Observations and Strategies for South Africa Green Freight Observations and Strategies for South Africa RFA Annual Convention Buddy Polovick, USEPA May 24, 2016

Today’s Discussion Common Challenges: USA and SA, Public Sector & Private Sector Transportation and Freight Sectors in US & SA Impacts and Drivers, Marketplace Changes, Challenges Green Freight Programs Global Movement The SmartWay to advance freight efficiency Supply chain performance benchmarking SA Green Freight Program Foundation SMART Truck Industry leaders on Green Freight Where to go from here

Common Challenge: Freight Environmental Impacts Transportation: Over 25% total GHG emissions in US 13% of total GHG emissions in SA Transport is 2nd to power Within Transport Sector Road accounts for: 84% of GHGs in US 86% of GHGs in SA Road Petrol emissions about 64% of transport GHGs Road Diesel emissions about 30% of transport GHGs 3 2014 Data - Inventory of U.S. Greenhouse Gas Emissions and Sinks (EPA 2016)

Common Challenge: Climate Awareness The February 2016 average temperature across land and ocean surfaces was 2.18°F above the 20th century average. This was not only the highest for any February (since record keeping began in 1880) (surpassing previous record set in Feb 2015), but surpassed all-time monthly record set two months earlier in December 2015. February 2016 also marked 10th consecutive month a monthly global temperature record has been broken. Source: National Oceanic and Atmosphere Administration

Common Challenge: Freight Public Health Impacts Diesel Particulates: PM10 and PM2.5 Permeate lungs, bloodstream Aggravates asthma, lung function, heart conditions Likely carcinogen SA estimates R12 billion in emissions cost externalities https://www3.epa.gov/airquality/particlepollution/basic.html

Common Challenge: Freight Public Health Impacts Dallas Region Diesel NOx: Forms ground level ozone Ozone: significant effects on elderly, asthmatics, children (Heavy Duty Trucks 48%) http://www.nctcog.org/trans/air/ozone/sources.asp

Common Challenge: Economic Impacts of Freight Freight transportation is cornerstone of our economies Trucking & rail deliver goods that drive our economic growth Domestic freight and exports and imports Our freight systems move: 20 billion tons of freight yearly (US) (truck is 14 billion tons) 1.7 billion metric tons (SA) (road is 1.5 billion mt) $4 trillion exports/imports (US) $212 billion exports/imports (SA) Transportation logistics costs $1.4 trillion in US (8.6% of GDP) R423 billion in SA (12.8% of GDP) growing with increased fuel costs US DOT Freight Facts and Figures Annual Report, 2015 10th State of Logistics Survey for SA, CSIR 2013 WTO trade statistics 2013

Common Challenges: Heavy Duty Truck Freight Tonnage Total: 20 billion tons (domestic and trade) US DOT Freight Facts and Figures 2015

Common Challenges: Heavy Duty Truck Freight Tonnage SA Weight of Freight by Mode 2013

Common Challenges and Opportunities Public awareness Private sector under pressure from customers, stakeholders to report carbon footprint and reduce emissions Policy makers pressing for efficiency gains SA Green Transport Strategy Rising and volatile energy prices US fuel and driver wages (about equal) are largest cost centers for truck carriers: 64% of operating costs SA fuel and driver wages (fuel almost 3 x driver wages) are largest cost centers for truck carriers: 56% of operating costs Fuel price volatility especially challenging in South Africa which has seen a 339% increase in last decade Globalization of supply chains Opportunities to impact and compete in global marketplace Fuel price volatility is significant in SA NMI (Natural Marketing Institute) ATRI: An Analysis of the Operational Costs of Trucking: A 2014 Update Car.co.za

Global Freight Growth ITF Transport Outlook 2015

Solution: Green Freight Program Green freight programs: promote and enable application of energy-saving and emission reducing strategies technologies and practices, including: Performance benchmarking and tracking Carbon accounting, disclosure and reporting Technology verification Capacity building, education and training Recognition, branding and incentives Successful Green Freight programs: leverage market mechanisms and create business case for investing in efficiency efforts, including: Key shippers, carriers, logistics and other stakeholders Multi-modal supply chain applications Public-private collaboration

Green Freight: Global Movement

How to Address Supply Chain Carbon Measure Supply Chain Footprint Benchmark Performance Report Results Innovate Operations Improve Efficiency

SmartWay Snapshot Since 2004, SmartWay has grown to about 3,000 partners in U.S. with broad freight industry support in U.S. and Canada Top 100 U.S. truck carriers and all Class 1 rail lines Fortune 500 shippers from key economic sectors Major logistics firms Since 2004, SmartWay Partners saved: 72.8 million metric tons of CO2 1,458,000 tons NOx and 72,000 tons PM 170.3 million barrels of oil and 7.2 billion gallons of fuel $24.9 billion dollars in fuel costs Equivalent to eliminating annual energy use in over 6 million homes

