1. The Role of Industry for Smart Freight in Latin America: Opportunities and Challenges Edgar E Blanco MIT Center for Transportation & Logistics eblanco@mit.edu Organized by Smart Freight Center, Sept 9 2014 - São Paulo, Brasil E. Blanco eblanco@mit.edu Do not copy or quote without author authorization

2. freight transportation CO 2 drivers E. Blanco eblanco@mit.edu 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)

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

4. E. Blanco eblanco@mit.edu 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

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

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

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

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

9. 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 eblanco@mit.edu Do not copy or quote without author authorization

10. 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 eblanco@mit.edu Do not copy or quote without author authorization Source: Velásquex, Fransoo, Blanco - 2014

11. route profiles & trucks have very different fuel consumption patterns E. Blanco eblanco@mit.edu Do not copy or quote without author authorization Source: Velásquex, Fransoo, Blanco - 2014 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

12. CO 2 savings by matching vehicle profiles to urban conditions, no capital investment E. Blanco eblanco@mit.edu Do not copy or quote without author authorization Savings of 40 tons of CO 2. Source: Velásquex, Fransoo, Blanco - 2014

13. de-carbonization of freight transportation E. Blanco eblanco@mit.edu 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

14. 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

15. Thanks! Edgar E Blanco MIT Center for Transportation & Logistics eblanco@mit.edu Organized by Smart Freight Center, Sept 9 2014 - São Paulo, Brasil E. Blanco eblanco@mit.edu Do not copy or quote without author authorization