carbon emissions Archives

Editor’s Choice: How Walmart Transportation is Working to Reduce Emissions Now and in the Future

Sustainability | By Fernando Cortes • 06/14/2022

At Logistics Viewpoints, we have written about how companies are looking to reduce carbon emissions, especially when it comes to transportation. More and more global companies are pledging to make their supply chains and their operations net-zero or carbon neutral. The following Editor’s Choice article comes from Fernando Cortes, Senior Vice President, Transportation at Walmart, and addresses how Walmart is working to reduce emissions through their transportation practices and operations.

As the world’s largest retailer, with a world-class transportation network, we have the ability to make a meaningful difference when it comes to reducing greenhouse gas emissions. That’s why in 2020, we set the goal to achieve zero emissions across Walmart’s global operations by 2040.

This includes our last mile delivery fleet, an area that is uniquely positioned for innovative solutions. You’ve seen us be among the first to use 100% electric self-driving cars and class 3 trucks, electric delivery vans and even drones. But there’s another fleet we’re committed to transforming, one that will have an even bigger impact on achieving our zero emissions goal: our Class 8 transportation fleet.

We know transforming our transportation fleet is not as simple as flipping a switch, but that doesn’t mean we’re sitting idle. Today I’m excited to share more about our zero-emissions transportation strategy and announce a series of collaborations and pilots. Many of these initiatives are first-of-their kind for Walmart and will be pivotal in moving us towards a zero emissions future, while being instructive to the entire transportation industry.

A Meaningful Approach

Walmart operates one of the largest and safest fleets in the U.S., with 12,000 drivers, 10,000 tractors and 80,000 trailers driving 1.1 billion miles every year. With a fleet of this scale, it made up approximately 24% of our Scope 1 emissions in 2020.

To make a meaningful impact, we’re taking a meaningful approach by evaluating various attributes of three different fuel types – renewable natural gas, hydrogen and electric. We’re piloting solutions not only for our over-the-road (OTR) trucks but for refrigerated trailers (also known as reefers) and yard trucks (which move trailers around in the lots), too. Here is how we are layering solutions to determine the best recipe for building a Walmart that is regenerative in action.

Natural Gas

As we transition away from diesel and move towards a lower emissions fleet, we plan to deploy and evaluate vehicles powered by compressed natural gas (CNG). Natural gas engines have a comparable range to diesel engines of around 700 miles – which makes them a great potential fit for our sleeper cabs – and can produce tangible emissions benefits that compound whenever powered by renewable natural gas (RNG) or RNG-linked fuel.

Renewable natural gas is produced by capturing biomethane of decomposing matter and treating it to generate fuel. Uncaptured biomethane has up to 25 times the ability to trap heat in the atmosphere compared to CO_2,but by capturing it from sources like dairy manure or food waste, studies suggest that renewable natural gas can avoid more emissions than it generates.

Over-the-Road: Starting early next year we’ll be the first transportation company to receive Cummins new 15-liter Natural Gas Engine and will be adding them to a few of our trucks. This brand-new engine is expected to deliver the same power and torque of a 15-liter diesel engine but with significantly lower emissions, lighter-weight and overall lower cost per mile than its diesel counterpart. And to maximize the potential emissions benefits of utilizing this technology, we have secured agreements with Chevron to supply Walmart trucks with CNG linked to renewable natural gas.

With so many major players in the industry working together to find a solution, we are optimistic we can drive meaningful growth in the market with critical lessons to come from this pilot.

Hydrogen

While the use of hydrogen is still in early development, we’re excited to be among the first to adopt it in our fleet. In fact, we’re already transporting liquid hydrogen to fuel many of our forklifts across our grocery distribution centers.

The advantage of hydrogen is that, compared to battery-electric, it has a higher range of around 400 miles, takes significantly less time to refuel and weighs less, allowing us to haul more freight. The downside? Right now, it’s expensive, and we know our customers look to us to keep prices low.

Yard Trucks: In just a few months, we’ll be the first company in the U.S. to test the capabilities and performance of Capacity’s very first 2^nd generation hydrogen fuel cell yard truck. The truck is manufactured by Capacity in Longview, Texas and has a range of expected benefits including an operating time of up to 10 hours on a single refuel, faster refuel time and less dependence on the electric charging grid. Plus, we can utilize the same infrastructure as our hydrogen forklifts while producing little to no emissions.

In fact, it’s because of these benefits that we see hydrogen as an option for our long-haul over the road tractors – will have more to share on that soon.

