Sustainability Strategies Addressing Supply-Chain Air Emissions (2014)

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39 4.1 Main Elements Transport technology, in terms of energy-efficient equip- ment (aircraft, trucks, trains, and ships), engines, and alterna- tive fuels, has driven and will continue to deliver substantial benefits for air emissions reduction (primarily GHGs) as well as operating costs. The EPA marine diesel and locomotive engine standards, which set levels of PM and NOx, as well as GHG emissions standards for heavy-duty trucks, will advance change. It will likely take some years for the full effectiveness of these standards to be realized due to the slow rates of fleet turnover. However, there are situations in which the regulators have been slow to promote new technology or have avoided allowing certain types of equipment due to concerns about effects other than fuel efficiency. In the primary research, the research team found that most shippers and all carriers are highly focused on testing and then adopting fuel-efficient technologies. These efforts are due, in part, to sustainability objectives that have become ubiquitous within American corporations. But primarily, they are aimed at achieving operational cost savings while also meeting federal, state, and local requirements. This chapter outlines key new technologies that shippers and carriers are using to achieve greater fuel efficiency, sus- tainability, and cost savings. It will touch, along the way, on the interaction among these private-sector initiatives and public policies that either promote or potentially retard the imple- mentation of more efficient technologies. Comments also will be provided on those advances that seem most likely to enter the freight transportation mainstream in coming years. 4.2 Equipment Upgrades and Improvements Improvements in transportation equipment efficiency have been extensive in recent years. The following discussion is organized by mode. Trucks Truck size and weight limits are a major element from the trucking industry’s perspective. A recent review of policies and technologies for improving truck fuel efficiency and reduc- ing CO2 emissions concluded that longer combination trucks offer the single biggest potential efficiency gain via lower vehi- cle miles traveled (VMT). Fuel savings through longer combi- nations are estimated to be between 17% and 28% (Greszler, 2009). These conclusions are supported by other research that asserts that improving the payload efficiencies through the use of longer trucks is estimated to have the potential to reduce GHG emissions by 11% to 30%, depending on gross vehicle weight, payload size and type, and engine size, compared with standard five-axle tractor-semitrailer combinations. However, longer trucks introduce concerns about safety and pavement wear and tear (Mintz, 2010). The American Trucking Asso- ciation has voiced strong support for “more productive truck combinations,” including single tractor-trailer maximum gross vehicle weights of 97,000 pounds and the use of heavier double 33-foot trailers. The association estimates that a reduction of 294.7 million tons of CO2 could be achieved over 10 years with the introduction of these changes (American Trucking Associa- tion, 2011a). The potential impact of changes to truck size and weight limitations is significant, particularly in respect to long-haul trucking (Solomon, May 15, 2012), as follows: • If weight restrictions were increased from 80,000 to 97,000 pounds, an estimated $32 to $37 billion a year in cost savings and productivity improvement could be made. • MillerCoors estimates it could cut the number of trucks deployed each week to its DCs by 25%, which would trans- late into 1.15 million fewer miles traveled each week. This would also mean cutting the weekly fuel bill by $180,000 and reducing carbon emissions by more than 4.5 million pounds per week. C H A P T E R 4 Equipment and Technology

40 • Kraft says that it could cut 66,000 loads a year, which would result in a 33-million-mile drop in weekly vehicle miles driven, saving the company 6.6 million gallons of diesel fuel and 73,000 tons of CO2 emissions each week. • Campbell Soup said it could cut its annual loads by 41,000, reducing vehicle miles driven by 23 million, saving almost 4 million gallons of fuel and eliminating almost 40,000 tons of CO2. The Moving Ahead for Progress in the 21st Century Act (MAP-21), signed into law on July 6, 2012, includes a call for the U.S.DOT to conduct a comprehensive study of truck size and weight regulations. Thus, fresh policy research on this topic is currently in the offing. Almost all previous truck size and weight (TS&W) studies have shown significant reductions in costs associated with increases in TS&W limits. However, large trucks would have to be consistently operated at high levels of capacity use for costs and emissions benefits to be realized. Studies also noted various potential adverse impacts of increasing federal