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Carbon Footprint Needs in Logistics

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  1. Carbon Footprint Needs in Logistics Diego Klabjan, Northwestern University, Evanston, IL

  2. Why? • Green image • Innovations to drive economical benefits • Cannot manage if you cannot measure • Proactive to future mandates • Wal-Mart’s eco labels • Large logistics services provider • A year ago a handful of requests for footprint • Now more than a hundred • A different one • Each shipper receives carbon footprint Shippers Want to Know Carbon Footprint

  3. Picture is not so rosy • Many large less-than-truckload (LTL) operators do not provide such service • Too few requests • Do not yet view it as a competitive advantage • Shippers not yet trading cost for eco image • Cost being equal, selection based on eco attributes • Different in EU • Regulations require trade-off • Proctor & Gamble • Switch from truck to rail in Western Europe • Ship on Amazon river instead of trucking south • 40% longer lead time, but 60% lower emissions Not so Fast

  4. SmartWay transport partnership • Commitment to conserve fuel and reduce emissions in transport • SmartWay is free to join and open to companies • Trucking companies • Commit to improve fuel efficiency and reduce emissions • Shipping companies • Commit to ship with SmartWay trucking partners • Improve freight operations EPA SmartWay

  5. Freight Logistics Environmental and Energy Tracking (FLEET) Performance Model • Carriers • Calculate tons of CO2, NOx, and PM • Determine effectiveness of strategies used in the fleet • Aerodynamics, idling reduction • Project the effectiveness of strategies a fleet could add in the future • Estimate cost savings and payback period for strategies • Shippers • Track percentage of freight shipped with SmartWay Transport Carrier Partners • Measure the environmental footprint EPA SmartWay

  6. Challenges • Data • Collection • Transparency • Quality • Processes • Not in place • Find the source, pick up the phone • SmartWay • How will the new tool affect me? Challenges in Carbon Footprint Accounting

  7. Division 2 Parcel Division 1 FAP Parcel FAP CO2 Emissions FAP Division 3 Country X (all divisions) FAP Parcel FAP FAP Shipper Parcel Shipper Complexity FAP = freight audit and payment

  8. Data Collection CO2 Emissions Calculations Uncertainty

  9. “Easy” to derive emissions of the entire system • LTL carrier can account for the total emissions • How to allocate emission contributions to individual users of the system? • Shared resources • Split by weight or volume? Different Angle

  10. Two parcel carriers – direct competitors • Internally developed allocation schemes • No alignment • Need for guidance • What is the carbon footprint of a package from Peoria, IL to Fresno, CA? Allocations

  11. Relay network of an LTL carrier LTL Example

  12. SmartWay • Reporting at a macro level • Total quantity shipped during a year • Receive a score • Works nicely in a static environment • Today’s environment is dynamic • Routes and quantities change often • What is the value of a more micro level reporting? • What is left on the table? Needs Statement

  13. Data • The same old story • Source • Quality • Governance • Allocation schemas • Empty moves (backhauls) • Shared resources • Consolidation • Rail cars • Terminals • Allocation by • Weight • Volume • Bill Summary of Challenges

  14. One third of total emissions in the US coming from transportation Different Perspective

  15. Emission in Intermodal

  16. Region • State • Corridor • Industry • Operation Slice it and Dice it

  17. Intermodal investment decision based on • Economics benefits • Emission control • Technological investment • Mode, process • Investment in which region, corridor Infrastructure

  18. Cap emissions • Region, mode, process • Price on freight greenhouse gases • Accounting standards and guidance • UPS and FedEx: Each does it differently Policies and Regulations

  19. Thank you very much! d-klabjan@northwestern.edu SMS: 847-691-1148