While Canada awaits a new outline from the federal government on a proposed “Made in Canada” environmental strategy, a “greening” is already underway in transportation.
Forward-thinking motor carrier and courier fleets are among those adopting more environmentally friendly practices simply because these practices already exist, and because they offer, beyond the much-touted environmental benefits, the opportunity for fuel savings and for a competitive edge, not to mention a better image of transportation and an increased knowledge base and skills for drivers, for example.
And ultimately, the industry’s survival may depend on these practices. If you believe the dire predictions, known oil reserves are scheduled to run out in some 40 years at current rates of use.
Some shippers, meanwhile, are starting to support green initiatives, while both carriers and shippers are looking to quantify any ROI that will result.
Greener fleets, greener pastures
Just about all the major courier players in the industry are involved in some kind of green initiatives, according to Phil Cahley, president & CEO, the Canadian Courier & Messenger Association.
“There’s a wide spectrum of areas that you can cover off, not just fuel and emissions but power initiatives, noise suppression, packaging, that kind of thing. We tend to look at it not only from the aspect of fuel reduction and CO2 emissions but that other area as well. Most of the larger players are already involved to take the initiative to go ahead and take advantage of alternative fuels. They see that there is an impact on the environment and they want to be good corporate citizens and launch initiatives,” he says.
Serge Viola, national fleet director, with Purolator Courier, says that in 2002, Purolator started working with a company called Azure Dynamics. Azure converted one of Purolator’s older trucks into a gas-electric vehicle hybrid. Purolator liked the way the test vehicle handled and was happy with the fuel economy changes and so entered into an agreement with Azure to build 19 vehicles.
“When we did the initial study on the test vehicle, it was based on the fact that this vehicle should do 40-50% better fuel economy, and it should be saving us roughly 20-25% on maintenance because it has regenerative braking. It doesn’t have a transmission, alternator or starter, all the failure components in a normal courier truck,” Viola explains, adding that to date, Purolator has seen fuel economy savings on the operational vehicles of 45%.
Purolator can’t validate the maintenance figures yet because it doesn’t have enough history but it has accumulated about 140,000 km total on the 15 vehicles so far, and is happy with the results.
What spurred on the initiative?
Back in 2002 Purolator justified incorporating these vehicles based on a 70-cent litre of fuel and it could see the price escalating (how right it was!). With 3000 curbside vehicles across the country, which spend most of their time downtown, the courier was looking at what it could do to minimize its environmental footprint in city centres.
“The hybrid vehicle, which actually shuts the engine down when the vehicle is at a stop, we saw as very positive. We don’t really market this as such but we’ve had a lot of positive feedback. It’s come to the point now where customers are saying I want a hybrid vehicle on my route,” Viola says.
Purolator has another 115 such vehicles ordered to come in September this year. Twenty will go to the Vancouver downtown core, the remainder in Toronto. They’ll probably drift in gradually over a six-month period,” he says.
Couriers compete on two major fronts: the service and products that they have, and on price. Cahley says there’s now a general understanding that they may also compete eventually on environmental initiatives.
“I think they recognize that and they are actively investing in those technologies. When you look at the customer out there, more and more customers are very savvy and aware that their buying power can influence the future, and investment in leading edge environmental technologies,” Cahley explains.
In an address to the Canadian Courier and Messenger Association last year, Purolator president and CEO Robert Johnson urged his competitors to invest in alternatively-powered vehicles.
“We don’t want to do this alone,” he stressed. “The vehicles today have a greater capital cost than conventional gas-powered vehicles. However, the more demand, the lower the unit costs will become as production achieves economies of scale.”
Other initiatives couriers are looking at are positive load shipping – where all available space is used – shipping dense loads to use fewer trucks, intelligent routing software, and route management software.
“Couriers have done extensive engineering studies for deliveries to say if you’re making x number of stops in the downtown core, that should take so many vehicles and no more than that, stops should only be for x number of minutes, thus reducing idle times,” Cahley says. He adds that some couriers, like FedEx, are using photovoltaic systems in their hubs to augment their power supplies (FedEx has such atop its Oakland airport hub, covering 81,000 sq feet and providing 80% of peak load demand for the facility).