TS&W limits, greater noise impacts, added infrastructure costs, dis- ruption of traffic flow, and potential adverse impacts on safety. Greater truck payload opportunities would affect the competi- tive situation with rail, short sea shipping/inland waterway transport, and intermodal transport, likely resulting in some shift from these modes to road as a result of reduced road haul- age costs. This could have an adverse impact on congestion (March, 2001; Döpke, 2007). Trailer design also affects fuel use, and hence, air emissions. An example of innovative trailer design is FedEx’s drop- frame trailers. These carry 12% more shipments than a typi- cal straight-rail trailer. Drop-frame trailers take advantage of the space between the front and rear wheels. Over the course of a year, the additional packages carried per trailer translate into 2,500 fewer line-haul trailers on the road, saving 70 mil- lion road miles and 10 million gallons of fuel per year (FedEx Corporation, 2010). Aerodynamics of tractors, trailers, and the combined unit is another area of design innovation. EPA’s SmartWay Techno- logy Program, a testing, verification, and designation program to help freight companies identify equipment and technolo- gies that save fuel and lower emissions, has verified a range of aerodynamic technologies. California now mandates the use of trailer skirts (undertray system) for trucks operating within the state. However, operators suggest these are not effective below about 50 mph (whereas the speed limit in California is 55 mph), so their impact may be limited in this state. One large trucking company, though, cited its new undertray sys- tem aerodynamic enhancement on trailers can save about 11% to 12% of fuel consumption for long-haul trailers. NHTSA and EPA are beginning work on developing regula- tions for trailer aerodynamics for heavy and medium equip- ment, with regulations expected in 2014 (Con-way, 2012, pers. comm., 24 May). Investment in aerodynamics of trailers faces a more challenging payback than that in trucks, however, given that the “drop and hook” system means that trailers are only on the road one-third of the time, thus making the payback period three times longer than that for power units. Ocean Carriers For ocean shipping, technology change is driven by com- mercial considerations and by international, national, and local regulations. Large, new containerships being intro- duced by lines such as Maersk and APL provide considerable sustainability benefits. Maersk, for example, claims that its new 18,000 20-foot-equivalent-unit (TEU) container vessels will produce 20% less CO2 per container moved, compared to its previous largest class (Emma Maersk and sister ships) and 50% less than the industry average on the Asia-Europe trade lane. This new vessel class is called the Triple-E class for the three main objectives behind the design—economy of scale, energy efficiency, and environmental improvement. The capacity is 16% greater than the largest containership previously in service, according to Maersk. APL introduced its latest, largest, and most environmen- tally friendly, fuel-efficient ship in May 2012. This vessel class is fitted with a ballast water treatment system (in line with International Maritime Organization’s (IMO’s) ballast water management framework) and electronically controlled main engine. APL will deploy 30 more new vessels in the next 3 years. The new ships will significantly curb CO2 emissions, with an energy efficiency design index (EEDI) nearly 30% greater than that required by the IMO (APL, 2012). APL also has introduced waste heat recovery on its vessels, leading to a 10% improvement in fuel efficiency, and seawater scrubbers to decrease vessel engine emissions (APL, 2011, pers. comm.). IMO studies estimate that improved ship design and operational arrangements could reduce CO2 emissions by as much as 75%, with a cut of around 20% possible without additional costs. The IMO has developed the EEDI for new ships, which sets a minimum energy efficiency level per ton- mile for different vessel types and sizes. The requirement will be tightened incrementally over time. The IMO has devel- oped a management tool to promote energy-efficient opera- tions in the form of the Ship Energy Efficient Management Plan (SEEMP). The SEEMP is to be implemented in parallel with the Energy Efficiency Operational Indicator, the pur- pose of which is to both monitor and benchmark perfor- mance. The EEDI and SEEMP were adopted as mandatory measures by the Marine Environment Protection Committee of the IMO, when it met for its sixty-second session in July 2011. This represents the first-ever mandatory global GHG reduction regime for an international industry sector. Never- theless, the EEDI and SEEMP will require time to take effect, given the average lifetime of marine vessels. In recognition