Electric

Finally, as electric vehicles become more mainstream, we’ve been exploring where they fit into Walmart’s fleet. Given the current weight and range capabilities of electric-battery trucks, they’re an attractive solution for yard operations, lighter weight hauls and day deliveries of around 200 miles – all of which play important roles in our operations.

Yard Trucks: We’ve been running zero emissions electric yard trucks, similar to Autocar’s all-electric terminal tractor (E-ACTT), in our distribution centers over the last year and have found they provide approximately a 50% emissions reduction compared to diesel trucks, taking into account how the electricity is created and delivered to power these units. Our goal is to continue working to pair these trucks with renewable energy like wind, solar, or hydro powers, so we can achieve a true 100% emission reduction.

Refrigerated Trailers: We also have an opportunity to power our refrigerated trailers with electric energy. As the world’s largest grocer, we use 10,000 of these refrigerated trailers to safely distribute fresh and cold groceries to stores. Today, they rely on diesel fuel to keep them cold, which contributes to our overall CO₂ emissions.

To change this, we recently worked with Thermo King to haul Walmart’s first-ever refrigerated trailer operated on battery electricity in the U.S. The trailer is designed to run on 100% electricity until the batteries are fully depleted. If the electricity is depleted mid-haul, the refrigeration unit cuts over to diesel.

During the two-month trial, we ran 18 routes hauling groceries between our distribution center in Shafter, CA and stores in the surrounding areas. We’re pleased to share that throughout the entirety of the pilot, the trailer ran on electricity 83% of the time.

Over-the-Road: Finally, we can’t talk electric without talking over-the-road, specifically our day cabs. Later this summer, we aim to run a battery-electric day cab proof of concept with Freightliner’s eCascadia and Nikola’s Tre BEV out of a distribution center in Fontana, CA. These electric day cabs will be picking up loads from suppliers and delivering them to a consolidation center in the area. Short-range deliveries such as these are a great use case for electric trucks, and we’re excited to be among the first to test them in our operations.

Moving the Industry Forward

Becoming a zero emissions company won’t be as simple as adopting electric alternatives. For some vehicle classes, the solution might look like a hydrogen-fueled yard truck moving an electric refrigerated trailer, which eventually gets transported by a natural gas-powered truck. Our hope is that by testing and learning, we can find the right recipe to reduce greenhouse gas emissions and create a less impactful transportation fleet, all while still delivering the freshest food and goods to our customers.

And while many of these technologies are still early stage, through industry collaboration, support from policymakers and actively testing alternative fuel-types in our transportation fleet, we hope to make a difference not only for Walmart’s operations but for the industry as a whole. Because we know when we lead, others follow.

As I look to the future, I’m confident that when you see a Walmart truck driving down the highway, you’ll be able to physically see us in action creating a better future for all of us – our children, our grandchildren and our planet.

Fernando Cortes is Senior Vice President, Transportation at Walmart.

Few Companies Make the Hard Tradeoffs to Reduce Carbon Emissions

Sustainability | By Steve Banker • 12/13/2021

The law firm Crowell & Moring recently released a survey-based report that looked at how companies are navigating pressures to improve their environmental performance. The company surveyed 225 executives whose jobs included environmental, social, and governance issues. 56% of respondents said their company does NOT measure its carbon footprint.

What may surprise many people is that increasing pressure from investors is the third most common reason – cited by one third of respondents – for companies to adopt environmental goals. Afterall, investors only care about the bottom line, right? It turns out, pension funds often approach investing differently.

Pension Funds are Focusing on Carbon Emissions

Mutual Funds that are actively managed try to pick firms that will be winners. They seek to understand the upside potential and the downside risks of individual firms.

Pension funds are different, they are so big that they invest in whole sectors. The Japanese pension fund, the Government Investment Pension Fund (GPIF), owns 7% of the Japanese equity market and about 1% of the world’s equity. Pensions often invest in multiple passive funds. These passive funds hold every available stock in an industry or class of investments. These sector specific funds are designed to track that performance of that whole swath of firms, not to beat the market. So, for a pension fund, the main risks are not company specific risks, but systemic risks. Systemic risks are so large that virtually every firm will be negatively affected if that class of risk manifests itself.

For pension funds, one of the largest systemic risks is the risk of climate change. Sustained climate change could lead to a world in which almost all firms perform worse. In effect, some pension funds, seek to improve the performance of the pension by lowering risks across the entire economy.

