Emissions Model Enables Green Decision Making for Shippers
From break rooms to boardrooms, dock floors to the Congressional floor, the green revolution and environmentally-sensitive practices are topics of concern and consideration. Since the mid-1950s, and the first Air Pollution Control Act, businesses sought environmentally-sound practices that would not strike a blow to their bottom line.
Today, the debate heats up as states and the federal government consider corporate carbon restrictions. Under a governmentmandated cap-and-trade approach, businesses would be expected to reduce carbon emissions by a stated percentage over a baseline year. In the event of such legislation, shipping practices most likely will figure into the company’s overall carbon footprint.
Fortunately, shippers now have tools to model their environmental footprint. By understanding the environmental effects of their shipping activities and measuring their environmental footprint, shippers can offset an environmental impact and still meet their cost, service, and capacity goals.
Greenhouse gases and the environment
Greenhouse gases (GHGs), such as carbon dioxide (CO2) and nitrous oxide, are emitted from many sources around the globe. What’s astonishing is the percentage of some of the most prevalent greenhouse gases attributed to fossil fuel combustion. For example, in 2005, 94 percent of CO2 emissions could be traced back to fossil fuel combustion. Of this 94 percent, 33 percent of CO2 emissions could be attributed to combustion associated with the transportation sector1.
Greenhouse gases have been strongly linked to what many refer to as “global warming.” As greenhouse gases are emitted into the atmosphere, they create a blanket between the Earth’s surface and the Sun. As solar radiation passes through the Earth’s atmosphere it warms the Earth’s surface. Naturally, a portion of this solar energy bounces off of the Earth’s surface and attempts to escape into space only to be trapped by the blanket of greenhouse gases.
“Global temperatures increased by approximately one degree Fahrenheit over the course of the last century, and will likely rise even more rapidly in coming decades. Scientists predict that unless global warming emissions are reduced, average U.S. temperatures could rise another three- to nine- degrees by the end of the century – with far reaching effects”.2
Effects of global warming on the movement of goods
With a rise in temperatures, the global society could begin to suffer consequences such as more frequent deadly heat waves, droughts and wildfires, flooding, and powerful hurricanes. There are obvious health concerns associated with these consequences of global warming, but the less obvious connections are between global warming and goods movement activities.
The relationship between goods movement and global warming is quite interdependent. For example, “warmer temperatures can induce greater evaporation, which can exacerbate drought conditions and increase the risk of wildfires.”2 In turn, wildfires typically impede shipping activities, especially in the air. In addition, warmer temperatures may play a heavy role in producing Category 4 and Category 5 hurricanes that flood our streets, and ultimately delay shipments that are moving over the roads.
Hurricane Katrina is an example. It was one of the most devastating storms in U.S. history; it left death and destruction and delayed a significant number of shipments in the Southeast region. As the hurricane swept through and flooding increased, roads washed out, designated truck routes kept changing, the region’s ports and airports could not operate at 100 percent, and oil refinery damages sent fuel prices soaring. Shippers were well aware of these challenges as they occurred. “Just as the rest of the country saw a leap in prices at the pump after Katrina, exporters saw a leap in shipping rates on the Mississippi – from 51 cents a bushel the day before Katrina hit to 97 cents a bushel on September 8.”3
Few shippers have been in tune with the aftermath of Hurricane Katrina that continues to ignite destructive activity years after landfall. In its 2007 State & Private Forestry Fact Sheet, the State of Mississippi reports, “Mississippi continues to recover from the impacts of Hurricane Katrina, including increased fuel loads across the state. Due to the additional fuels, fires are burning more intensely and control efforts are greatly hampered.”4
As interdependency would have it, the same transportation activities that play an indirect role in increasing global-warming induced hurricanes also play a direct role in transforming possible consequences into definite realities. For example, wildfires ignite when rail congestion forces trains to forcefully apply their brakes and when the endless goods movement takes its toll on trains’ wheel bearings, sending sparks into nearby foliage and dry forests for miles5. An example of this occurred in Byron, Georgia when overheated brakes on a Norfolk-Southern train sent sparks, causing 25 acres to burn.6
These same wildfires can be responsible for delaying shippers’ cargo over the road, on the rail, and in the air as flames and accompanying smoke spread uncontrollably. One illustration came in 2003 when wildfires snarled air traffic across Canada and the United States, and forced air traffic controllers in Southern California to evacuate their posts.7
Building political pressure
Beyond contributing to the rise in disasters that negatively affect goods movement, there is another compelling reason for shippers to begin seriously evaluating their shipping patterns. Now, more than ever, shippers and transportation providers are being challenged to juggle cost, service, and capacity while thinking green. If not to satisfy their own environmental goals, shippers are beginning to think green as the logistics industry feels the political pressure to clean-up.