41 that these technical and operational measures will, on their own, be unlikely to reduce global shipping emissions given the projected increase in global trade, the IMO also identified market-based instruments as being both cost effective and environmentally effective, as well as providing strong incen- tive for change (IMO, 2009). However, agreement on these measures has yet to be reached. Rail Railroads have introduced new technology aimed at fuel efficiency and air pollution reduction. One Class 1 railroad, for example, is adopting generator set switchers that use less fuel, piloting alternative-fuel locomotives, and introducing lower emissions intermodal terminal equipment in Southern California. Overall, however, railroads have not been sub- jected to the same fuel efficiency pressures as trucking, in part because the overall fuel efficiency of the mode is inherently greater than that of trucking. Major enhancements on the rail side stem from a decade or more ago, when intermodal traffic began to become sig- nificant. This traffic continues to grow today. The advent of double-stacked railcars has greatly increased the economic and fuel efficiency of intermodal moves, and routes capable of carrying double-stack cars now crisscross the nation. Growing usage is being driven by high fuel prices and service improve- ments, with railroads overcoming earlier shipper concerns about delivery reliability. Rail-based flatbeds are just the latest example of new inter- modal technology that may shift long-haul freight from truck to rail. A joint effort by equipment manufacturer Raildecks, Fontaine Trailer, motor carrier Boyd Brothers, and the Burling- ton Northern Santa Fe (BNSF) Railway aims to develop a more sustainable, cost-effective, and efficient product for flatbed car- goes such as steel coils, drilling pipe, building materials, and forest products. These new flatbed cars can be double-stacked as well, and can be moved over short distances (at origin or destination) via highway on a chassis. Prototypes were tested by several railroads, and 240 loads were shipped successfully before the companies announced their launch in February 2012. Moving freight by rail rather than truck reduces GHG emissions by 75%, according to the Association of American Railroads (Association of American Railroads, 2012). 4.3 Engine Improvements and Alternative Fuels Engine Emission Standards and Efficiency Emissions from diesel engines are typically regulated at the federal level by EPA as follows: • EPA, under the Clean Air Act, sets standards for emis- sions from diesel engines to combat health risks from diesel emissions. Since 1984, EPA has implemented standards that have progressively lowered the amount of key pollut- ants from diesel engines by more than 75%, by imposing strict standards on vehicle emissions and fuel content (U.S. General Accounting Office, 2004). • Emission standards for on-road heavy-duty vehicles were tightened in 2007. Under these new standards, both NOx and PM emissions are required to be 10 times lower than 2004 levels, and sulfur is reduced by 97% over 1999 levels. To meet these standards, truck engine manufacturers need to use exhaust after-treatment devices (similar to catalytic converters on automobiles) (Burks et al., 2010). Note that the emission standards apply only to new vehicles in the year of their manufacture. No federal emission standards apply to in-use vehicles. Most diesel trucks last 20 years or longer, and older models have little or no emission controls. • The emission-control devices required to enable engine manufacturers to meet EPA’s 2007 standards for NOx and PM emissions are incompatible for high sulfur levels in fuel. EPA therefore adopted parallel standards for diesel fuel sulfur levels. Since June 2006, on-road diesel fuel has been required to have 0.15 parts per million sulfur or less (also referred to as ultra-low sulfur). This ultra-low-sulfur diesel also was required for off-road applications (e.g., locomotives and port cargo-handling equipment) before 2010. • In October 2010, EPA and NHTSA proposed the first-ever Fuel Economy Standards for Heavy Vehicles, intended to improve fuel efficiency and reduce GHG emissions. The proposed standards cover not only engines but also the complete vehicle, enabling the greatest possible reductions in fuel consumption and GHG emissions. The NHTSA stan- dards (expressed in gallons per 1,000 ton-mile) are proposed for vocational vehicles and combination tractors, account- ing for the fact that the work to move heavier loads burns more fuel and emits more CO2 than that required to move lighter loads. EPA standards are expressed in grams CO2 per ton-mile. The agency’s analysis indicates that the stan- dards have the potential to reduce GHG emissions by nearly 250 million metric tons and save approximately 500 million barrels of oil over the life of vehicles sold from 2014 to 2018. The majority of vehicles would see a payback period of 1 to 2 years (U.S. EPA, 2010). As a result of acute air quality issues in California, in Decem- ber 2008, CARB took a decisive step to address emissions from “in-use” diesel trucks with the passage of the California On-Road Heavy-Duty Diesel Vehicles (In-Use) Regulation. It is intended to reduce PM and NOx emissions from exist- ing diesel vehicles operating in California, to meet federally imposed clean air standards. Amendments to the regulation were considered in December 2010 to provide more time for fleets to comply. The amended regulation requires installation of PM retrofits beginning January 1, 2012, and replacement

