FedEx Corp. (NYSE:FDX) said Wednesday it plans to reach carbon neutrality across its global delivery network by 2040, and as part of that strategy the Memphis, Tennessee-based company will transition to a fully electrified surface transport fleet by that time.
In addition, FedEx said it will spend $100 million to establish the Center for Natural Carbon Capture at Yale University, the alma mater of Frederick W. Smith, FedEx’s founder, chairman and CEO. The center will be tasked with developing methods to extract and store existing carbon emissions from the atmosphere, an effort considered as important but more costly and complex than preventing greenhouse gas emissions from entering the atmosphere in the first place.
“The path toward sustainability requires new strategies for removing and storing Earth’s excess carbon,” FedEx said in a statement announcing the broad-based program.
According to a 2019 analysis by the Economist Intelligence Unit, a division of The Economist, even with aggressive action to reduce carbon emissions, the world will still need to remove about 10 billion tons of CO2 from the atmosphere every year by mid-century, and 20 billion tons of carbon each year by 2100 to hold global temperatures below 1.5 degrees Celsius above preindustrial levels.
FedEx acknowledged that its undertaking is ambitious because it pulls forward the company’s previous timetables for reaching carbon neutrality. It will also face the challenge of reducing its carbon footprint at a time when a surge in e-commerce deliveries is putting more vehicles on the road than ever before.
“The entire shipping and logistics industry needs to step up and look at ways to take responsibility for our growing impact, and FedEx’s pledge is a step in the right direction,” said Dennis Oates, a former FedEx executive and chief logistics officer of e-commerce delivery firm Sendle. “As e-commerce shows no signs of slowing down, even after (COVID-19) lockdown restrictions end globally, it’s a commitment to change that can’t come fast enough.”
One major challenge for the company will be to hit carbon neutrality for its global air fleet, which today consists of 680 aircraft. Unlike a ground-delivery network that could be fully electrified by a certain date, “there is no magic bullet” to meet net-zero neutrality for its aircraft, Brie Carere, FedEx’s senior vice president and chief marketing and communications officer, said during a press conference.
Since 2012, FedEx’s Fuel Sense program, designed to cut jet fuel consumption, has saved 1.43 billion gallons of jet fuel and avoided over 13.5 million tons of carbon emissions, according to company data.
FedEx said it will initially spend $2 billion on the broad initiative. It did not comment on expectations of the program’s total cost. Nor would the company comment on what plans, if any, it has to subsidize the transition to electrification for its FedEx Ground unit, which is operated exclusively by a network of independent contractors.
The Ground unit, which also includes FedEx Home Delivery’s operations, will likely become the most important part of the company in the years ahead as e-commerce fulfillment comes to dominate delivery patterns.
In Wednesday’s announcement, FedEx laid out a broad timeline for electrifying its pickup and delivery fleet that supports its FedEx Express air and international unit. The announcement did not address timelines for FedEx Ground and its FedEx Freight LTL operations. The company also said it would work toward reaching carbon neutrality for its more than 5,000 facilities across its network.
FedEx Express recently conducted a test of electric pallets developed by General Motors Corp. (NYSE:GM). The unit will receive the first 500 of GM’s electric vans later this year.
Carere said that FedEx has long supported the concept of a marketplace for carbon pricing as a mechanism to efficiently reduce greenhouse gas emissions.