Many believe corporate carbon restrictions are inevitable. Whether it is the cap-and-trade system proposed by Sen. Joseph Lieberman (I-Conn.) and Sen. John Warner (R-Va.)8, or some other approach, legislation that creates a commodity market for carbon likely will have businesses looking more holistically at their operations, including their transportation.
More specific to transportation activities, in November 2006, the Los Angeles Board of Harbor Commissioners and the Long Beach Board of Harbor Commissioners unanimously adopted the San Pedro Bay Ports Clean Air Action Plan to reduce air pollution from heavy-duty vehicles (trucks), ocean-going vessels, cargo handling equipment, harbor craft and railroad locomotives. Control measures in the plan include replacing or upgrading all trucks calling on the port, reducing container ship speeds, and using cleaner fuels for ground, sea and rail equipment.9 Together, the Ports of Los Angeles and Long Beach handle 40 percent of U.S. cargo-container imports.
Comments from the presidents of the two harbors state that the cost to implement the plan will be shared. “Both Boards want to make it clear that the Ports cannot and will not subsidize the cost of cleaner transportation indefinitely. Those expenses are a legitimate cost of doing business, and we believe that our position will ensure that companies engaged in goods movement pay their fair share of the cost of cleaning up our air and protecting our citizens.”9Shippers can expect to bear a portion of the costs associated with this new air pollution plan.
A Logistics Today article, “A Green Role for Logistics,” discusses the California Air Resources Board’s plans to clamp down on performance standards for engines used on temperature-controlled trailers, railcars and containers that simply operate (not necessarily register) in California. “Focusing on tractor-trailer fleets, the ATA says 340,000 units nationwide would have to comply with the California regulations. This translates into 75% of the total refrigerated tractor-trailers outside of California to be retrofitted, scrapped, or replaced with new equipment.”10 As a result, temperature-sensitive shippers can expect to see an increase in temperature-controlled transportation costs.
The cost of federal emissions regulations
The United States government has put in place a host of standards and regulations mandating the transportation sector to reduce its role in producing dangerously high levels of smog-causing pollutants. These standards include, but are not limited to:
- New ultra-low sulfur diesel (ULSD), which became available throughout the United States in the Fall of 2006
- The requirement for clean diesel engines, effective with the 2007 heavy-duty-engine model year.
ULSD fuel prices range one- to three-cents more per gallon at the pump11. In addition, many carriers will be replacing or retrofitting engines across their fleets to ensure their pre-2007 equipment is compatible with the new alternative clean fuels. “A combination of clean fuels and retrofits can reduce some hazardous diesel emissions by up to 90 percent, improving both environmental conditions and public health.”12
Retrofitting a transportation fleet is both complex and costly. “For a typical on-road heavy-duty engine, the average diesel oxidation catalyst cost ranges from $500 to $2,000 per vehicle. Wall-flow diesel particulate filters are currently being sold for about $7,000 to $10,000 per filter. The cost of selective catalytic reduction devices ranges from $12,000 to $20,000 with an oxidation catalyst, and $15,000 to $25,000 with a diesel particulate filter. A low-pressure exhaust gas recirculation system with a diesel particulate filter costs in the range of $18,000 to $20,000. A system combining a lean NOx catalyst with a diesel particulate filter costs from $15,000 to $20,000.”13 Shippers can be sure that as the cost of making fleets green/clean rises, shipping rates will increase as well.