42 of older trucks starting January 1, 2015. By January 1, 2023, nearly all vehicles will need to have 2010 model year engines or equivalent. The regulation applies to nearly all privately and federally owned diesel-fueled trucks. The regulation pro- vides extra credit for PM filters installed prior to July 2011 and has delayed requirements for fleets with three or fewer vehicles. The trucking companies interviewed by the research team, admittedly large players, emphasized the upgrading of their fleets to adopt the newest engine technology as quickly as pos- sible. Although this is clearly driven by EPA requirements, it also seems to be a point of pride for progressive operators who have the resources to make the investment. For example, one motor carrier the research team spoke with claimed the com- pany has one of the cleanest tractor fleets, half being built in 2008 or later. The carrier is also working with its contractor fleet to promote the purchase of newer and cleaner technology. The FedEx BlueTEC Clean Diesel Vans are a good example of continuing fuel efficiency within the traditional diesel fuel realm. FedEx has over 10,000 sprinter vans in service, which equates to more than 35% of their U.S. pickup and delivery fleet. The new vans are used for suburban and extended driv- ing range markets (FedEx, 2012, pers. comm.). FedEx states that each sprinter is 70% to 100% more fuel-efficient than the alternatives they replace. FedEx Express’ Vehicle Refresh Plan, of which the sprinter vans form part, has saved over 86 mil- lion gallons of fuel since its inception (Basich, 2011; FedEx, 2012, pers. comm.). Matching the vehicle to the mission and the route, FedEx Express is adding all-electric and hybrid-electric vehicles to dense urban routes that involve frequent starts and stops. The use of regenerative braking and electric motors significantly improves the efficiency of the vehicles on such urban routes (Basich, 2011). Alternative Fuels The major new fuel concepts of potential interest in the ground delivery world are natural gas and electric or hybrid vehicles. Natural gas includes compressed natural gas (CNG), liquefied natural gas (LNG), and biomethane. Electric vehi- cles are already used extensively for local delivery work by shippers and carriers. UPS, for example, now has 384 hybrid- electric vehicles deployed in its delivery fleet. Electric power is even being extended to a small tricycle format for urban delivery in Europe. The operating cost advantage is the pri- mary reason for adoption by operators, with environmental benefits an added plus. The main challenges to faster adop- tion are generally immature technology, high capital costs, or lack of widespread fuel availability. According to Cascade Sierra Solutions (CSS), the diffi- culties in switching heavy trucks from diesel to natural gas include a lack of fueling infrastructure, limited access to financing (not many lenders want to be the first to finance alternative-fuel vehicles), and difficulties in getting technolo- gies through the EPA and CARB verification processes. CSS has a goal of supporting the implementation of alternative fueling infrastructure and is working to help private-sector companies secure public funding to help facilitate fueling infrastructure projects. They also are lobbying to obtain gov- ernment support for technologies that have environmental, as well as economic, benefits. Regulations are a major factor driving the search for viable alternative-fuel options and will directly influence the pace and direction of change. For example, the rules on subsidies for biodiesel and ethanol have now all expired. It is doubtful they will be reinstated. This will change the pricing of diesel fuel and could affect the choice of fuel for trucks in the future. In 2012, EPA will require that 1 billion gallons of biodiesel be blended into diesel fuel. California introduced a new Low Carbon Fuel Standard in 2009, intended to expand the use of low carbon alternative fuels (including some bio-fuels, hydrogen, and electricity). Refiners, importers, and blenders of fuel are required to track and steadily reduce the “carbon intensity” of fuels. The regula- tion has been challenged on the grounds that it discriminates against out-of-state fuels, thereby promoting and protecting local economic interests. There are also concerns about the costs of implementing the regulation. Opponents, including the ethanol industry, fuel producers, business interests, and American Trucking Association, estimate that the rule will