Green Supply Chain Conference focuses on costs and paybacks

Tom Andel -- Logistics Management, 6/10/2008

SACRAMENTO, Calif.—Measuring your carbon footprint isn’t rocket science. It’s harder.

That’s the impression attendees of the Greeining of the Supply Chain Conference  might have gotten while listening to the first few speakers. The conference, held in Sacramento, Calif. this week, was the result of a collaboration between the International Warehouse Logistics Association , the Warehousing Education and Research Council , and the Council of Supply Chain Management Professionals. The conference did offer substantial guidance however. Presenters gave attendees a glimpse into their regulatory future and then offered practical examples of what forward-thinking colleagues are doing to beat a path to that future.

Trina Martynowicz, from the EPA’s Office of Transportation and Air Quality , outlined the SmartWay Transport Program, a voluntary partnership between various freight industry sectors and EPA that establishes incentives for fuel efficiency improvements and greenhouse gas emissions reductions.  By 2012, this initiative aims to reduce between 33 and 66 million metric tons of carbon dioxide (CO2) emissions and up to 200,000 tons of nitrogen oxide (NOx) emissions per year.  At the same time, the initiative will result in fuel savings of up to 150 million barrels of oil annually. How can shippers make a difference?

• offer preferential dock scheduling to SmartWay carriers;
• use electric forklifts in the plant and distribution center;
• improve efficiency in the warehouse; and
• make more use of intermodal (rail) shipping

Although this program is currently voluntary, Martynowicz suggested that regulations could eventually make tracking and monitoring one’s carbon footprint standard business practice.

If that happens, Edgar Blanco with Massachusetts Institute of Technology’s Center for Transportation and Logistics, suggested that many supply chain professionals may be caught unprepared. According to a study sponsored by MIT, IOMA and CSCMP, many haven’t stayed up on green technology and trends—or even how they could start measuring their carbon footprint. Even if they did measure it, they wouldn’t know what to do with that measurement. Other challenges include understanding that carbon footprint from a supply chain perspective.

Blanco told of shippers who are setting a good example. Wal-Mart, for example, is working with Railex to help it switch from truck to rail transport from the West Coast to East Coast DCs. Yogurt-maker Stonyfield Farms is working with Ryder System to move from one large distribution center to four smaller ones to reduce transportation. This adds two days to the delivery cycle, but informed customers are willing to build that into their schedules. Fiji Water is starting to ship through the Panama Canal instead of the Port of Los Angeles to reach the Port of Philadelphia—again adding more time to delivery, but reducing its carbon footprint.

These measures are risky, Blanco allows, but “you have to start somewhere and it’s time to understand the tradeoffs before carbon footprint standards make their way into law. The question is, will you merely be compliant or will you be a value creator?

Stephan Lemieux, of the California Air Resources Board (CARB)  outlined ways that the carbon footprint of heavy duty vehicles will be reduced in California. California's major initiatives for reducing greenhouse gas (GHG) emissions are outlined in Assembly Bill 32, which was signed into law in 2006 and intended to reduce emissions to 1990 levels by 2020. Lemieux said efforts are in play to encourage early action on the part of shippers and carriers, including the use of speed governors on California diesel engine trucks by 2014 (2010 phase-in).

In terms of numbers, it’s expected that 135 tons of nitrogen oxides emitted through transportation will be cut every day if shippers and carriers do their part, saving up to $5.5 billion in 2008 dollars.

And if supply chain partners don’t do their part? Lemieux said when it comes to the use of Smartway in California, non-compliant freight owners and even brokers could be subject to fines. That’s why he suggested that contractual language require the use of compliant equipment.

Tom Andel is editor-in-chief of Modern Materials Handling.