Delivery companies excited about the possibilities of alternative fuels
There’s a lot of BS in this story. That’s because cattle dung is a key component of renewable natural gas (RNG), one of several alternative fuels that delivery companies are turning to as they revamp their supply chains. Zero emission energy sources are expected to make up 60 percent of installed capacity by 2040. Always looking to stay one step ahead, parcel companies are investing for the future by adding more alternative fuel vehicles to their fleets.
As for why delivery companies would diversify their assets to include a mix of alternative fuel sources, the simple answer is no BS at all: They want to maximize profits. Fossil fuel prices are notoriously unstable, as anyone who’s stopped at the gas station right after a price jump can attest. Especially when fuel is imported, there are so many external factors that go into determining price that one event reducing supply can throw budgets devised over months or years completely out of whack. When fuel can account for a third of transportation costs in the supply chain, that’s a big deal.
It’s also no bull that corporations want good public relations. A steadily growing percentage of consumers actively looks for products that are sustainable. The catch, says Yossi Sheffi — director of the MIT Center for Transportation and Logistics and author of the book “Balancing Green: When to Embrace Sustainability in a Business (and When Not To)” — is that only 5 to 10 percent of people are willing to pay extra for sustainable products. A switch to alternative fuels, Sheffi told Material Handling & Logistics, can lower costs and win over eco-conscious consumers.
“In many cases, devising ways to become energy-efficient involves activities that benefit the environment and simultaneously cut costs. Whether you replace light bulbs or have fuel-efficient trucks, the ROI happens quickly,” he said.
The more public opinion turns in favor of alternative fuels, the more companies will follow in the footsteps of Eagle Transport, which has partnered with Eco-Energy in its ethanol supply chain. Real-time monitoring allows ethanol buyers and shippers to keep tabs on their product at each step of transportation.
Last year, UPS committed to the purchase of 170 million gallon equivalents of RNG from Clean Energy Fuels through 2026. RNG is composed mostly of methane and comes from bovine manure, organic waste, and wastewater. It’s cleaned and conditioned to be used as a fuel. It’s the most RNG any US company has agreed to buy. That’s a lot of BS … in a good way. It’s part of a billion dollar investment in alternative fuels and advanced technologies UPS has made. By 2025, UPS wants to have 40 percent of its ground fuel come from alternative sources. To that end, the company has made use of electric vehicles, hybrid electric vehicles, compressed natural gas (CNG), liquified natural gas (LNG), and propane. A quarter of the vehicles UPS purchases this year will use alternative fuels or advanced tech.
The long-term goal of DHL Group is to be a zero emission company by 2050. To that end, it aims to cut 2007 carbon levels by 50 percent by 2025. Amazon wants to be net zero by 2040 and has ordered 100,000 electric vans from Rivian that will be phased into service between 2021-2030. Ryder has more than 1,000 natural gas powered vehicles on the road that have tallied close to 100 million miles. Turning its attention to the skies, FedEx aims to have 30 percent of its jets to use alternative fuels by 2030, and will obtain 7.5 million gallons of aviation fuel annually from Red Rock Biofuels.
As is always the case with e-commerce and supply chain, the last mile is the hardest. In addition to implementing alternative fuels, delivery companies are experimenting with options that require no emissions on their part. FedEx is giving customers the option of picking their packages up at participating Walgreens, Walmart, and FedEx stores. It is also deploying delivery bots in select cities to test the viability of autonomous delivery. The battery powered bots roll on six wheels and can hold up to 100 pounds.
UPS has rolled out a program in more than 30 world cities where packages are dropped at a central location and couriers on electric bikes deliver them to their final destinations. The e-bikes come with a customized trailer to hold packages, akin to a pedicab for cargo. The arrangement has been tested in European capitals and came to the US with a permanent program in Seattle in 2018.
“While we have launched cycle logistics projects in other cities, this is the first one designed to meet a variety of urban challenges,” said Scott Phillippi, UPS senior director of maintenance and engineering, international operations. “The modular boxes and trailer allow us to expand our delivery capabilities to meet the unique needs of our Seattle customers. It’s exciting to return to our roots – UPS started in Seattle in 1907 as a bicycle messenger company. We’re looking forward to being able to offer these customizable urban delivery solutions to other cities nationwide.”
Be it incorporating alternative fuels or dispensing with fuel altogether where they can, delivery companies are finding ways to pair environmental responsibility with the bottom line. “Our environmental goals also need to be economically sustainable, so this is one of those cases where they both come together very well,” recently retired UPS director of fleet procurement Mike Casteel told Supply Chain Dive last year. That’s no bull.