports Climate Declaration, in which they committed to jointly reduce their carbon footprint. The ports of Los Angeles and Long Beach were some of the first signatories.
Under the World Ports Climate Initiative (WPCI), member ports piloted various environmental initiatives including onshore power supply working groups, lease agreement templates with sustainability requirements, and a carbon footprinting working group.211 Geraldine Knatz, former executive director of the Port of Los Angeles, served as the first chair of the WPCI during her presidency of the IAPH. The Port of Los Angeles, for example, presented its methodology for accounting for its GHGs inventory during the 2008 WPCI Los Angeles symposium and is an active member of the carbon footprinting working group.212
The WPCI also manages the Environmental Ship Index (ESI), which it rolled out in 2008 to catalog ships that “perform better in reducing air emissions than required by the current emission standards of the International Maritime Organization.”213 As a member of the WPCI, the Port of Los Angeles adopted the ESI and even took it a step further by introducing its own unique incentive program in 2012. “ESI is a voluntary program open to any oceangoing vessel that calls at the Port of Los Angeles,” said Carter Atkins, an environmental specialist heading the ESI program. “It rewards operators for reducing emissions in port areas ahead of and beyond regulations through operational practices, investing in green technology, and deploying their cleanest ships to Los Angeles.”214