Here is how the Norwegian pension fund explains it: “Our motivation for responsible investment is to achieve the highest possible return with moderate risk. Companies’ activities have a considerable impact on society and the environment around them. Over time, this could affect their profitability and so the fund’s return. We therefore consider both governance and sustainability issues and publish clear expectations of companies in the portfolio.”

The Japanese pension asks every one of their asset managers to start having systematic conversations with every company they invest in about that company’s approach to environmental, social, and governance issues. Companies not making progress might face the pension fund voting against the existing management of a company at a proxy election.

Crawl, Walk, Run

When a company initially sets goals for reductions in their carbon emissions, they find a lot of low handing fruit. A company might decide to invest in a more energy efficient machine. Thus, the company gets energy savings and carbon emission reductions. Or they might invest in a type of supply chain software, like transportation management, that gets them strong freight savings while simultaneously lowering their carbon emissions.

Sometimes companies embarking on a sustainability initiative will require a lower return (less savings per dollar invested) for ESG initiatives than for other capital investments. But they still expect savings. They still want a good payback on the investment.

But eventually, if carbon reduction goals are at all significant, companies will face tradeoffs. Lowering carbon emissions will require greater costs.

Supply Chain Planning Solutions are Trade Off Machines

Existing SCP solutions can generate a plan, for example, that leads to the lowest costs that allow the firm to deliver a 95% service level to their customers but do so in the most cost-efficient manner.

Now, SCP companies are being asked to add CO2 emissions as a third goal to plan around. So, the goal might be to develop the least cost plan that delivers a 97% service level while keeping emissions under some defined target. This may sound simple. It is not!

It is hard to describe just how complex supply chain planning solutions can get. A SCP solution creates a model of a supply chain. A factory planning solution, for example, might model the throughput of every machine on a factory line, which products can be made on different machines, how the factory throughput is affected by the route the product takes through the factory while being built, and so many other things. A million different schedules might be examined, in a matter of seconds, before the optimal plan is selected. I have greatly simplified what these models contain for the purpose of making these solutions a bit more comprehensible. An end-to-end supply chain model that encompasses sourcing options through to manufacturing and finally out to customer deliveries can contain more than a million variables!

Now, next generation planning models will need to understand the constraints and attributes associated with carbon emissions. I have kicked off research on the SCP market and am talking to executives across the industry. So far, I have talked to executives at Kinaxis, John Galt Solutions, Starboard Solutions, Adexa, and Honeywell. All are adding carbon optimization capabilities at the behest of their customers. Praveen Sam, a director of product management at Honeywell Connected Enterprise, said that it was pressure from the financial community that led one of their more important customers to ask for this new functionality.

Are manufacturers engaged in tradeoffs where they are accepting higher costs to reduce emissions? The SCP executives I talked to say their customers are at the beginning of the journey. First, their customers seek to document what their emissions are. Next, the customers seek to show what the tradeoffs would be from a cost perspective if the company did put in place an optimal plan to achieve targeted reductions in emissions. The expectation is that initially companies will NOT engage in a tradeoff; they will select the lowest cost plan.

But it is important that companies be able to show the financial community they are making progress, year after year after year. In the early years, progress can be made without tradeoffs. But eventually, these tradeoffs will need to occur, and companies must be in a place where the tradeoffs can be made optimally.

Finally, the financial community also wants to make sure the progress on sustainability that companies are reporting to them is real. When public companies release their financial results, the results are audited by certified public accounting firms so that the public can have faith in what is reported. A similar thing is occurring around ESG reports. We are beginning to see them certified by third party auditors.

The Complexities of Carbon Reporting

Sustainability | By Steve Banker • 12/08/2010

Cap and trade legislation may be dead, but companies still want to be publicly percieved as being socially responsible. Implementing a Transportation Management System is a way for companies to reduce their transportation costs while also reducing their carbon footprint. This is a logistics and environmental win-win.

But I recently downloaded a report from Cefic, The European Chemical Industry Council, called “Measuring and Managing CO2 Emissions of European Chemical Transport.” Despite the title, the issues discussed in the report apply to all industries and regions. I also visited a site called EcoTransiteIT, which is an online transportation C02 calculator, for a discussion of these issues.

Because there is currently no single, agreed upon standard on how to calculate carbon emissions, companies have some latitude in how they calculate it. According to the Cefic report, “The simplest and most accurate way of calculating these emissions is to record energy use and employ standard emission factors to convert energy values into C02.” If you have your own private fleet, you can come up with a highly accurate measure. But since most companies don’t have a private fleet, they need to take an “activity-based approach”—i.e., take the tons transported and the average distance traveled and apply various emissions factors to come up with a number. Mode of transport is one such factor. From an emissions standpoint, ocean and rail are better modes then road and air. But it gets a lot more complicated than that, depending on how granular you want to get.

