æSharpÆer environmental focus
EPA thinks extending transportation program is 'SmartWay' to go.
By Chris Dupin
Walk into any appliance or electronics store to buy a refrigerator or computer and you can easily identify which products are the most energy efficient by looking for items with 'EnergyStar' logos on their boxes.
The EnergyStar program, started in 1992 by the U.S. Environmental Protection Agency and Energy Department, now covers 60 types of products with thousands of models.
Consumers may soon see another environmental and energy 'mark of excellence' adorning their products ' the EPA 'SmartWay' logo.
SmartWay is a 5-year-old voluntary program created by EPA's Office of Transportation and Air Quality that assists shippers and carriers in measuring the impact of their transportation operations on the environment, and then rewards them with the SmartWay designation if they make good progress in reducing fuel use and air pollution.
SmartWay, while pretty well known in the logistics community ' the program doubled in size last year to 1,400 companies ' it hasn't had much of a profile among the general public.
That may be changing. Last year, the EPA began an experimental program in allowing Hewlett-Packard to begin putting the logo on packaging of some consumer products it transported exclusively using SmartWay compliant carriers.
The use of the SmartWay logo on products ' the agency has also authorized its use on cleaner automobiles and trucks ' is just one of several EPA initiatives to extend and reinvigorate the program.
Another initiative, SmartWay 2.0, hopes to extend the program from a road and rail transport focus into other transport modes, and make it even more useful to shippers attempting to reduce their carbon footprint.
'With a little more funding more and more people would understand what SmartWay is all about,' said Mark S. Servidio, vice president of logistics and environmental supply chain planning at Sharp Electronics. 'The future is that this program could become as big as EnergyStar.'
|Mark S. Servidio
of logistics and
|'With a little more funding more and more people would understand what SmartWay is all about. The future is that this program could become as big as EnergyStar.'|
Servidio, who joined Sharp in 2003, is a big proponent of SmartWay, saying that in three years he has been able to get 98 percent of Sharp's cargo on SmartWay carriers.
SmartWay works with trucking companies and railroads to help identify products and practices that minimize fuel use and air emissions. For instance, it encourages the use of auxiliary power units and truck-stop electrification for heating and air conditioning so that drivers don't have to idle their trucks.
Other examples include hybrid power trains, improved aerodynamics on trucks, wide-base tires, automatic tire inflation systems, low weight trucks, reduced truck speeds, driver training, increased use of rail intermodal shipping and better route planning.
Carriers measure what kind of improvement they achieve and the EPA ranks them in a three-tiered system, giving those who achieve the biggest savings the right to call themselves SmartWay carriers.
Shippers like Sharp and HP, and logistics companies that are members of the program, then commit to use those carriers and implement good practices can earn SmartWay accreditation.
That has become easier as the program has caught on, Servidio said, adding he has never found a trucker unwilling to join when asked.
SmartWay is one tool Servidio has used to help his company's supply chain become both more efficient and more 'green.' He has reduced the number of truckers his company uses from about 80 to the mid-40s. By consolidating volume he said he has also improved service and reduced freight rates.
Sharp moves about 100,000 tons of freight by truck out of its distribution centers in Mahwah, N.J., where he is based; Romeoville, Ill.; Memphis; and Huntington Beach, Calif. He also has overflow warehouses in Carson and San Diego, Calif.
Servidio has reduced Sharp's warehouses from 21 to the four major facilities. Part of that is due to new products ' flat-screen TVs need less space than the tube TVs ' but also because of efforts to simplify Sharp's supply chain.
For example, he used to take a lot of returns to Sharp's facilities that would then be sent to a central refurbishment and repackaging facility. Now a lot of that work is done at local logistics facilities, eliminating extra truck trips. The company also requires truckers not to idle while waiting to load at its warehouses.
Servidio said that while at first blush it sounds like a good idea to have many warehouses to locate inventory close to customers, implementation gets complicated.
'You have to have such a great demand planning system to understand what products should be in which warehouse that we found we were needlessly shipping products around the country,' he explained.
