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How UPS, DHL Drive Emissions Cuts, Efficiency Improvements in Transportation and Logistics

UPS ORIONTransportation is a major source of carbon pollution, accounting for about 24 percent of greenhouse gas emissions worldwide in 2015.

This means that for the US and other nations to meet their commitments under the Paris climate agreement, transportation emissions must be reduced.

Looking specifically at road transportation emissions, analysis from Lux Research finds that these can be cut by 29 percent by 2030 through a combination of low-carbon fuels, alternative-fuel vehicles and improved fuel efficiencies.

“Global warming remains at center stage, and significant strides need to be made in road transportation technologies to achieve the goal set for 2030,” said Yuan-Sheng Yu, Lux Research analyst and lead author of Driving Down Emissions: Achieving CO2 Emissions Reduction Goals through Biofuels and Alternative Fuel Vehicles.

US policy appears to be headed this way. The Obama administration’s big-rig emissions standards, for example, will lower CO2 emissions by about 1 billion metric tons by 2025, according to EPA and US Department of Transportation.

Corporations are taking the lead, as major companies with some of the biggest trucking fleets in the US have set performance goals to reduce transportation emissions. Walmart, for example, has set a goal to double its fleet efficiency compared to 2005, and is 87 percent of the way to meeting this target. General Mills has cut its fuel consumption 22 percent compared to 2005 levels. The company has set a goal to reduce fuel use for its outbound moves by 35 percent.

Not surprisingly, transportation and logistics companies have a big part to play in reducing the sector’s impact on climate change. But they also stand to realize significant cost savings and efficiency gains.

DHL has improved the carbon efficiency of its business activities by 25 percent as compared to 2007 — a step towards achieving its goal of a 30 percent carbon efficiency improvement by the year 2020.

The global logistics and transportation provider also recently added nearly 1,000 electric vehicles to its fleet, bringing that total to more than 13,500 in use network wide. DHL even purchased an electric vehicle manufacturer so it could add electric vehicles to the fleet faster.

In an email exchange, DHL’s executive vice president of corporate responsibility Christof Ehrhart told Environmental Leader that the company has a range of measures in place to increase fuel efficiency and cut carbon emissions, “from modernizing our air and ground fleets, optimizing our transportation networks and routings, through to our in-house development of electric vehicles (the StreetScooter) designed specifically for urban deliveries.”

Ehrhart says aviation accounts for about 69 percent of the DHL’s greenhouse gas emissions. “We are undertaking the continuous modernization of our aircraft, such as the deployment last year of Boeing 757 freighters in Europe that are more efficient than their predecessors. We are also currently working together with other companies as part of the Aviation Initiative for Renewable Energy in Germany e.V. to advance the development of alternative aviation fuels.”

In an interview with Environmental Leader, Chuck Holland, vice president of industrial engineering at UPS, says the company takes a multi-pronged approach to cutting emissions. “From a sustainability perspective we are trying to attack it on all fronts,” Holland says. “One is how can I have the fewest number of drivers in a geography? Second, how can I make that driver as efficient as possible? Third is having the largest fleet of alternative vehicles.”

UPS is growing its alternative-fuel vehicle fleet every year and improving efficiency with its proprietary routing software ORION (On-Road Integrated Optimization and Navigation).

The company’s “green fleet” is comprised of about 6,840 vehicles, or about 7 percent of its total feet, and includes propane, compressed natural gas and liquefied natural gas, hybrid and electric vehicles. “We have more alternative-fuel vehicles than any other carrier that I’m aware of,” Holland says. “We also have a saying here at UPS: we say the greenest mile is the mile never driven.”

To this end, the company’s ORION routing system uses more than 250 million data points from customers, drivers and vehicles to reduce miles driven on delivery routes every day. Once US implementation is complete at the end of this year, UPS expects ORION to result in an annual savings of 10 million gallons of fuel, a reduction of 100,000 metric tons in CO2 emissions, and an estimated $300 to $400 million in savings and cost avoidance.

“Fuel is a big expense for us,” Holland says. “If we can save 1 mile per driver per year in the domestic US, that’s about a $50 million savings for us.”

It’s been a long road to full implementation. UPS developed the concept in the mid-’90s, entered the prototyping period between 2008 and 2011, and then officially launched ORION in 2013. The program cost about $250 million, and about 80 percent of the cost was in deployment, Holland says. “We spent about six days per driver to deploy.”

Earlier this month UPS won the prestigious INFORMS Franz Edelman Award for Achievement in Operations Research and the Management Sciences for ORION.

Still, Holland says, the ORION algorithm — it’s 1,000-pages long — is not perfect. “If we’d have waited for it to be perfect we still wouldn’t have deployed it and we still would be waiting to save the miles. Part of the lessons learned is when is it good enough and are there additional gains for a second version or third version or fourth version?”

UPS is currently working on a second version and “the third version is in our sights as well.”

And that’s a positive sign for improved efficiency and fewer miles driven. When coupled with alternative-fuel vehicles, these technological advances put major companies’ fleets on track to reduce transportation-related emissions.

Don’t miss our Environmental Leader 2016 Conference in June.


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