TRUCK AND RAIL CARRIERS ARE RAISING THE BAR FOR SUSTAINABILITY

One decade ago, Toyota determined to develop efficient “green” solutions for the then 160,000 vehicles it shipped annually into West Coast ports for distribution to its U.S. sales outlets. The company built a 20-acre facility in Portland, Oregon, that optimized process flow logistics, fuel consumption, energy-efficient buildings—and the truck and rail shipments which moved 85 percent of all inventory from the port (http://www.siteselection.com/ssinsider/special/sp02). The move was one of a series of “wakeup” calls to carriers, who responded by capitalizing improvements to their transportation infrastructures. Since that time, the drive to green shipping has been propelled by new and tougher environmental regulations, a recognition that operational expenses can be reduced by going green, and a sense of stewardship and social responsibility that companies feel toward the communities in which they operate.

Carriers also continue to feel the pressure from their shipper customers.

As part of its comprehensive set of sustainability guidelines, Walmart is testing carbon emissions in real time with a new analytics dashboard that can be used on trucks—and potentially extended to outside transportation suppliers as a best practice http://www.sustainablebusinessoregon.com/articles/2010/11/greenshipping-targets-carbon-reduction.html. The goal is reducing carbon emissions.

Ford has recognized that achieving its own internal green initiatives depends on its suppliers’ green success. http://www.reliableplant.com/Read/24668/Ford-carbon-footprint-suppliers

Procter and Gamble and IBM work actively with their supplier bases—including transportation—by providing analytics tools and periodically assessing supplier progress.

“Our customers come from the industrial, agricultural, coal and retail/consumer sectors,” says John Lovenburg, Vice President, Environmental at Burlington Northern Santa Fe (BNSF) (http://www.bnsf.com/). “Many of these companies are publicly traded, and have shareholder resolutions about sustainability. We furnish customers with annual customer carbon letters that some customers place in their corporate reports. Several of our publicly-traded customers are listed in the Dow Jones Sustainability Index, a resource for socially-responsible investers. Another example of the growing visibility of sustainability that retail/consumer customers are experiencing is the Sustainability Consortium, in which customer environmental and sustainability metrics will be placed on product labels of goods marketed through major retailers including Walmart and Target. Many of our customers are hard at work reducing their environmental footprints, and rail plays a big part in reducing transportation footprints, and we have to provide value in this area in order for them to succeed.”

Inter-modal Transportation: The “Low Hanging” Fruit

One way carriers achieve green progress is by blending truck and rail transport into cost- and fuel-efficient delivery systems. “The concept isn’t new,” says Tom Lange, Director of Communications at Union Pacific http://www.up.com/. “In fact, it’s been going on since the sixties.”

Inter-modal shipping combines the best features of highly fuel-efficient rail transportation with the convenience and door-to-door pickup and delivery service of trucking. “The trucking industry is our largest customer,” says BNSF’s Lovenburg. “By converting to inter-modal, where trucks transport their loads to the train and the train does the long haul, with trucks again picking up the loads to travel the ‘last mile’—trucking companies are finding that this operation is more efficient and economical than trucking entire loads across country. Traffic congestion and emissions are also reduced on our nation’s long-haul highways. Rail also provides a tremendous opportunity beyond fuel efficiency and sustainability. It reduces supply chain costs, allowing businesses to be more competitive in the global market. A BNSF train can move one tom of freight 500 miles on a single gallon of diesel.”

Customers like this because they are under pressure to produce their own sustainability reports that demonstrate progress. Many of these objectives address carbon efficiency. Since railroads are able to provide four times the fuel efficiency and 75 percent less greenhouse emissions of trucking, consumer product and auto customers look for rail to handle long haul routes that exceed 500 or 600 miles—with trucking handling the “last mile” deliveries to the dealers. The fuel and carbon emissions reductions from this inter-modal shipping process can be plugged directly into the sustainability reports that customers voluntarily file, with impressive results. “Annually, BNSF rail transportation reduces U.S. fuel consumption by over three billion gallons of fuel and 30 million metric tons of carbon emissions. This is the equivalent of taking six million passenger cars off the road,” says Lovenburg.

Changing How You do Business with New Technology

At the same time, transportation providers recognize that inter-modal transportation by itself is not going to solve the green challenge. “BNSF Railway has a robust fuel efficiency program. One of the technologies we are employing is new locomotives that are distributed throughout our trains, and not just at the front, which was how it was done formerly,” says Lange. “The new distributed approach is to place two locomotives in the front of the train, one in the middle and one at the end so that the power is distributed. So, instead of pulling 100 cars behind you, you have a distribution of the power. This conserves energy, but is also safer….We additionally monitor the locomotive idle time with technology. If a locomotive idles for longer than 15 minutes in the yard, technology automation shuts it off. This takes the human element out of the monitoring.”

Electric widespan cranes that can span multiple tracks and operate with zero local diesel emissions while loading and unloading trains in the yard are also starting to appear. “We have operations like this in Seattle and Memphis—and we will soon be employing them in Kansas City and Southern California,” says Lovenburg. “In our research and development, we are also exploring a type of rail lubricant that improves efficiency by reducing the friction and the resistance on the tracks. BNSF continues to test innovative approaches and locomotives such as diesel-electric hybrids, biomass, hydrogen fuel cells, ethanol injection and liquefied natural gas (LNG).”

