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Global Shippers Take Environmental Route

By land, by sea and by air, the shipping industry is turning toward greater environmental sustainability.

Last week, UPS announced aggressive new sustainability goals to add more alternative fuel and advanced technology vehicles to its fleet while increasing its reliance on renewable energy sources.

UPS said the goals support its commitment to reduce its greenhouse gas emissions from global ground operations 12 percent by 2025.

“Because of our size and scale, we know our commitments can shape markets, advance technologies and be a catalyst for infrastructure investments,” said David Abney, UPS chairman and chief executive officer. “We rely on the ingenuity of our employees, suppliers and technology partners to help us reach goals that will transform the shipping industry and spur innovation.”

One goal UPS has is to have 25 percent of the electricity it consumes come from renewable energy sources by 2025, a dramatic increase from the 0.2% in 2016. In addition, by 2020 UPS plans that 25 percent of new vehicles purchased annually will be an alternative fuel or advanced technology vehicle, up from 16 percent in 2016. The company also set a new goal that by 2025, 40 percent of all ground fuel will be from sources other than conventional gasoline and diesel, an increase from 19.6% in 2016.

UPS operates more than 8,300 alternative fuel and advanced technology vehicles worldwide. The company’s fleet includes electric, hybrid electric, hydraulic hybrid, compressed natural gas, liquefied natural gas, propane and lightweight fuel-saving composite body vehicles. UPS also noted that it uses millions of gallons of lower-carbon footprint renewable diesel and renewable natural gas in its fleet.

The company said these initiatives reinforce its commitment to reducing its environmental impact despite growth in e-commerce deliveries that are driving up energy used to operate facilities and power its vehicle fleet.

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“The UPS vision entails a future smart logistics network of advanced technology vehicles and facilities powered by more diverse and sustainable energy sources, including on-site solar, off-site wind, renewable natural gas, renewable hydrogen, and renewable diesel delivered via advanced energy system infrastructure,” the company’s “2016 Corporate Sustainability Report” said. “UPS already deploys many of these technologies in its ground fleet and facilities, and plans to significantly increase their use in its worldwide fleet.”

Since 2009, UPS has invested more than $750 million in alternative fuel and advanced technology vehicles and fueling stations globally. The company used more than 97 million gallons of alternative and lower-carbon fuels in its ground fleet in 2016 and recently made an $18 million investment in on-site solar energy systems across eight facilities.

[Read more on what’s going on with logistics: Supply Chain Foundation Stable, But Uncertainty Lurks]

Air freight giant FedEx saved more than 153 million gallons of jet fuel in fiscal year 2016 by continuing to modernize its aircraft fleet and improve operations. That’s the equivalent of 230 Olympic-sized swimming pools, the company noted in its “2017 Global Citizenship Report.”

FedEx said it avoided more than 2 million metric tons of carbon dioxide emissions through fuel and energy saving initiatives across the company–the equivalent to the carbon sequestered by more than 1.9 million acres of U.S. forest in one year.

On the ground, FedEx Express has also raised the stakes and revised its vehicle fuel efficiency goal. The company set a new goal to increase vehicle fuel efficiency by 50 percent by 2025 from a 2005 baseline. In fiscal year 2015, FedEx Express met its goal of increasing vehicle fuel efficiency by 30 percent by 2020.

On the ocean, global cargo container company CMA CGM Group intends to reduce its CO2 emissions per transported container 30 percent by 2025, having already improved its performance per transported container per kilometer by 50 percent between 2005 and 2015.

In 2016, CMA CGM, based in Marseille, France, reduced its carbon emissions per container transported by 4 percent, with a reduction target of 30 percent between 2015 and 2025.

The results of the CMA CGM Group were achieved through operational optimization of the fleet, technological innovations that improve ships hydrodynamics, the chartering of modern giant container ships equipped with new efficient technologies and launching an “eco-container program.”

Improved environmental sustainability results in the years ahead will come through the application of new technologies, including the use of alternative fuels such as liquefied natural gas thanks to partnerships with energy groups such as Total and Engie.

Similarly, Japan’s MOL recently released its “Environmental Vision 2030 Plan” that sets an emission reduction target of 25 percent in 2030 and 50 percent in 2050 versus the 2014 performance.

Meanwhile, a move to make cargo containers more environmentally sound is having some negative connotations.

In China, where 90 percent of all containers are manufactured, companies have started to coat them water-based paints that release less toxic fumes than oil-based varieties before China starts levying a green tax in January.

As part of a pledge to cut emissions by 70 percent, these manufacturers have had to reengineer their factories to allow for the usage of the new paints.

According to a report in Bloomberg Business Week, this has sent prices soaring as much as 69 percent from last year’s lows. A.P. Moller-Maersk, operator of the world’s biggest container line, said it expects prices to increase during the broader industry’s transition to water-borne paint as it temporarily constrains factory capacity.

Analysts don’t expect the price fluctuation to be long term, but it has added some uncertainty to the equation of overall freight rates, which have stabilized in recent months, but are still up 12 percent from a year ago at $1,381 per 40-foot container.