Although retrofitting older engines with new technology will be an option for some fleet managers, other fleet managers will be purchasing new vehicles. Dee Kapur, of International Truck and Engine, estimated that “International mid-range diesel powered trucks will cost $5,000 to $6,000 more per vehicle in 2007, while there will be an increase between $7,000 and $10,000 for Class 8 truck/tractors with supplier engines.”14 Surely the increased purchase prices for the 2007 equipment has the largest financial impact on fleet managers, but shippers should be prepared to bear a portion of the financial burden as well.
Calculating shippers’ emissions footprints
At this stage, many retailers and manufacturers are asking how they can prepare for possible legislation on carbon emissions and what they can do to mitigate negative financial and service impacts that may result from these changes. The United States EPA’s Shipper Fleet Performance Model helps shippers estimate emissions activities by transportation mode. The model has been expanded to consider over-the-road, rail, ocean and air transportation. Shippers can use this model to evaluate their current emissions footprints against the emissions impact of strategies such as route optimization, modal shifts, freight consolidation, flow through activities and network redesign.
For more information:
Noatum Logistics expanded the EPA Shipper Fleet Performance Model to include ocean and rail transportation emissions, and has the tools to model emissions associated with fuel usage for commercial cargo and passenger aircrafts; heavy-duty diesel engines on the road, rail and sea; facility equipment (e.g., forklifts); and idling vehicles on a facility lot.
About Noatum Logistics
To learn how Noatum Logistics can create intelligent solutions and powerful results for your business, contact us at:
11501 Outlook Street
Overland Park, KS 66211
1 United States Environmental Protection Agency. The Inventory of U.S. Greenhouse Gas Emissions and Sinks: 1990-2005. ES 6-8. 30 July 2007: www.epa.gov/climatechange/emissions/downloads06/07ES.pdf
2 “The Consequences of Global Warming.” 09 Jan. 2006. Natural Resources Defense Council. 22 May 2006: www.nrdc.org
3 Toni Lapp, “Running on Empty: Gauging the Lingering Effects of Hurricane Katrina on the Tenth District Farmers,” Federal Reserve Bank of Kansas City, 10:3 (Winter 2006): 5
4 Mississippi Forestry Commission. State & Private Forestry Fact Sheet. February 2007. 8 August 2007: www.southernforests.org/documents/statefacts/MS%20Fact%20Sheet.pdf
5 Linda Way, “Wildfires Soar Since Katrina. The Meridian Star 20 May 2006. May 2006: www.meridianstar.com
6 Natasha Smith, “Byron Wildfire Caused by Train,” The Macon Telegraph May 2007: www.findarticles.com/p/articles/mi_km4477/is_200705/ai_n19108678
7 “Wildfire Causes National Flight Delays.” 26 Oct. 2003. KNBC Los Angeles. 25 May 2006: www.nbc4.tv
8 John Goff, “Carbon Trading,” CFO Magazine 1 Jan. 2008: www.cfo.com/article.cfm/10345560/c_2984351/?f=archives
9 California Environmental Protection Agency. Air Resource Board. Final 2006 San Pedro Bay Ports Clean Air Action Plan Overview
9 August 2007: www.portoflosangeles.org/DOC/CAAP_Overview_Final.pdf
10 Perry A. Trunick, “A Green Role for Logistics.” Logistics Today 47.6 (2006): 26+
11 Energy Information Administration. Petroleum Navigator. 8 August 2007 www.tonto.eia.doe.gov/dnav/pet/pet_pri_gnd_a_epd2d_pte_cpgal_m.htm
12 Cleaner Diesel Handbook. Environmental Defense. Environmental Defense, 2005. 1-85. 8 August 2007
13 “Frequently Asked Questions about the Installation of Emission Control Technology on Existing Diesel Engines.” MECA. May 2007
14 Sean Kilcarr, “Cleaner Road Ahead.” American City & County 1 Feb. 2006. 25 May 2006: www.americancityandcounty.com
15 “SmartWay Transport Partnership,” 14 July 2006, U.S. Environmental Protection Agency, 25 July 2006: www.ega.gov