UPS has also invested more than $15 million in its alternative fuel fleet, which is currently operating hydrogen fuel cell, liquefied natural gas, compressed natural gas, electric and propane-powered trucks in the United States, Canada, Mexico, France, Germany and Brazil. The company also recently announced it would add 50 hybrid electric vehicles to its fleet over the next year. These electric hybrids will feature third-generation technology and are expected to deliver a 35% improvement in fuel economy over the vehicles being replaced. In addition, UPS says it will add 4,100 low emission vehicles in 2006 to the more than 8,000 such vehicles already in its fleet.
Other major programs at work also aim to harmonize efforts across Canada and the US and to develop a community of greener fleets and shippers who will work in tandem to reduce emissions and save money.
The US Environmental Protection Agency’s SmartWay Transport Partnership, for example, is a voluntary collaboration between EPA and the freight industry designed to increase energy efficiency while significantly reducing greenhouse gases and air pollution.
According to EPA’s Roxanne Smith, one of the key drivers of the Partnership was to stimulate a marketplace evolution in the trucking industry.
“Overall, with more than four hundred partners since 2004, the results have been very strong. EPA recognized the desire of many environmentally progressive shippers to reduce their transportation footprint. EPA also recognized the carriers’ desires to save fuel/money and improve their public image. By helping shippers to better quantify the performance of the carriers they hire, EPA is empowering the shippers to hire carriers who support their environmental efficiency goals,” she says.
A charter founder of the SmartWay Transport partnership since its January 2003 launch is IKEA Transportation in North America. IKEA has been focusing on being one of the most resource efficient transport buyers in the world, increasing flat packing and vehicle loading with patented technologies to ensure maximum load optimization and minimal waste, increasing intermodal shipping so that 20% of all freight is delivered by rail, and shipping some 90% of their ton-miles with 16 SmartWay Transport Partner Carriers. IKEA says it eventually aims to ship 100% of its freight with SmartWay Transport Partner Carriers.
Coca-Cola Enterprises, FedEx Express, The Home Depot, and Nike are also SmartWay charter partners.
Lynda Harvey, senior manager with Natural Resources Canada’s FleetSmart program, which includes over 3,000 fleet participants, notes there was a clear opportunity for EPA and NR Can to harmonize efforts on their energy efficiency programs.
“We had some wonderful conversations (with EPA) whereby we were working towards the same goal, and we felt let’s do an MOU between our two programs and departments, which we signed in September 2005 and we identified a number of things we plan to work together on, and encourage the harmonization of energy efficiency efforts on both sides of the border,” she says.
“Canada has adopted the EPA standards for heavy duty diesel engines and will have the ultra low sulfur diesel fuel because it’s recognized that because of the huge amount of trade that goes on between the two countries, it would be foolish to adopt different standards,” says Harvey.
SmartWay has a measurement tool, the Fleet Logistics Environmental and Energy Tracking Performance Model or FLEET Model, which enables a company to quantify the environmental performance of their fleet operations. Additionally, the FLEET Performance Model evaluates the effectiveness of innovative fuel saving and emission reduction strategies that companies have integrated into their fleet operations. This feature quantifies the amounts of fuel saved and carbon dioxide, nitrogen oxide, and particulate matter emissions that have already been eliminated, which provides companies a sense of how efficient their fleet operations are.
SmartWay is also currently developing a program which bundles highly fuel-efficient technologies ( such as idle reduction devices, low rolling resistance tires, and tractor and trailer aerodynamics) with exhaust after-treatment emission control devices, such as an oxidation catalyst or PM filter, into “SmartWay Upgrade Kits.” These kits include technologies that address both improved fuel economy and emissions reduction. SmartWay upgrade kits will be offered to trucking companies through financial packages such as flexible low-interest loans, often at below-market rates, says Smith.