The trucking side of the industry is also undergoing technology transformation. Large shippers like FedEx hard-wire trucks and plot the most economical and direct routes for deliveries, while also monitoring time between stops with the help of GPS (global positioning systems) and automation. This same technology is being used by industries highly reliant on trucking (e,g., tools on wheels businesses) so that they actually start moving their product inventory out of their warehouses and into their mobile fleets. Consequently, when an expensive part is needed somewhere and the truck in the immediate area isn’t carrying that part, GPS and other online technology that links the trucks in the fleet in real time to each other can locate the closest truck that has the part and obtain a delivery. As a result, the amount of inventory that the company has to carry (especially in expensive parts) can be reduced—and fuel costs and carbon emissions are reduced because of fewer trips to the warehouse.

In both trucking and rail, technology is also being used as a training facilitator for drivers and engineers. “We train our engineers on the dynamics of locomotives so they learn to operate the train in the most efficient way, but still meet their time commitments,” says Blair Wimbush, Vice President of Real Estate and Sustainability for Norfolk Southern Railroad http://www.nscorp.com/. Norfolk Southern uses technology to function as a kind of “cruise control” that monitors in real time the train’s planned route, the weight of the load it is carrying, and the grades of the terrain it is traversing. “The tool calculates and advises the engineer when slowing should occur, and when the train should be speeding up,” says Wimbush, who estimates that about 60 percent of Norfolk Southern’s road locomotives will be equipped with the technology by the end of this year. Similar tools exist in trucking. Pitt Ohio’s (www.pittohio.com) Chief Marketing Officer and Vice President Geoff Muessig believes that sustainability can be a differentiator for carriers, and said that his company has developed a proprietary customer carbon footprint calculator that enables an LTL shipper to measure the carbon footprint of its LTL shipments.“This carbon footprint is comprised of 12 percent infrastructure carbon and 88 percent rolling stock (trucking) carbon, so the focus over the past five years has been on improving the fuel efficiency of our fleet,” says Muessig.

Overcoming the Challenge of Implementing Green Initiatives

Market forces and technology are driving green adoption—but premier companies also recognize that more is needed to effect permanent green change in their organizations. “Focus is the key,” says Steve Phillips, Senior Vice President of Operations at Werner Trucking (www.werner.com). “We tell our drivers that no matter what we do, safety is always our utmost priority.” Phillips also said that 95 percent of what the company saves from sustainability efforts will come from fuel consumption and carbon emissions reductions. “This requires organizational change, beginning with the driving habits of drivers,” says Phillips. “We have internal training programs that teach drivers how to drive with a ‘soft foot,’ traveling at the best possible miles per gallon while driving safely. We also continue to pilot various equipment modifications that all come with SAE certification and the promise of improving our fuel and emissions efficiencies. Some of them work in practice and some don’t—but we have an aggressive testing program to qualify the tools that will help us.”

The trucking industry is also experiencing a driver shortage. This makes the strategy of long-hauling freight with trains to offset some of the driving even more important. The pickup in the economy is one reason for the shortage, as drivers have more

opportunities for employment that is close to home and that can improve the time that they can spend with their families. “We use a technique called “matching optimum lanes” that works somewhat like the old Pony Express to help this,” says Phillips, who cited an example of a 500 mile daily route where the first driver drives 250 miles from his home to a mid-point delivery location to drop off a load, and then drives back home—and a second driver whose home is 250 miles on the other end from the receiving site then picks up the load and drives it to its ultimate destination–a customer in his own home area. The net of it is that each driver is back at home at the end of the day.

Continued focus on sustainability, safety and customers is also a challenge on the rail side. “You have to stay focused on safety and reliability in all of your efforts,” says Union Pacific’s Tom Lange. “Every month, we survey our customers on satisfaction. Eight or ten years ago, we would get scores from these surveys in the 60s and 70s out of 100 points. Today, the market is more competitive and new initiatives like sustainability carry more weight. We work very hard at collaborating with and pleasing our customers—and we have seen results. Our customer satisfaction surveys are now averaging in the low 90s.”

Coming Full Circle on Sustainability

Customers and carriers know that the best way to achieve environmental sustainability gains is to reduce fuel consumption and carbon footprints. But sustainability encompasses more than energy use. “There are really three pillars to sustainability,” says Union Pacific’s Tom Lange. “They are environmental responsibility, social impact and economic impact.” Lange says that it is important for companies to contribute to the entire ecosystems of the communities they serve so that communities can be sustained. This means job creation that develops healthy local economies—and that also furthers a company’s brand and reputation. “In 2011, we added 4,500 jobs, which is approximately ten percent of our workforce,” says Lange. “Some of this was due to attrition, but at least 1,500 of these jobs were new. In 2012, we plan to add another 4,000 jobs. This is important because a recent Association of American Railroads study concluded that for every job a railroad creates, another four to five jobs are also generated in the community.”

Meanwhile, carriers actively collaborate on sustainability with the communities they serve, the customers they serve and even their competitors in an industry where sustainability is increasingly viewed as a competitive advantage. “There are three things that customers always want,” says Werner’s Steve Phillips, “Service, price and capacity….During the recession, we were in a price war and customers were making decisions based upon which carrier was the cheapest. We are now seeing demand outpace capacity. The shipping community also recognizes this and therefore is focusing on locking in capacity to cover its needs. But customers still want to get more for less—and sustainability is a very hot topic.”