A green role for logistics

The Muppet's Kermit the Frog concludes an advertisement for a hybrid car saying that maybe it is easy being green. He's clearly not looking at the challenges facing the logistics community. A quick look at some environmental issues demonstrates how quickly the solutions can spread, in the form of look-alike-laws or from the impact of a regional solution.

Fuel is on everyone's mind as the summer driving season gets into full swing, but for truck fleet operators, fuel was an issue even before the dramatic price rises of the last year. At the top of the clean air agenda is the 2007 diesel engine requirement that drove fleet operators to replace many of their tractors early to avoid the more expensive, less efficient engines designed to meet tighter emissions standards.

While the "pre-buy" on fleet equipment clouded many forecasts of the current and near-term state of motor carrier capacity, it's also had a financial impact for carriers because it brought forward capital spending that would have been spread over a longer period. With replacement buys running ahead of their normal mileage thresholds, a potential glut of used tractors were released onto the market. Arguably, this could delay some positive environmental effects of the new engine requirement by satisfying much of the demand for new equipment with engines employing the older emissions technology and keeping more of the old equipment on the road longer.

Shippers and carriers are getting a second hit on engine requirements from the California Air Resources Board (CARB) (www.arb.ca.gov), this time on performance standards for engines used on refrigerated/temperature-controlled trailers and containers. Identified as transport refrigeration units, or TRUs, the California measure targets diesel-fueled TRUs and generator sets operating in California.

At first that sounds like a regional solution, but it covers all such units registered inside or outside the State of California and extends to trucks, trailers, shipping containers and railcars that operate in California. It also requires facilities with 20 or more loading dock doors serving refrigerated areas "where perishable goods are loaded or unloaded for distribution on trucks, trailers, shipping containers or railcars that are under facility control."

The American Trucking Associations (ATA) (www.truckline.com) has urged the U.S. Environmental Protection Agency (EPA) (www.epa.gov) to prevent CARB from implementing the performance standards, saying, in part, the impact of the regulations would extend far beyond the state's borders. Focusing on tractor-trailer fleets, the ATA says 340,000 units nationwide would have to comply with the California regulations. This, says ATA, is 30 times the original CARB estimate and will require 75% of the total refrigerated tractortrailers outside of California to be either retrofitted, scrapped or replaced with new equipment.

The CARB request goes beyond the authority afforded California under the Federal Clean Air Act, says the ATA. It effectively creates a new national engine emissions standard. The cost to the industry could be $775 million to $1.4 billion, according to an ATA estimate. This is substantially higher than the $87 million to $156 million estimated by CARB.

In the February 2004 regulation adopted by CARB, diesel engines used to power refrigerated trucks operating in the state would have to meet the California-only standards before the end of 2008. Fleets could retrofit existing refrigerated units, replace existing engines, establish a seven-year tradein cycle or create a California-only refrigerated fleet.

ATA argues that long-haul carriers provide interstate service, and that the CARB rule would place an additional burden requiring them to meet the engine standard on their entire fleet. While the ATA position looks at tractor-trailer fleets, little has been said about the impact the California rule could have on rail equipment that would operate in the state or import ocean containers.

Another CARB initiative that took hold outside California was a ban on truck idling. The first target was trucks idling at California ports while waiting to be loaded or unloaded. The concept spread and other states have begun adopting similar rules.

The SmartWay Transport Partnership (www.epa.gov/smartway) of the EPA claims significant progress in reducing emissions and conserving fuel through a National Idle Free Corridor-initiative that reaches well beyond the gates of the major U.S. ports. SmartWay announced $5 million in grant awards to reduce truck engine idling. The grants were to help deployment of a variety of technologies for trucks and at truck stops across the country.

This, and other initiatives, could be headed north as a result of a memorandum of understanding between SmartWay and the Natural Resources Canada FleetSmart program.

SmartWay Partners and the National Idle Free Corridors program claim to be on track to reduce emissions by 3.1 million tons of carbon dioxide, 800 tons of particulate matter and 22,000 tons of nitrogen oxides per year by 2007. In addition, it claims the program will save approximately 284 million gallons of fuel per year.

Various initiatives at ports set fines for truck engine idling, but another source for avoidable emissions and fuel use is road congestion. The problem is so acute, London in the U.K. has set up an exclusion zone in the center of the city banning vehicles without a special permit to enter during peak hours. The program appears to be working, and other cities are considering similar arrangements.

Other efforts to combat congestion on European highways include a weekend ban of heavy goods vehicles in some regions during the summer tourist season, when passenger vehicle traffic peaks.

Meanwhile, Norman Mineta, secretary of the U.S. Department of Transportation (DOT) (www.dot.gov) calls congestion "a looming threat to our economic prosperity." Goods stalled at seaports, aircraft circling crowded airports, and trucks stuck in traffic cost the U.S. $200 billion each year, says Mineta. Traffic jams alone waste 2.3 billion gallons of fuel and 3.7 billion hours. Airline delays rob the economy of $9.4 billion every year, he added.

