There are few companies so ingrained in people’s daily lives, or that can have as big an impact on the environment as UPS.
Making 20 million package deliveries every day to more than 10 million customers, UPS’s transportation and logistics choices and operational methods can have major effects on greenhouse gas (GHG) emissions, carbon footprint and use of natural resources.
As such, the shipping company’s just-released “2017 Corporate Sustainability Progress Report” details its performance, initiatives and engagements that contribute to its “Committed to More” sustainability strategy.
“The e-commerce revolution continues to disrupt how goods and services are bought and sold, creating new demands and opportunities for our global logistics network. We’re making bold investments in advanced technologies to keep pace with this change, taking our integrated network to new levels of efficiency that translate into tangible sustainability benefits,” the report noted.
David Abney, chairman and CEO of UPS, said, “In 2017, UPS embarked on a major transformation that will result in the most significant upgrade of our operations in decades. We are exploring real-time data, mobile connectivity, robotics, blockchain and other cutting-edge technologies to seamlessly integrate our digital and physical networks, modernize our facilities and fleet, and better manage our operations.”
In addition to increased capacity, Abney said the transformation will enable UPS to improve flexibility in transportation modes and enhance service dependability. Further, he said, “These technologies will generate significantly improved facility and fleet operating efficiency by capitalizing on innovations that advance our sustainability goals, which include using more renewable electricity and alternative fuels, and reducing our greenhouse gas emissions in absolute terms.”
In 2017, UPS continued expanding its “rolling laboratory”–its fleet of about 9,100 alternative fuel and advanced technology vehicles. As part of its recent $90 million investment in natural gas infrastructure, UPS added nearly 1,200 vehicles and powered this specialized fleet with more than 115 million gallons of lower-carbon fuels.
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UPS also pre-ordered 125 of the Tesla fully electric semi-trucks set for 2019 production, and it’s collaborating with Workhorse Group to deploy electric delivery vehicles that are comparable in acquisition cost to conventional gasoline- or diesel-powered trucks. This involved joining a consortium in the U.K. to deploy smart-grid technology that enables simultaneous recharging of an entire fleet of electric vehicles. If feasible, the technology could eliminate the need for expensive upgrades to the power grid.
This electrification strategy is part of broad-based collaborations with governmental entities to develop new solutions for delivering packages that limit congestion, smog and noise in urban areas. For example, last year UPS launched a “depot-to-door” pilot program in London that uses an electrically assisted trailer to deliver packages from a central location.
“As we continue to refine our sustainability strategy, we consider macro trends, global frameworks such as the U.N. Sustainable Development Goals and stakeholder feedback, which serve as inputs to identify issues that are material to our business,” UPS said in the report. “We’ve set 2020 and 2025 goals to hold ourselves accountable and measure the effectiveness of our strategy.”
The environmental goals include a 12 percent reduction in absolute GHG emissions by 2025 in global ground operations, derive 25 percent of electricity derived from renewable sources by 2025, use 40 alternative fuel as a percentage of total ground fuel by 2025 and have 25 percent of vehicles purchased annually be alternative fuel or advanced technology vehicles by 2020.
“When we operate more efficiently, our customers do, too,” the report said. “As a result, we help reduce the emissions intensity of supply chains worldwide. Scale also defines other aspects of our impact: We employ more than 454,000 people. We serve more than 10.5 million customers. We generate revenues of nearly $66 billion. We touch thousands of communities across the more than 220 countries and territories we serve. As a result, our view of sustainability is broad and interconnected, extending beyond the environment to include the long-term economic viability of our business and that of our customers, the empowerment of our people, and the needs of communities around the world.”
UPS said it is addressing the risk of climate change and regulations by improving the fuel and emissions efficiency, and by educating policymakers and the public about its contributions toward making commerce more carbon-efficient. The company accomplishes this by using intermodal transportation that includes airplanes, trains, ships, trucks, cars, carts and bicycles, and by loading every vehicle to maximize shipping volumes and minimize miles traveled.
The company offers customers supply chain optimization solutions that help improve inventory management and reduce their carbon footprint. It also strives to reduce visits to customer stops by consolidating package deliveries to a UPS Access Point location or holding shipments at the customer’s option for single-trip deliveries.
There is room for improvement, however. Commenting in the report, Tamara Barker, chief sustainability officer at UPS, said, “While we’re pleased that alternative and renewable energy is becoming an increasingly prominent part of our fleet, we didn’t make as much progress toward our targets as we had hoped. For example, our total GHG emissions decreased only slightly in 2017 and our total electricity consumption outpaced our use of renewable energy.”
Barker said with UPS’s dynamic growth last year–revenues grew 8 percent to $65.9 billion, “this growth is also creating some headwinds for our sustainability goals. The e-commerce boom is generating more package volume, which is directly linked to an increase in our GHG emissions.” She said the shift to more residential deliveries combined with service enhancements such as our Saturday Ground delivery in select markets, means UPS is using more fuel, driving more miles and generating more emissions.
“We knew this would be part of the challenge when we committed to reducing our absolute, rather than intensity-based, emissions,” Barker added. “To achieve our goal, we’ll need to think differently to find new ways to mitigate our footprint while continuing to serve our customers’ needs.”