Last month, Ryder announced that it voluntarily participated in the Carbon Disclosure Project (CDP6). If you’re not familiar with CDP, it’s an independent not-for-profit organization that collects key climate change data from major corporations around the world. You can download a copy of Ryder’s completed questionnaire at Ryder’s “Green Center” website. I read the document this morning and, at a minimum, it’s a great reference for anybody in logistics that’s still in the “learning stage” when it comes to implementing “green”/sustainability practices at their company.
I first became aware of Ryder’s activities in this area last year. They sponsored and supported the Green Supply Chain Forum held in February 2008 and hosted by Florida International University (FIU) and the Ryder Center for Supply Chain Management. I presented at this event, along with Gary Hirshberg (CEO of Stonyfield Farm), representatives from Hewlett-Packard and General Motors, and other speakers from academia and government agencies. You can watch videos of the presentations at this link, and you can also download a report ARC and FIU published (“The State of Green Supply Chain Management”) based on a web survey we conducted prior to the conference. Ryder has also participated in other conferences this year, giving talks, for example, on how to reduce the carbon footprint of fleets. In short, Ryder is among a handful of logistics service providers that I consider “early adopters” in recognizing the risks and opportunities associated with sustainability efforts and are taking action.
I won’t dive into every detail of Ryder’s CDP response, but the main theme can be summed up with two words: risks and opportunities. On the risk side, Ryder highlights regulatory, physical, and financial risks associated with climate change. For many companies, especially logistics service providers, the financial risks are the ones that attract the most attention (even more so today, as companies deal with the economic downturn). Here is what Ryder had to say: “Regardless of which U.S. regulatory approach is adopted (cap & trade or cap & tax), business operating costs will increase, because companies will be required to develop systems to monitor, report, and pay for greenhouse gas emissions either in the form of a tax or with mandates that require buying, selling, and trading carbon credits.”
This is one of the “inconvenient truths about ‘green’ supply chains” that I wrote about earlier this year. Simply stated, creating “green” supply chains that are truly sustainable will be costly and messy, and we’re all going to have to pay for it, one way or another.
Ryder highlights some of the actions the company is taking to mitigate potential regulatory and financial risks, including investing in new and improved technologies that reduce fuel consumption; supporting nationwide speed limits of 65 miles per hour and govern truck speeds at 68 miles per hour for new vehicles; exploring alternatives to reduce idle-times for long-distance drives; promoting reforms to the size and weight limits allowed per tractor trailer; supporting legislation that promotes the use of alternative fuels; and opposing a cap and trade regulatory approach for GHG emission management for mobile resources.
Interestingly, three of the items on this list involve supporting, or opposing, different regulatory actions. For me, the message is clear: at this stage of the game, logistics service providers and others in the transportation industry need to start working today with Congress and the new Obama administration. Odds are that the U.S. will adopt some form of carbon emissions regulations sometime in the next two years; it’s only the details that need to be debated and finalized. Putting items on the table, like reforming size and weight limits, is a smart negotiation tactic. The industry might be willing to make some concessions on cap and trade, for example, if they can get relief in other areas. In short, there’s going to be a lot of lobbying taking place in Washington next year.
On the opportunities front, Ryder sums it up nicely: “As new, more stringent regulations are adopted, we believe there is the potential for increased business opportunities for Ryder. Many companies are realizing how expensive it is to implement transportation initiatives in order to comply with new regulations. Not only are there bigger investments required in equipment, but there are additional costs associated with training and finding the right resources to manage these programs. In this environment, companies see the benefits of outsourcing, where they can tap into the existing infrastructure of a company like Ryder that has the experience and expertise to manage these programs for them.”
The opportunity for increased business in dedicated fleet services, one of Ryder’s key service offerings, is certainly evident. But I believe “green” regulations and mandates can generate business opportunities across the board for logistics service providers. The challenge, of course, is having the financial means and the support of upper management to make the necessary investments today in order to exploit these opportunities tomorrow. Ryder is fortunately in the position to have both.
This was Ryder’s first response to CDP. It’ll be interesting to see how their responses change over time, and how they compare with other LSPs that follow their lead. Stay tuned.