On May 23, 2006, Mineta announced the National Strategy to Reduce Congestion on America's Transportation Network. It will provide federal, state and local officials with a clear plan to expand capacity on existing roads, highways and ports, and calls for new approaches to fund and manage transportation systems in the future, the secretary explains.

"We know that many private firms are literally knocking on doors in state capitals across the country, willing to invest billions of dollars in transportation projects," says Mineta. "While many of these firms are international, we believe that transportation infrastructure will be an increasingly attractive opportunity for American investors." He points to how deregulation of trucking, rail and aviation helped drive equity investment and observes, "We can see the same power unleashed on our highway system."

The DOT has already requested $100 million for an Open Roads demonstration program for fiscal 2007. The funds could be used to support work that would be part of the new congestion-relief initiative, Mineta says, noting that he hopes to request another $100 million for the next year as well.

Paving that road may not be as easy as Mineta makes it sound. A recent report by the National Academy of Sciences (www. nationalacademies.org) entitled, "Assessing and managing the Ecological Impacts of Paved Roads," recognizes that despite having more than 4 million miles of paved roads, the U.S. is in the midst of a capacity shortage. With additional highway construction looming, the report warns of potentially significant impact on wildlife eco-systems.

Several federal statutes direct national and state highway authorities to adopt a more sensitive approach to the environment, but there are still several significant gaps, says Margaret Strand, partner with the transportation and infrastructure practice for law firm Venable LLP (www.venable.com).

Ports are no strangers to environmental concerns. Image and public perception are critical, according to John Pauling, director of ports and waterways for Weston Solutions (www.westonsolutions.com). The Port of Philadelphia (www.philaport.com) quotes Pauling as saying that as global trade and ship sizes increase, more demands are put on ports and related businesses to enhance infrastructure by expanding operations, berths and channels and to redevelop waterfront property. At the same time, regulatory requirements are focusing a lot of attention on the environmental sustainability of ports.

Continuing on that point, Florida's Canaveral Port Authority (www.portcanaveral.org) boasts a long history of protecting natural resources. Noting that environmental concerns have been part of the port's commitment since its creation in 1953, the port commission points to new higher standards and enforcement capability. These include the areas of air pollution restrictions, rules governing land clearing and vegetation removal on through to handling, storage and disposal of hazardous materials.

Environmental issues need to be the concerns of ports, ocean carriers, terminal operators, inland carriers and shippers, says Chang Kuo-Cheng, chairman of shipping line Evergreen Marine Corp. (www.evergreen-marine.com). In the past, this issue might have been dismissed as commercially insignificant, says Chang. "This is no longer the case. We must begin to develop the foundation for a sustainable container transportation industry — environmentally, socially, economically and commercially-responsible and viable."

He notes the industry must raise the awareness of the world to the importance of the industry itself and why investment is so critical. "Civilizations have grown through economic development relying on trade," Chang points out. "Ocean transportation has made this possible with more than 75% of global trade — more than $6.6 trillion of merchandise — today carried over the seas."

While ships get credit for carrying much of the world's commerce, they have also been the bearers of less-than-welcome cargoes over the centuries. A recent concern centers on wooden packaging and pallets, specifically infestations of the Asian longhorned beetle.

The U.S. and most other nations have adopted or are in the process of implementing rules for treating wooden packaging materials imported along with cargoes. The International Phytosanitary Standard for Wood Packaging ISPM15 is the specific global standard.

The U.S. began with "informed compliance," but has been moving forward with requirements and enforcement. The U.S. Department of Agriculture's Animal and Plant Health Inspection Service (APHIS) (www.aphis.usda.gov) revised its import regulation for wooden packaging material (7 Code of Federal Regulations 319) and the U.S. Customs and Border Protection (CBP) (www.cbp.gov) is pressing on with enforcement on a timetable that calls for full enforcement to begin on July 5, 2006.

The issue with ISPM15 isn't just the Asian longhorned beetle — it is neither the first nor the last such pest to be targeted — it is the rapid deployment of a global response. The list of countries signing on to the standard runs from Argentina to the Ukraine and nearly everywhere in between. And in the story of this small insect lies an example of how universal environmental concerns have become and how similar responses proliferate.

Whether it's fuel conservation, clean air, congestion, sustainable development, packaging waste or a non-indigenous pest, environmental concerns are on the rise. Which issues take priority will depend on the degree of concern or potential impact in a particular region as well as cultural and social sensitivities. In most cases, responses aren't likely to be as coordinated as the wood packaging standard, requiring some diligence on the part of global supply chain managers to learn about and comply with local, regional and national regulations.