Shippers often do not know the route of their intermodal shipments, nor the split between the different modes, and not all carriers are capable of providing this data.
Do your trucks weigh out or cube out? If they cube out, what load factor should you apply? In other words, when transporting heavy goods, you can achieve an excellent level of vehicle capacity utilization on a weight basis. As a result, the environmental impacts per transported ton are lower.
The steeper the gradients encountered, the higher the carbon emissions. Do you apply averages by region or by country?

There are also boundary questions: Who owns the carbon emissions, the shipper, carrier, or consignee? And which emissions should each party own for a multi-leg shipment? It is generally recognized that the party who owns the carrier contact also owns the C02 emissions. If your customer arranges for a pick up at one of your facilities, they own the emissions. However, who owns the CO2 emissions associated with empty backhauls? Shippers, of course, prefer not to have “empty running” allowances as part of their calculation, but there are good arguments to include them.

One thing this means to me is that if you are in the market for a TMS solution, you should look at the CO2 reporting capabilities of the different solutions available. The business intelligence (BI) tools should come with the key parameters built in so that it is easier to automate the reporting. But until there are some agreed upon standards in this area, those BI tools also need to be flexible.

Guest Commentary: Taking Stock of Your Sustainability Program: Why It’s Important Today … and Tomorrow

Guest Commentary | By Anthony Oliverio • 08/03/2010

Running a sustainable operation is essential to protecting the environment, adhering to laws and regulations and remaining competitive in today’s global market. But how do you know if the results of your green programs and initiatives are measuring up? Just as important, who measures your environmental impact, and against which standards? Unfortunately, there’s no single solution, since standards vary widely depending on where you do business and in which industry.

In the absence of a single universal standard, transportation and logistics companies can still gain a firm grasp of their green strengths and weaknesses, and develop a plan to position themselves for success today and well into the future. They can start by taking stock of their total carbon emissions output, researching and understanding measurement systems in the greater market and staying on top of environmental legislation and regulatory requirements.

Through these efforts, companies can overcome the lack of industrywide sustainability measurement standards and create opportunities that are multi-fold: to display an organizational commitment to carbon footprint management, satisfy a market need for sustainable transportation and warehouse products and services, develop a deep internal knowledge base of measurement protocols, and build a mutually beneficial relationship structure and efficiencies that customers value.

With potential new greenhouse gas (GHG) legislation on the horizon — one that will likely include all emissions sources — it’s more important than ever to understand your carbon emissions inventory. Failing to do so could cost you customer relationships and credibility, and inevitably hurt your bottom line.

Create a Plan. Call in the Experts. Gain Customer Confidence.

The most obvious sources of GHG emissions — like carbon dioxide — in our industry are trucks and other vehicles. But, when accounting for your company’s total carbon footprint, you’ve got to consider every aspect of your daily operations and their tentacles into the environment. For example, has your organization purchased electricity for its own use? What about emissions from contractor-owned vehicles? Do your employees travel a lot for business? How do you handle waste disposal? To truly impact your carbon footprint means more than taking trucks off the road, it means evaluating electricity levels and natural gas use and understanding your operations.

There are also business intensity measures to consider relative to your carbon emissions. Consider the total number of shipments of freight over a given period of time and then break down the CO₂ for each one. How can you reduce emissions at that level? The same process holds true for electricity — what are the kilowatts per hour over your total hours of operation? Can you change your carbon footprint by turning lights off or installing energy-efficient lighting on motion sensors?

Lean tools are especially valuable in helping to drive out waste through the identification of carbon streams, which, in turn, provides a more holistic view of where to focus sustainability efforts. All of this analysis informs the true state of your organization’s impact on the environment.

Establishing a deep understanding of decentralized sustainability measurement systems for different segments of sustainability is also an important step. These can include, among others, the GHG Protocol, the National Greenhouse Energy Reporting (NGER) Act, the Climate Registry Information System (CRIS), EPA’s SmartWay Transport Partnership and any custom systems. Creating a plan will help to integrate your carbon emissions inventory with the various registries together into one manageable and measurable program. And with an internal team responsible for socializing and serving as champions for the program for the rest of the organization, you’ll be best poised for success.

This team will help to develop a quantifiable business plan, establish a roadmap and milestones and formalize carbon mitigation activities. As important, they’ll help to keep the focus on the organization’s core competency by calling in experts who develop sustainable measurement technologies and systems.