“One of our activities under the MOU is to expand the SmartWay fleet model into Canada which will take our database and plug in some of the Canadian elements we want to add to the database and promote the business to business opportunities through the “FleetSmartway” strategy and work with them on supporting the benefits for shippers and carriers who are like-minded to do business together,” says Harvey.
In Canada, she says, the SmartDriver family of driver training programs have proven very popular. Under the MOU FleetSmart will be adapting the SmartDriver for highway trucking into a US model, and it will also be translated into Spanish, adds Harvey.
“It’s important to note the original program was made for highway trucking, and what happened was that the other sectors of the commercial fleet operations have seen the highway trucking product and have requested versions of their own. So our SmartDriver family has expanded to include transit operations, motor coach, we’ve launched school bus, and there’s a forestry truck edition,” she says.
A year and a half ago, FleetSmart launched a program called Fuel Management 101, developed in response to a number of inquiries from operators who wanted to know what to do about reducing fuel consumption and emissions.
“We’ve given a number of workshops across the country giving participants, in the end, a template on how to write a business plan dedicated to fuel. The feedback has been really terrific, because there are a lot of operations out there who want to do something, but they didn’t know where to start, or they were doing something within their fleet but didn’t know how to put it in the context to be able to measure it or expand it and add other criteria to their activities,” says Harvey, who adds she works closely with shipper association CITA to encourage the shippers to look towards carriers that are undertaking energy efficiency activities.
In terms of ROI emerging from participation in these programs, SmartWay has established some approximate payback periods for various fuel efficiency devices.
According to Smith, idle reduction devices such as an auxiliary power unit cost approximately US $6-8000 and have a payback period of 21-28 months. Single-wide tires, meanwhile, cost approximately $US 3000 and have payback of 29 months. Trailer aerodynamics applications such as fairings added to the front, underside and rear of the trailer to reduce drag may cost $2400 and have a payback of 15 months.
(The payback period is defined as the number of months it would take for the reduced fuel costs to compensate for the cost of the equipment. Fuel costs are calculated based on the November 10, 2005 diesel price of US $2.85 per gallon.)
Harvey says that on the fuel efficiency side, generally within a week you should be able to see the results very quickly with use of fuel management techniques.
“On the trucking side, we’re going to be doing some surveys to see what is the duration of the impact and how often do companies need to train additionally. We really want to go into the quantitative side because we feel there are significant numbers out there that will give us good value in terms of the quantitative data.
Anecdotally people have told us that the turnover rates are affected and that drivers love doing it because it’s a positive workshop experience. My goal is to take it a step further to ensure the quantitative side. That means a lot to people who might be a bit skeptical of the impact of training and don’t want to invest in training,” she says, adding “We’ve been focusing on getting the various on-road sector models out and now we’re going to invest more in actually doing full data collection to do full cost benefit analysis. Having some very good quantitative data will support the whole initiative of getting companies to train their drivers.”
Harvey notes there will probably always be some reluctance in the transportation sector to adopt new, environmentally friendly techniques.
“When fuel was cheaper people didn’t necessarily pay a lot of attention to it, but part of our work is to try and raise the awareness of the impact of things like unnecessary idling, and what the cost of it is. We’re seeing a change-we’re noticing that people are turning off their trucks. Many of the drivers are champions – especially those with kids. The impact of air quality and emissions is growing. Blue chip operations will always have an interest. If you have an energy-efficiency policy in your operations, and you are saving money, why would you change it? You wouldn’t move forward and then move back. If you’re smart, you’ll include energy efficiency as part of your corporate portfolio. It goes beyong running the fleet-it can have an impact in the way you run the shop, the office or look at design plans when expanding operations. In a conversation with EPA recently, what’s starting to happen for EPA is that companies are starting to look around and say, if they don’t sign on, they might be left out,” says Harvey.
Managing Editor Julia Kuzeljevich has been writing about transportation and supply chain issues for five years. Her meticulously researched articles have garnered several Canadian Business Press Award nominations.