result in diesel price increases of between $0.12 and $2 per gallon (Howard, 2009; Con-way, 2012, pers. comm.). There is concern that the regulation will effectively ban the import of certain (cheaper) fuels for use in California, thereby increas- ing freight transportation costs, but will not address global GHG emissions because these fuels will simply be sold else- where. The California Trucking Association believes this will drive up the diesel price by $2 per gallon (Howard, 2009). On the natural gas front, regulations are again a key ele- ment in adoption. For LNG, EPA is in the process of rulemaking on natural gas leakage. The leakage of methane (which has 20 times the global warming potential of carbon dioxide) from gas fields could offset any carbon emissions savings gained through shifting from diesel to LNG gas. The pending leak- age rule has major implications for the adoption of LNG (and CNG) in the trucking world (Con-way, 2012, pers. comm.). Natural gas-powered engines for truck fleets seem likely to emerge as a significant trend in the years ahead. The com- bination of strong economic motivation for fleet operators (with natural gas costing much less than diesel fuel) and the air quality benefits, together with the growing practicality of the technology, fits the pattern of strong fuel efficiency prog- ress by shippers and carriers that the research team have seen

43 in the research. Despite the need to solve the issue of methane release, the research team expects this combination of factors could presage rapid development. Further, MAP-21 federal policy supports natural gas, given that the act allows money under the Surface Transportation Program and the Conges- tion Mitigation and Air Quality Program to be used for devel- opment of natural gas refueling stations. Local communities need to be aware that they can tap into these federal funds to help support the local NG refueling infrastructure. Alternative-Fuel Vehicles This section provides examples of the progress being made with alternative-fuel trucks and delivery vehicles—an exciting development aimed at tapping new sources of non- petroleum-based fuel. CNG, widely used for delivery vehicles in countries like the Netherlands, is already a viable fuel for local buses and delivery vehicles in the United States. Many of our interview- ees reported that their fleets of CNG light freight vehicles are growing. A major shift may be starting in the use of LNG for long-distance heavy trucks. Interviewees state they are testing and rolling out such vehicles. Cummins Westport is slated to begin production of an 11.9-liter natural gas engine in April 2013, providing the power that a standard, heavy-duty truck requires. The overall economics appear potentially favorable. LNG trucks typically cost $40,000 to $80,000 more than an equivalent diesel truck, but the LNG fuel costs (as of March 2013) are about $1.30 less per gallon than diesel. Thus, trucking companies consider the return on their investment, weighing increased capital cost against lower fuel cost and consider- ing elements such as engine longevity, maintenance, and fuel availability. The boom in natural gas production in the United States, which has kept natural gas (NG) prices low relative to diesel prices, coupled with the expanding network of NG fuel- ing stations along major highways, supports the expectation that NG will be increasingly used by U.S. motor carriers. At present, there are only about 70 LNG stations in operation in the United States, mostly in California, Texas, and other west- ern states. In its Annual Energy Outlook 2013 Early Release, however, the U.S. Energy Information Administration (U.S. EIA) predicts that the use of natural gas (CNG plus LNG) for vehicle transport is expected to rise from 0.1% in 2011 to 4% of the highway energy mix by 2040 (U.S. EIA, 2013). Examples of alternative-fuel vehicle use are provided in the rest of this subsection. • Staples has added 10 new heavy-duty CNG tractors to its dedicated fleet in Southern California, which is operated by Ryder. These tractors will replace 10 diesel tractors currently in use. The vehicles are made available through Ryder’s natural gas (NG) vehicle project agreement with the San Bernardino Associated Governments. This $38.7-million project is part of a public-private partnership among the DOE, California Energy Commission, Southern Califor- nia Association of Governments Clean Cities Coalition, and Ryder. The project includes 202 NG vehicles, upgrades to three maintenance facilities for proper servicing of the vehicles, and construction of two fueling stations. These tractors will be used to transport inventory to Staples stores in Los Angeles, Orange County, San Diego, and the Inland Empire. Ryder claims that CNG vehicles produce 20% to 30% fewer emissions than comparable diesel vehicles (Trucking Info, 2011). • UPS’s “green fleet” is composed of 2,600 alternative-fuel vehicles. These vehicles have traveled more than 200 mil- lion miles