The Role of Industry for Smart Freight in Latin America: Opportunities and Challenges Edgar E Blanco MIT Center for Transportation & Logistics Organized by Smart Freight Center, Sept São Paulo, Brasil E. Blanco Do not copy or quote without author authorization

freight transportation CO 2 drivers E. Blanco Do not copy or quote without author authorization Fuel types Engine Efficienc y Engine Efficienc y Driving Practice s Congestio n Infrastructure Planning Customer Expectations Product Profile Fuel Consumption & CO2 Equipment (Carriers) Load (Shippers) Distance (Network)

the “carbon-efficiency” math 3 $$$ = D x W x Rate CO 2 = D x W x EF  Rate ≈  EF

E. Blanco Do not copy or quote without author authorization variations of GHG emissions by mode … Sources: MIT News, 2011; Fransoo, 2011; Lents et al., 2004 impact of load factors mode variations operational conditions

Case Studies LATAM Grupo Corona Urban Parcel Deliveries in Mexico City USA Ocean Spray Boise Cascade Caterpillar E. Blanco Do not copy or quote without author authorization

case study: Grupo Corona - Overview E. Blanco Do not copy or quote without author authorization Source: Grupo Corona S.A. - Informe de Sostenibilidad 2013

Grupo Corona S.A. – corporate carbon footprint E. Blanco Do not copy or quote without author authorization Source: Grupo Corona S.A. - Informe de Sostenibilidad 2013

Grupo Corona S.A.: freight carbon footprint E. Blanco Do not copy or quote without author authorization Source: Grupo Corona S.A. - Informe de Sostenibilidad 2013

Grupo Corona S.A. – smart freight strategies Active measurement of transportation emissions –Field data collection of fuel consumption –Colombian government statistical service –Partnership with LOGyCA, non-profit expert in carbon footprinting –Monthly reporting Focus first on in-house transportation –Truck utilization –Driving practices –Engine fine-tuning Focus on third-party emissions –Driver training –Vehicle age in decision-making Tied to executive compensation E. Blanco Do not copy or quote without author authorization

Parcel Delivery in Mexico City Strong corporate commitments Detailed data availability Complexity of urban operations –11 distribution centers –424 vehicles for last-mile operation E. Blanco Do not copy or quote without author authorization Source: Velásquex, Fransoo, Blanco

route profiles & trucks have very different fuel consumption patterns E. Blanco Do not copy or quote without author authorization Source: Velásquex, Fransoo, Blanco Buildings with high number of offices, high density and congestion Motorway Traffic lights in every block, a significant number of apartments and houses, and small businesses Pronounced slopes

CO 2 savings by matching vehicle profiles to urban conditions, no capital investment E. Blanco Do not copy or quote without author authorization Savings of 40 tons of CO 2. Source: Velásquex, Fransoo, Blanco

de-carbonization of freight transportation E. Blanco Do not copy or quote without author authorization Product Characteristics Value density Modal split Water Rail Road Air Network Design Mode selection Facility location Length of links Tactical Planning Vehicle Operation Vehicle type Average load Empty trips Customer Operational Efficiency Vehicle Efficiency Vehicle Fuel Congestion Driver Adapted from Mckinnon, 2008 business driven logistics driven light-weighting and Inbound Consolidation DC consolidation backhaul coordination fleet planning filled-up railcar driver training

Case Study Learnings The math works… –Cost is correlated to CO 2 Operational focus & coordination –Make each “move” counts –Modal variety –Internal collaboration –Metrics & scorecards –New partners 14

Thanks! Edgar E Blanco MIT Center for Transportation & Logistics Organized by Smart Freight Center, Sept São Paulo, Brasil E. Blanco Do not copy or quote without author authorization