Special Delivery

Special Delivery

FedEx and UPS on why CR is so important to their business—here is a look at their sustainable initiatives by the numbers.

By The Editors

FedEx and UPS on why CR is so important to their business—here is a look at their sustainable initiatives by the numbers.

Sustainability is extremely important in the shipping industry. Millions of packages are delivered every day in the U.S.—and logistics and transportation industry spending totaled $1.48 trillion in 2015, representing eight percent of the annual gross domestic product. Maintaining sustainable shipping practices benefits not only the environment, but the bottom line of the delivery service corporations themselves.

CR Magazine spoke with Mitch Jackson, vice president of environmental affairs and sustainability at FedEx, and Tamara Barker, chief sustainability officer at UPS, about their sustainability efforts —and we compare their answers head-to-head in this look at shipping practices.

History of the Company Corporate Responsibility Program

FedEx and UPS discuss how each of the companies have supported their communities, improved their impact on the environment, and created sustainability initiatives.

FedEx: FedEx is focused on developing environmental solutions that will lessen its footprint. Here are a few examples:

• In 2000, FedEx Express teamed with the Environmental Defense Fund on a project to develop commercial hybrid electric vehicles. In 2004, the first commercially available hybrid delivery trucks were placed into service on FedEx Express routes.

• FedEx supports commercial vehicle fuel economy/ greenhouse gas legislation, subsequently enacted along with new passenger vehicle standards in the Energy Independence & Security Act of 2007.

• FedEx improved fuel efficiency by 20 percent.

• In 2008 FedEx set a goal to reduce carbon dioxide emissions from its global aviation fleet by 20 percent by 2020 from a 2005 baseline year.

UPS: Since 2002, UPS has published a corporate sustainability report using the Global Reporting Initiative framework.

UPS has a history of partnering with technology developers in the private sector, governments and academia worldwide that continues today. For example, UPS participates in the Department of Energy’s Clean Cities Program and was one of the initial 13 companies to participate in the Obama Administration’s American Business Act on Climate Pledge, committing to reduce greenhouse gas intensity 20 percent by the end of 2020.

Sustainability Program Uniqueness

FedEx and UPS describe their sustainability efforts that help drive business strategy.

FedEx: FedEx works to achieve goals through EarthSmart, the FedEx roadmap for operating in an increasingly sustainable way. It was introduced in 2009 to create innovative ways to improve environmental performance. Some solutions include installing solar panels and investing in biofuels. These are intended to deliver clear and tangible benefits for the environment, customers, team members and our business. We currently have 17 active EarthSmart Innovations.

UPS: Sustainability is inherent to our operations. We manage more than 18 million shipments each day through an integrated global logistics network. We always look for ways to make it as efficient as possible: considering our scale, small changes in efficiency add up to a big difference. For instance, for every mile we don’t drive, we save 1.5 million gallons of fuel each year and the associated emissions.

Special Efforts that Ensure Operational Sustainability

FedEx and UPS describe what each company does in their day-to-day operations that improves suitability; for example, green vehicle usage, biodegradable packaging and materials, etc.

FedEx: Our Fuel Sense program has saved more than $1 billion in jet fuel since 2007. We also brought eight new on-site solar energy systems online in the past two years, almost doubling the number in this timeframe. We expanded our fleet of alternative-fuel vehicles to more than 2,700 in FY16.

Responsible packaging includes:

• 100 percent of FedEx packaging is recyclable, and 52 percent is made from recycled content;

• Every FedEx envelope delivery is carbon offset to minimize its impact on the environment. In FY16, FedEx Express shipped over 190,000,000 carbon-neutral envelopes;

• FedEx white boxes are made from an average of 38 percent recycled content; and

UPS: ORION—our route optimization software— uses historical route data and traffic patterns to identify the most efficient route out of an essentially endless number of options. We manage more than 18 million shipments each day through one integrated global logistics network.

• Our data infrastructure is designed to know the location of every package, where it’s going, when it needs to be there and whether it got there on time.

• Our scale allows us to take everyday actions that collectively add up to a big difference. For instance, for every mile we don’t drive, we save 1.5 million gallons of fuel each year – and the associated emissions.

Through the Eco Responsible Packaging Program, we evaluate our packaging processes to determine the best way to protect deliveries while choosing reusable materials and right-size packaging to eliminate waste.

The Link of Sustainability Efforts to Profitability Although sometimes ROI can be difficult to quantify, FedEx and UPS explain how operating sustainably can tie into profit.

FedEx: In FY15, FedEx saved $65 million through fuel-efficient driving, vehicle technology improvements and alternative fuel usage.

Shareholders and other stakeholders have recently been requesting information and data on our citizenship programs. Customers who sought information about the company’s corporate citizenship and carbon emissions data as part of their purchasing process accounted for $6.2 billion in FY15 revenue.

UPS: While things like fuel savings have a sustainability benefit and contribute to the bottom line, other efforts that also yield benefits—like improvements in reputation and brand equity—are more difficult to express in financial terms. We assess ROI broadly and don’t require that every effort be directly measurable in profitability.

“FedEx is built on the belief that local economic growth requires connectivity with the rest of the world, and we accept that it is our role and responsibility to do this sustainably. We remain focused on developing environmental solutions that will lessen our footprint, while serving as an example to our peers.”

— Mitch Jackson, vice president of environmental affairs and sustainability, FedEx

Future Plans and Goals

FedEx and UPS reveal their goals for the future of sustainability and the community outside their walls.

FedEx: We see four major trends shaping the global marketplace:

• Increasing globalization and trade;

• More supply chain efficiencies;

• Proliferation of high-tech businesses and high-value-added goods; and

• The growth of e-commerce.

On a recent earnings call from Dec. 20, 2016, it was discussed that as e-commerce grows, so does the challenge of peak, with multiple days of volume levels approaching or surpassing double our average daily volume. This surge in demand is driven primarily by a relatively small number of customers. Less than 50 large retail and e-tail customers are responsible for the majority of peak demand, so it’s important that we understand their forecast well in advance to allow us to plan resources properly.

We have goals around our FedEx Express aircraft emissions intensity and vehicle fleet fuel efficiency, and an investment of $200 million in more than 200 communities by 2020 through our FedEx Cares program.

UPS: UPS was one of the initial 13 companies to take the American Business Act on Climate Pledge to reduce greenhouse gas emission intensity 20 percent by 2020. Our initiatives allow us to increase the number of packages we deliver while decreasing the amount of carbon emissions per package. We refer to this as the carbon intensity per package, and to date we have reduced it by 14.5 percent versus a 2007 baseline.

UPS has plans to invest in developing and deploying new technologies that help reduce carbon emissions (such as hybrid electric vehicles, natural gas vehicles, and fuel cell vehicles); to increase the use of renewable fuels; and introduce alternative fuels to the UPS fleet.

“The desire to make a tangible difference in communities extends companywide. UPS continues to adapt our sustainability strategies and commitments to address the emerging issues facing our industry and evolving stakeholder expectations.”

— Tamara Barker, chief sustainability officer, UPS

Posted February 2, 2017 in Sustainability