since implementation. The first UPS alterna- tive vehicle was electric, in the 1930s. The company uses various alternative-fuel types: LNG, CNG, propane, hybrid electric, electric, hydraulic hybrid, and biomethane. The goal is to drive 400 million miles with these vehicles by 2017. In addition, UPS decided in 2012 to buy 150 deliv- ery vehicles incorporating composite plastic body panels, which save weight and generate 40% fuel savings (UPS Freight, 2012, pers. comm.). • UPS believes that LNG is most promising in the long term, but challenges still exist in terms of infrastructure such as fueling stations. The potential methane leakage issue is being evaluated, but currently is not viewed as a major concern. The investigation of LNG is necessary because UPS wants to ensure that any new type of vehicle will pro- vide the same miles and lifespan as vehicles currently in the fleet (UPS Freight, 2012, pers. comm.). • UPS announced the deployment of 10 dual-fuel biometh- ane trucks in the United Kingdom (U.K.) in April 2012. This could be a major advance for alternative fuels, in that the burning of biomethane as fuel can create an absolute reduction in the environmental impact versus not using it. Biomethane is a renewable energy source produced from organic waste, in this case derived from a landfill. Biomethane has potential for reducing carbon—each unit of biomethane cuts emissions from well to wheels by 70% compared to diesel. Also, it reduces dependency on fossil fuels and is one of the few alternative fuels that supports long-haul, heavy trucks used for moving package trailers (UPS, 2012, pers. comm., May 11). There are challenges regarding availability, because biomethane is mostly used for electricity generation. UPS is currently working with commercial partners and governments to address this issue. In the trials, UPS found that two-thirds of the blended fuel could be biomethane. The test vehicles went on the road in early 2012, were at the Olympics, and are expected to operate over a normal 7-year lifecycle. The vehicles are regular Mercedes tractors, modified by Hartstaff to run on

44 biomethane, with the fuel provided by Gasrec. This trial is not subsidized and no government entity is currently involved, although UPS is actively seeking public-sector interest. The only government role comes in the form of a reduced fuel tax/duty for the biomethane gas. UPS expects to break even on this endeavor by the end of the 7-year period (UPS, 2012, pers. comm.). • Pacer announced in September 2011 that it was adding about 40 LNG trucks to its Southern California cartage fleet. Pacer is testing the trucks’ operational capabilities to determine whether to continue deployment. The LNG truck testing program is a continuation of Pacer’s commit- ment to reducing emissions and improving fuel efficiency. “We believe that the use of clean tractor technologies for our cartage operations is the right decision for our custom- ers, the environment, and our company. We are excited to test the benefits of this new technology in our cartage oper- ation,” said Val T. Noel, president, Pacer Cartage (Transport Topics Staff, 2011). As of mid-2012, Pacer was still resolving issues with components and leases, but was hopeful to get the units released shortly (Pacer International, 2012, pers. comm.). • FedEx, UPS, and Purolator were piloting hybrid hydrau- lic parcel delivery trucks as of April 2012. The innovative delivery trucks are made by Freightliner Custom Chassis Corporation, Morgan Olson, and Parker Hannifin. Each of the three parcel companies purchased an evaluation vehicle with assistance from Calstart, through a grant from DOE. These are the first-of-their-kind commercially available hybrid hydraulic parcel delivery vehicles. Braking energy is recovered and stored in hydraulic accumulators, where it is then used to power the truck during acceleration. The vehicle also has an onboard controller that turns the engine off at unnecessary run times. Fuel can be reduced by 40% or better. This type of hybrid hydraulic system has been used with Class 8 refuse trucks, but this is the first time it has been used for the lighter vehicles of Class 6. The three parcel companies are part of the Hybrid, Electric, and Advanced Truck Users Forum’s parcel delivery work- ing group and are working with Calstart and Framework Convention on Climate Change to collect data on the fuel economy improvements and reduced brake and engine maintenance costs (Environmental Leader, 2012). • Navistar (builder of commercial trucks and diesel engines) and Clean Energy Fuels Corp (provider of NG fuel for transportation) recently partnered to try to jumpstart and incentivize a widespread conversion among all U.S. fleet types from gasoline and diesel fuels to NG, “with or with- out the help of government incentives.” This is a unique partnership between two large public companies develop- ing infrastructure for, and financially incentivizing, the shift to natural gas for the transportation