SmartWay Success Factors SmartWay provides balanced approach Simplicity – standard benchmarking tools and methods Accuracy – performance based assessment of CO2, NOx, PM Flexibility – multiple metrics, multimodal, multi-fleet, multi-categories Transparency – manageable granularity, protects sensitive info EPA lends credibility and neutrality Facilitates exchange of performance data to inform marketplace Data QA/QC program ensures rigor SmartWay triggers market mechanisms Based on business case for freight sustainability Partner incentives, e.g., shipper demand for cleaner/greener carriers SmartWay provides supplemental value for Partners Technology verification Operational best practices Goal: Ensure data submitted by SmartWay partners are accurate and secure Credibility and integrity of program rests on integrity and quality of the tools, data and data processes Data quality enhances results, brand credibility Rigorous data protection part of Partner Account Management process Partner data stored in secure database Partner data never disclosed (unless permitted) Carrier ratings/factors based on bins (not actual) Partner data aggregated for total program results

The SmartWay Benchmarking System Carrier Data Collection Tools Truck, Logistics, Barge, Rail, Multimodal Suite Air Tool launch 2016 SmartWay “Process” Data collection & processing, benchmarking Quantifies emissions SmartWay Database Stores, manages data Allows industry benchmarking Shipper Tool Calculates carrier emission footprints for Shippers SmartWay Website Tools, guides, resources, webinars

Carrier Data Collected Short Haul vs. Long Haul Fuel types and gallons consumed Particulate Matter Reduction (pre-2006) “Cube Out” Percentage Model year and truck class Miles (revenue and empty) Average Payload (Tons) – Cargo Weight Only Average Capacity Volume (Cubic Feet) Percent Capacity Utilization (Excluding Empty Miles) Road Type / Speed Categories Average Annual Idle Hours per Truck

SmartWay Carrier Rating and Ranking 15 Carrier Categories - TL, LTL, Refrigerated, Tanker, etc. 6 Emission Factors - 2 metrics x 3 pollutants Quintile Rankings (ex: Truckload CO2 g/mile) 1480 g/mile Top 20% TL Dry Vans 600-1500 g/mile 1560 g/mile Second 20% TL Dry Vans 1500-1600 g/mile 1640 g/mile Middle 20% TL Dry Vans 1600-1700 g/mile 1720 g/mile Fourth 20% TL Dry Vans 1700-1800 g/mile 1800 g/mile Bottom 20% TL Dry Vans 1800-3600 g/mile 19 19

Shipper Data Collected North American Industry Classification System (NAICS) code(s) Accounting of all SmartWay carriers utilized All truck, rail, multimodal and logistics providers Activity data for amount of freight, distance shipped Total miles contracted and/or ton-miles contracted by SmartWay carrier and non-SmartWay carrier category Freight characterization (avg density, avg payload) Mileage and ton-mileage data recommended Flexibility for other data types Optional data on operational, mode shift strategies

SmartWay for Carbon Reporting Step 1- Complete the Shipper Tool Step 2 - Generate SmartWay Data Reports Step 3 - Use results in: Benchmarking and Operations Environmental Reporting Carbon Disclosure Submittals

SmartWay for Carbon Optimization Step 1- Complete Shipper Strategies analysis Step 2 - Generate SmartWay Data Reports Step 3 - Use results in: Performance tracking Progress reporting Case Studies

SmartWay Snapshot

Where can SA go from here? Develop a SmartWay Green Freight Program, start with: SA SMART Truck program Performance based standards Driver training, speed control, maintenance Data collection and reporting Average 14% fuel economy improvements Could achieve 15% - 20% with full scale adoption SA Road Freight Association, SA DOT, DEA Build partnership approaches with government and industry SA Industry leaders Carriers and logistics leaders like Barloworld Advanced aerodynamics and super-single tyres saved 10% Multinational shippers focused on Scope 3 carbon footprint Advanced aerodynamics and singlewide tires lowered Barloworld fuel consumption by 10% and accrued a saving of 13 tonnes of carbon over a six month period (measured over 2010/2011), thereby reducing costs for Barloworld Logistics and its customers. In addition to cost savings and carbon emission reductions, the truck, due to increased stability, is also safer on the roads for both driver and other road users. Frost & Sullivan 2015

Resources to help SA move forward EPA SmartWay program training curriculum 200 page program development guide and interactive workbook 100 page Teacher Trainer Guide 85 – Powerpoint slides Technology Verification training in development (ready summer 2016)

SmartDriver E-learning

Global Green Freight Action Plan Blueprint and roadmap to develop Green Freight Programs Technical Background Report Catalogues applicable technologies and strategies Summarizes global program status, features and key info Global Logistics Emissions Council Standard methodology framework Numerous other resources Build capacity Share information Coordinate efforts

Why Should SA Implement SmartWay? Standardized approach to assess supply chain efficiency and emissions in SA freight sector Applicable to any organization that ships, carries or receives goods Can be adopted by private sector, vendors, providers, suppliers Designed for the freight sector Can deliver solutions to marketplace needs and challenges May be voluntary and no-cost Proven benefits Shippers can identify greener carriers Carriers gain competitive advantage for leading shippers Policy makers drive environmental, economic & societal benefits SA can enhance competitiveness and lead the way for Africa Position the nation and the region as global leader

www.epa.gov/smartway smartway_transport@epa.gov SmartWay Helpline 734-214-4767 Buddy Polovick polovick.buddy@epa.gov +1-734-214-4767