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April 22, 2008Promoting Green Supply Chains1 Promoting Green Supply Chains in North America Progress and Perspective Arnold Maltz, Ph.D. April 22, 2008.

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Presentation on theme: "April 22, 2008Promoting Green Supply Chains1 Promoting Green Supply Chains in North America Progress and Perspective Arnold Maltz, Ph.D. April 22, 2008."— Presentation transcript:

1 April 22, 2008Promoting Green Supply Chains1 Promoting Green Supply Chains in North America Progress and Perspective Arnold Maltz, Ph.D. April 22, 2008

2 Promoting Green Supply Chains2 The Two Sides of the Issue Resource Use –Enforced by price –The “Easy” Sell –Subject to the customer test Environmental Impact –An “externality” from the firm’s perspective –Enforced by regulation –Trade-offs

3 April 22, 2008Promoting Green Supply Chains3 Rail vs. Truck (1) Fuel Efficiency Fuel efficiency – measured in ton-miles per gallon Rail current state: 400 ton-miles per gallon (AAR) Truck current state: 130 ton-miles per gallon (estimate)

4 April 22, 2008Promoting Green Supply Chains4 Rail vs. Truck (2) Accessibility

5 April 22, 2008Promoting Green Supply Chains5 Rail vs. Truck (3) Service Performance On time delivery (anecdotal) Truck 92%-95% Rail83%-87% Transit time ??? Other customer issues

6 April 22, 2008Promoting Green Supply Chains6 Rail vs. Truck (4) Results Market Share – Ton-miles (w/o pipeline) 19962005 Rail42.8%47.7% Truck33.0%35.6% Market Share - $ (2006) Rail 6.7% Truck79.3%

7 April 22, 2008Promoting Green Supply Chains7 Rail vs. Truck (5) Cost Drivers Fuel costs per ton-mile Rail$.009 Truck$.031 Labor cost (wage only) Rail$.0003 (rough estimate) Truck$.0170 (rough estimate)

8 April 22, 2008Promoting Green Supply Chains8 Expectations Rail will take share of longer haul business, but gradually. –Infrastructure growth limited by access to capital and environmental acceptability –Work force issues –Availability of equipment –Customer acceptance Rail impact on the environment is not negligible.

9 April 22, 2008Promoting Green Supply Chains9 Regulatory Actions for a Green Supply Chain

10 April 22, 2008Promoting Green Supply Chains10 Highway Diesel Engine Rule made in 2000, in effect with 2007 engines. –Lower sulfur fuel content from 500 ppm to 15 ppm (97% reduction) –90% reduction in particulate matter –Significant reduction in Nox –Additional reduction in 2010 Higher costs per truck ($8,000-$12,000) and for fuel and maintenance. Lower fuel efficiency (7 mpg-6.5 mpg)

11 April 22, 2008Promoting Green Supply Chains11 Highway Diesel - Mexico As of July, 2008, new Mexican trucks to meet 2004 U. S. standards; OK unitl 2011. ULSD begins in 2008, but long term conversion.

12 April 22, 2008Promoting Green Supply Chains12 Port Cleanup (LA/LB) 80% decrease in emissions by 2012 (mix of DPM, Nox, Sox) $35/teu fee to penalize non-conforming, finance upgrades Disagreement on owner-operator vs. licensed drayage company approach Increased cost, but much higher under LA approach

13 April 22, 2008Promoting Green Supply Chains13 Non-Highway Diesel Locomotive and marine diesel to conform to 2007 standards, over time. Must use ULSD fuel, a major change Final results by 2012 and 2014

14 April 22, 2008Promoting Green Supply Chains14 Some Company Programs

15 April 22, 2008Promoting Green Supply Chains15 Wal-Mart Fuel efficiency improvement for private fleet –“No idle” and APU programs –25% initial effort (end of 2007) –100% improvement by 2015 Better network and packaging design, as well as supplier score cards Store redesign???

16 April 22, 2008Promoting Green Supply Chains16 UPS Phasing in compressed natural gas (CNG) for urban deliveries –20% less emission than optimal diesel –10% better efficiency than optimal diesel Approximately 1,000 currently deployed in U. S., and 700 overseas, with multiple alternative models

17 April 22, 2008Promoting Green Supply Chains17 DPWN Reduce carbon footprint by 30% by 2020 Upgrade aircraft Improve warehouses and sorting centers GoGreen shipping service allows customers to offset shipping related emissions (in Europe since 2006)


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