sector (Clean Energy Fuels, 2012). To support the initiative, Clean Energy is building what it calls “America’s Natural Gas Highway,” a network of refueling stations along major U.S. highway cor- ridors (Solomon, 2012). • In 2012, Con-way took delivery of two CNG tractors for a pilot program in Chicago and will be getting several more in 2013 to operate in the Texas Triangle, and therefore achieve a better understanding of operational character- istics in a warm climate. Although others are looking at LNG, Con-way believes that savings can be achieved using CNG, and the company wants to understand more. If it is not possible to obtain fuel savings from CNG, then Con- way believes it will not be possible to make a return on investment with LNG (Con-way, 2012, pers. comm.). • Shell Oil and TravelCenters of America (TA), the larg- est full-service truck stop chain in America, have joined together to expand the network of LNG refueling loca- tions in the United States. This will help lower the per- ceived barriers to entry, making companies more likely to adopt this alternative fuel. Plans include the construc- tion (and supplying) of more than 200 LNG fuel lanes at about 100 TA sites and gas stations through the U.S. Interstate Highway System. The first of the LNG fuel lanes is expected to become operational in 2013 (Trailer Body Builders, 2012). • Swift Transportation is optimistic about the future of NG- powered trucks, though challenges exist at the moment. According to Swift, two areas require further improvement— engine reliability and cost. Once these two issues are resolved, NG is expected to become an excellent oppor- tunity. Availability of fuel is not a problem—if the trucks are there, the fuel will come, Swift believes. If the price difference between diesel and natural gas continues, truck owners will be motivated to acquire this technology (Swift Transportation, 2012, pers. comm.). • Stonyfield Farm is currently using biodiesel in limited applications. Although biodiesel is about 25 cents more per gallon, the company does not use much and believes this exemplifies its commitment to the environment, even though there is an incremental cost. Stonyfield is waiting for NG to reach the mainstream and will convert then (Stonyfield Farm, 2012, pers. comm.). Electric Vehicles FedEx is testing the Newton Step Van, launched by Smith Electric Vehicles Corporation in March 2012. These vehi- cles feature an all-electric, zero-emissions engine and carry enough battery power to cover a 100-mile range. The first batch of these vans has been reserved by FedEx, which is focused on improving its fleet efficiency and reducing emis- sions (Michelsen, 2012; FedEx, 1995-2012).

45 Electric propulsion solutions for light-vehicle, urban pack- age deliveries (e.g., tricycles) are being tested for use in old center cities facing issues of intense congestion, air pollution, and noise pollution. Cities and carriers have started work- ing together to find innovative solutions for the parcel deliv- ery sector. Both UPS and FedEx recently tested, or are in the process of testing, electric “tricycle” type vehicles in Europe. Traveling at a top speed between 12 and 16 mph, these vehi- cles use an all-electric motor supplemented by pedaling. Cit- ies, particularly in Europe, are asking parcel carriers to deploy these vehicles, at least at high-traffic times of day. Examples of the use of electric vehicles are provided in the rest of this subsection. • UPS has been testing its version of a delivery tricycle (known as the Cargo Cruiser) in downtown Dortmund, Germany. The vehicles will help reduce emissions, noise pollution, and traffic congestion. The trial is expected to run from June to October 2012. A standard UPS delivery vehicle will supply the Cargo Cruisers with parcels at approximately 20 loading zones established by the city of Dortmund on the outskirts of the downtown area. A UPS driver will then travel the “last mile” via Cargo Cruiser to deliver to customers. This will facilitate delivery of the parcels in the downtown’s narrow streets, which often present few parking or stopping possi- bilities for large motor vehicles. During the night, the Cargo Cruiser parks at the depot of a Dortmund energy supplier, where the batteries are recharged via a standard 220-volt electric socket. By the next morning, the Cargo Cruiser is capable of traveling a distance of about 35 km for deploy- ment in Dortmund, with a load volume of 2.2 cubic meters and a possible additional load of 300 kg. The vehicle’s top speed is 25 km/h. The test is being conducted as part of UPS Germany’s participation in the cooperative project Green Logistics, sponsored by EffizienzClusters LogistikRuhr. The project focuses on ecologically efficient logistics planning and is being conducted in cooperation with the Fraunhofer Institute for Material Flow and Logistics IML of Dortmund (UPS, 2012). • FedEx, in collaboration with the Green Link, has deployed electrically assisted tricycle delivery