Tapping outside resources is an efficient way to supplement internal capabilities and leverage the latest technologies. Not doing so could mean a delay in collecting data and getting an effective system of measurement up and running. It also helps to reduce administrative costs and increase your organization’s carbon management credibility.

As the industry and customers’ demands for carbon management and reporting become a requirement, there’s never been a better time to become informed, take action and position your company for success. The risks of waiting for an industry standard and not starting out on your own path are just too high. Not only will it leave you unprepared for existing and future regulation and upcoming legislation, but it will also impede your ability to service customers and maintain your competitive advantage.

Anthony Oliverio is Senior Director of Operations Strategy at Menlo Worldwide Logistics, where he is responsible for companywide initiatives that improve operational performance and industry competitiveness. In this capacity he has initiated, designed and led implementation for corporate initiatives such as Menlo’s Global Lean Strategy, Sustainability Program, Business Intelligence Project and standardized work programs for business processes, warehousing and transportation groups. Since joining Menlo in 1999 as senior logistics manager for the high-tech group, Oliverio has held several leadership positions requiring progressively increasing responsibility in operations management for the retail, high-tech and manufacturing sectors. Prior to joining Menlo Worldwide Logistics, Oliverio served as warehouse operations manager and director of regional distribution operations for FedEx Supply Chain Services, formerly Caliber Logistics, and in various logistics and distribution roles with Nordstrom, Inc.

Contradictory Public Views on Climate Change and Cap-and-Trade

Sustainability | By Steve Banker • 03/23/2010

The logistics industry is obviously interested in what sorts of taxes might be applied to fuels that emit carbon dioxide (CO2). Whatever laws are enacted will depend partly on the public’s opinion on these issues. Recent surveys show somewhat contradictory reactions in the American public as to whether green house gases are causing global warming, and if so, what should be done about it.

A recent poll by the Yale School of Forestry and Environmental Studies and George Mason University, conducted December 24^th 2009 through January 3^rd 2010, shows a decline in public concern about global warming (see “After errors, global warming gets a cold shoulder,” Beth Daley, Boston Globe, March 8, 2010). This poll of more than 1,000 randomly selected respondents had 50 percent of the respondents saying they are “somewhat’’ or “very worried’’ about global warming. However, this was a 13-point decrease from the fall of 2008. Sixteen percent of the respondents believe that global warming isn’t happening and is probably a hoax, up from 7 percent in 2008.

Global Warming Survey Data — Source: “After errors, global warming gets a cold shoulder,” Beth Daley, Boston Globe, March 8, 2010; click to enlarge.

This decline could be explained by the “Climategate’’ controversy, which skeptics publicized late last year as evidence that global warming data is not credible. Or it could be explained by an unusually cold and snowy winter in much of the U.S. For the first time in recorded U.S. weather history, snow was on the ground in all 50 states last month. Or it could be that economic pressure is leading some in the public to put more focus on their own economic interests.

Meanwhile, a report by the Pew Research Center points in the opposite direction. Their survey included almost 1,400 respondents and was conducted from February 3-9 2010. A majority (52%) of Americans favor setting limits on carbon dioxide emissions and making companies pay for their emissions, even if it may mean higher energy prices; about a third (35%) oppose the proposal. In this case, the number of respondents in favor of setting limits actually increased by two percentage points since the last survey was conducted in October 2009. However, as was the case in October, those who have heard a lot about the legislation are more likely to oppose it (54%) than those who have heard a little (27%) or nothing at all (36%).

Most economists believe that if your goal is to reduce CO2 emissions, a carbon tax makes more sense than cap and trade. Cap and trade is, in reality, an indirect tax on the public. Carbon taxes on fuel would work best if: (1) fleet owners are provided invoices that clearly separate the carbon tax from the fuel sales tax; and (2) they are fairly constructed, meaning that fuels that emit more CO2 (diesel) are taxed at a higher rate than less polluting types of fuel (gasoline).

While a direct tax would send a clear signal to fleet owners, it would take several years, perhaps as long as a decade depending on how big the tax was, to replace inefficient trucks with newer models. This is another way of saying that the price elasticity of fuel is low, that upward changes on price have a relatively small effect on the quantity bought. Thus, any carbon tax should be combined with tax incentives to buy newer trucks. Further, early introduction of cleaner engines could also be stimulated by financial instruments such as preferential road toll rates. In Germany, for example, road toll discounts were introduced in 2005 which stimulated early launch of trucks that complied with Euro 5 emission standards.

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