Green Payoff Of Sustainable Shipping Needs To Be Cost Savings

January 12, 2009

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Sustainable shipping caught fire in 2008, but with the worsening economy, businesses will increasingly insist on cost-savings as the main payoff of “green” initiatives, according to Traffic World, “with carbon and greenhouse gas emissions reductions as a welcome if still somewhat ancillary benefit.”

The most reliable gauge of shipper commitment to sustainability initiatives is the price of fuel. “That seems to be the barometer,” [said Patrick Penfield, assistant professor of supply chain management at Syracuse University].

“If fuel costs are going down, there seems to be less activity going around sustainability,” he said. “If fuel prices are going up, then there’s a lot more interest in what that can do for them.”

So how are delivery companies saving money? First Global Xpress, which works with about 115 airlines and a network of ground couriers to deliver packages direct to just about any city. By avoiding the hub-and-spoke networks of consolidators like UPS and FedEx, the company says it is able to cut 30 percent to 40 percent off delivery overhead for about 20 percent off the price of his bigger competitors.

Mike Kelley, chief sustainability officer at YRC Worldwide, says technology to improve fuel economy or equipment performance are not as productive as strategies. In fact, of all the additives the carrier has been pitched, none has produced the efficiency claims its vendors made. The most productive “green” initiatives for reducing fuel consumption and carbon emissions at YRC are strategic.

For example, fuel consumption increases about 2.2 percent for each mile per hour above about 60. The carrier also catalogued speed limits on every road it drives and removed the 25 percent to 30 percent of routes where it never expects to hit the limit. YRC calculated that by following a 62 mph limit for its trucks, it cuts about 30 percent of CO2 emissions.

Bill Zollars, head of YRC Worldwide says calls to return to a 55 mph national truck speed limit are off base because today’s trucks are most fuel efficient between 63 and 65 mph.

Last October Karl Feilder, CEO of DHL Neutral Services, said while carbon neutral supply chains are possible they would take time to achieve.

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