vehicles in Paris, serv- ing 60% of the city’s districts. The tricycles also are being piloted in Brussels, and opportunities are being explored in other parts of the EU. Locations are chosen based on lev- els of congestion, pollution, and city center access restric- tions on gasoline-powered vehicles at certain times of day. These vehicles run on pedal power and are supplemented by a 250-watt electric motor, which can reach a speed of about 25 km/h. The electric tricycles have a useful volume of over 2 cubic meters and can carry up to 350 kg of pay- load. They are allowed in pedestrian-only areas and many bike lanes. Paris plans to develop more than 400 miles of bike lanes and has some streets devoted to pedestrian-only traffic, which makes the use of this vehicle particularly viable (McKone, 2010; FedEx, 2012, pers. comm.). 4.4 Warehousing Developments Warehousing activities represent a small portion of overall fuel, energy use, and air emissions within the supply chain, far less than transportation activities. Nevertheless, shippers and third-party warehouse operators are increasingly focused on green design for their distribution facilities. In taking a holistic view of logistics activities, it is relevant to look at progress in these storage and handling facilities closely linked to freight transportation. Nike is devoting considerable effort on the development of their warehousing strategy. Nike has recently refreshed its strategy and formally rolled it out with third-party part- ners, making more explicit how Nike needs its warehous- ing providers to work toward sustainability. The company’s sustainable supply chain group has created a network to share ideas and develop a macro-level assessment of suc- cess. The team engages external partners as well, to speed up implementation. Nike achieved Leader in Energy and Environmental Design (LEED) certification for its Shanghai distribution center, as well as 3 of its office buildings and 10 Nike stores in North America. Going forward, the company aims to design all new buildings to LEED standards (Nike, Inc., 2011 and 2012). Similarly, in November 2011, Becton Dickinson (the global medical technology company) opened a new LEED gold- certified DC in Four Oaks, North Carolina (operated by 3PL partner, Genco ATC), that exemplifies many of the new sus- tainable design features. The incremental cost to make the facility environmentally efficient was about 8% of the total capital invested. The warehouse uses the latest reach trucks, equipped with regenerative masts. (As the pallet is brought down from the rack, it reenergizes the lift truck’s battery.) This feature requires fewer battery changes, increases pro- ductivity, and adds 12% more run-time for improved energy use. This DC has 4 acres of solar panels on a roof that spans an area equivalent to 15 football fields. An online dashboard monitors the electricity being generated. These solar panels reduce the site’s energy consumption by about 20%. Using skylights with global positioning system technology and mirrors that track the sun bring natural light into the offices, greatly reducing the need for conventional lights. In the warehouse, most interior lights are motion-sensor activated. Exterior lights in parking and trailer lots are also on motion sensors. Employees with fuel-efficient vehicles are rewarded with the closest parking spots and alternate transportation to work is encouraged. Becton Dickinson has achieved an esti- mated 9% improvement in service times to customers and

46 subsequent reductions in transportation and facility costs (Napolitano, 2012). ConAgra Foods, the large food producer, is focusing its warehouse sustainability efforts on electricity conservation, upgrading lighting and controls, and switching the entire fleet of lift trucks to electric or automated guided vehicles (ConAgra, 2011, pers. comm.). 4.5 Encouraging Continued Progress The private sector has made considerable progress in reduc- ing emissions through equipment upgrades and improve- ments, engine improvements and the use of alternative fuels, and sustainability innovations in warehousing. Regulations (e.g., in respect to engine emissions standards) have set the scene, but business is embracing a range of innovative tech- nologies ahead of regulations, partly because of expected cost benefits. Key lessons for the public sector are as follows: • Ensure that regulations are sufficiently flexible to allow for ongoing innovation and to ensure that processes (e.g., per- taining to the approval of new technologies) do not have a stifling effect. • Provide support for new technologies (e.g., through the promotion of NG refueling infrastructure). • Provide opportunities for the recognition of innovation (e.g., through programs such as SmartWay). • Identify opportunities for the development of well-located warehouse and trans-shipment facilities that minimize trip distances, reduce empty moves, and curtail CAP emissions and noise impacts on local communities.