One of Sharp's biggest initiatives has been to increase its use of intermodal transport, Servidio said. Almost all of its products from the Far East and LCD television manufacturing plant in Mexico move to its distribution centers by rail, and the company has been increasing use of intermodal outbound from those warehouses from about 5 percent in 2003 to about 15 percent last year.
He'd like to do more outbound intermodal shipments, but to do that he needs to work with Sharp's customers such as the big electronic retailers.
'We are trying to talk to customers about being a little more flexible on the requested delivery date,' he said. 'The problem is trying to make the customer's requested delivery dates and the reliability of intermodal is just not there yet. When you are trying to ship a truck, we figure we can go from California to Miami in four days with team drivers. When you do intermodal the published time is seven days, but we find it can be anywhere from seven to 11 days. When you have a customer who says they want something June 1, June 1 through June 4 just won't work, since deliveries are often timed with sales and promotions.'
Servidio said he is working with other SmartWay members to entice a retailer to pilot test intermodal shipments and promise not to penalize shippers if they arrive late.
'It needs an energizing from the upper management of retailers and shippers to sit down and say, 'these are pilot programs we are going to try in order to reduce greenhouse gases,' ' he said.
Sharp uses APL Logistics to help with its transportation management. Sharp forwards its orders each day to APL Logistics, which then looks at requested delivery dates and lanes.
'What they are trying to do is put two orders together so you only make one. They look at stopoffs so that if you have an order going to Kansas City and an order going to St. Louis they'll try and combine,' Servidio said.
Sharp does not co-load products with other electronic manufacturers, though Servidio said he has met with other Japanese electronics companies to examine the idea.
'The problem is, it only works if you are in one warehouse and all the orders are placed on one truck,' he said.
Servidio, who began his career working for companies like the Pepperidge Farm division of Campbell's Soup, Kraft, and Cadbury Schweppes, said this is common practice in the food industry, where companies use public warehouses with their own trucking fleets.
Sharp moves about 10,000 TEUs of product into the country from Asia, and said he would like to choose ocean carriers based in part on their environmental impact. He originally hoped to do that in 2008 or 2009, but he has put it off.
'Maybe in 2010. The difference between them is too subtle now, it is not as dramatic as it is with the trucking industry, and I have had to put it off,' he said.
He also said there are a great many other factors that go into selecting ocean carriers ' price, port rotations, sailing dates and the number of containers they can commit.
'It's also not as easy to reduce the number of carriers,' he said, though he has made progress in that direction. He has gone from 12 to 14 before 1997, to this year hoping to trim his ocean carrier roster to six.
Choice is based mostly on cost, 'but there is a little bit of me that will favor some of the environmental carriers,' steamship lines that highlight the efforts they are making to improve the environment, such as using low sulfur diesel fuel or other initiatives, he said.
Buddy Polovick and Matt Payne, team leaders of the EPA's SmartWay Transport Partnership office in Ann Arbor, Mich., explained last fall to program participants that the agency would work in 2009 to develop more sophisticated ways for carriers and shippers to measure the environmental impact of their operations, developing what the agency is calling SmartWay 2.0.
Since the program was launched five years ago, the world of goods movement has changed with shippers facing higher and more volatile prices, greater concern about energy security and 'a more profound awareness of climate change,' Polovick said.
Because shippers have supply chains that extend beyond the U.S. ports and borders, they are asking SmartWay to be extended into other transport modes so they can measure the impact of their use of air and ocean transport, and even barge or short sea shipping.
Industry 'is looking ahead to a potentially carbon constrained world where they may need to benchmark their CO2 performance and find ways to reduce it,' Polovick said.
Payne said the EPA wants the models SmartWay uses to measure carriers' environmental performance to rely less on industry averages, and look more at the actual performance of individual fleets. At the same time, the agency is looking to simplify how carriers measure performance. The agency is also trying to create a system that can be harmonized with similar initiatives in other countries around the world.
'To date the world of carbon is a little bit of a wild, wild west, where there are no strict rules or regulations,' Payne said. 'You see consultants working on carbon trading, so there is a strong desire for EPA through SmartWay to step in and provide some order and a framework so everyone can compete on a level playing field. At the same time we want to reduce the administrative burden on both the carrier and the EPA.'