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Carbon Footprint Needs in Logistics

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

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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

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