UPS Makes No Left Turns In Quest to Deliver Sustainability; Q&A

By Siobhan Wagner

United Parcel Service Inc. said investing in 2,500-plus greener vehicles and smarter logistics helped its drivers cut fuel and carbon emissions, as they delivered around 15.8 million packages each business day last year.

The world’s biggest package-delivery company said it supports the development of jet-engine biofuels while it aims to reduce emissions from its airline by 20 percent by 2020, compared with 2005 levels.

Scott Wicker, chief sustainability officer for UPS, said aviation biofuel is currently about seven times the cost of regular jet fuel, and the company will not “begin using it in a big way” until it reaches a better price point and scalability. “You can’t make sustainability moves that drive your company to be non-profitable,” he said. “Sustainability is about balancing your environmental impacts, your social impacts, while keeping your company economically prosperous.”

Wicker spoke with Clean Energy & Carbon Brief.

Q: How have you tried to cut carbon from transportation?

A: We’re always trying to reduce the miles that we travel. The fewer miles, obviously the less fuel. The less fuel, the less carbon. Last year, from our telematics, we calculated that the technologies that we deploy on our vehicles and in our facilities enabled us to avoid driving 90 million miles last year, which is huge. That saved us approximately 9 million gallons of fuel. When you have a fleet that is as large as ours – we have over 100,000 ground vehicles – you do a little bit for each one of those vehicles and it adds up quick...You may have also heard our story that we like to avoid left turns. As you make a left turn in the U.S., you sit at a light and you have to idle a lot. You waste a lot of fuel sitting and idling. With our routing technology and [better driving], we avoided 98 million minutes of idle time last year.

Q: Do your sustainability efforts offer a competitive advantage?

A: Probably our biggest single advantage that we have over our competitors is our network is one single integrated network, so it doesn’t matter if you’re moving a piano or a box of cookies, it goes into the same network. If you put everything in one network it only stands to reason you are going to be more efficient. Our ground vehicles leave the building every day with air packages on them. Our biggest competitor here in the United States has two separate networks for that. If today I was getting an air package from that competitor here in the U.S., it would come on one truck driving down my street with the driver making a delivery. If I had a ground package being delivered the same day, that would come from a different truck. It’s hard to imagine that two trucks going down the same street can be near as efficient as one truck that’s doing it all.

Q: UPS operates more than 2,500 low-emission vehicles. These include electric vans, hybrids and vehicles that run on compressed or liquefied natural gas. Why not turn the whole fleet green?

A: The cost of an alternative fuel vehicle is often two to three times the cost of a diesel or gas counterpart, and the infrastructure is often not there. Those are challenges and make it very expensive to move into alternatives. That’s why you don’t see our whole fleet converted to any one of those technologies. It’s economically not feasible today and each one of those technologies will only work in certain environments. So we’re looking very heavily at all of them. One last that we’re looking at, which actually sounds the simplest of all and is proving to have bigger benefits than any of them, is just a lighter-weight vehicle. We just ordered 150 lightweight composite vehicles. These are delivery vehicles that for their size, they weigh about 1,000 pounds less than the traditional model. And they give you about a 40 percent increase in fuel efficiency and their cost is very competitive with the vehicles they’re replacing.

Q: How are you reducing the carbon footprint of UPS Airlines?

A: Our airline produces well over 50 percent of our carbon footprint and there’s a number of things you do with airlines to try and make them more efficient. The single biggest thing you can do is buy the newest, most efficient, largest aircraft that you can get. If you look at our fleet, 13.5 years is the average age of our fleet and long ago we began retiring our 727s. We retired our last 727 aircraft in 2008. That model was by far and away the most fuel inefficient aircraft and our competitors are now just beginning to phase out their 727s. We moved into 767s, 747-400s. The second thing is to ensure your optimizing the loading of your vehicles. You could have the most efficient plane in the world but if you only fill it half way and you got it full of air, you’re not doing any good. You’ve got to be hauling a full plane at every chance you can possibly get.

Q: The European Union has included all airplanes that fly in and out of its borders in its emissions trading program. Do you think that’ll give air carriers an extra push to cut CO2 emissions?

A: When you look at aviation, we’re dependent on technology. We fly aircraft that we don’t make. We fly aircraft that we would like to be as efficient as possible. The funny thing is, we don’t need anybody to put pressure on us to tell us to burn less fuel. It’s very costly. We would be focused on the reduction of fuel, and have been, long before anybody thought about carbon.

Q: What’s the solution to the aviation emissions problem?

A: I believe the answer is in technology. I think biofuels are very important to aviation. I think governments have to get focused on it because it can make a fairly big impact. We’re hopeful that biofuels can get to a price point and scalability that we can begin using it in a big way because we certainly would. We’re all set to use it, but you can’t make sustainability moves that drive your company to be non-profitable. Sustainability is about balancing your environmental impacts, your social impacts, while keeping your company economically prosperous.

Wagner is an analyst at Bloomberg New Energy Finance.

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-0- Sep/20/2012 11:51 GMT
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