How to set up a green transport program with your carriers: interview with Deverl Maserang
Internal sustainability programs will only get you so far, says Deverl Maserang of Chiquita Brands. But bring your carriers into the effort, and you stand to make noteworthy gains.
Susan Lacefield has been working for supply chain publications since 1999. Before joining DC VELOCITY, she was an associate editor for Supply Chain Management Review and wrote for Logistics Management magazine. She holds a master's degree in English.
there's one thing that Deverl Maserang believes passionately, it's this: Distribution and supply chain management is all about relationships. If you're looking to improve performance in your distribution network, says Maserang, who is vice president of North America product supply and logistics for Chiquita Brands, you're not going to get very far on your own. For truly meaningful results, you have to work collaboratively with your carrier partners.
when the fresh fruit and vegetable company launched a fuel efficiency program in 2007, it was a given that Maserang and his team would enlist their carriers' help. At its carrier conference that year, Chiquita brought in industry experts to talk about today's eco imperatives as well as techniques for cutting an operation's carbon footprint. The company also urged its carriers to sign on with the U.S. Environmental Protection Agency's (EPA) SmartWay Transport Program, a collaborative initiative between government and the freight sector to boost energy efficiency and reduce greenhouse gas emissions. In order to become a certified partner in the program, a carrier must agree to reduce emissions by a certain percentage each year.
The results have been impressive. Under Maserang's direction, Chiquita has cut CO2 emissions by 44 percent in its North American transportation/distribution network in just three years. At the same time, it has boosted fuel efficiency by 9 percent and reduced food miles (the distance food is transported from the place where it's grown to the point of consumption) by 8.3 percent.
Maserang, who previously held supply chain management positions at the information technology firm Freedom Pay and at Pepsi Bottling Group, joined Chiquita in 2003. He recently spoke with DC Velocity associate managing editor Susan Lacefield about the techniques Chiquita used to reduce its North American supply chain's carbon footprint.
Q: What led Chiquita to start looking at ways to boost fuel efficiency and sustainability in its transportation operations?
A: For decades now, Chiquita has looked for innovative ways to continue our efforts to be a good corporate citizen, especially regarding the environment. Even prior to the change in presidential administrations and the potential for a cap-and-trade policy, we were engaged in reducing our carbon footprint.
We also saw that fuel was not going to get any cheaper. If you remember back to the '06 to '08 time period, fuel was just going through the roof. We saw $4 dollar-plus diesel, almost $5 diesel. So we knew we were going in the right direction.
We're constantly looking for ways to drive efficiencies. That's partly because if you can drive efficiency, you can drive cost out, which is good for the customer and good for the carrier. But there's the sustainability side to consider as well. And that's more important because more people—at least from a consumer customer perspective—are focusing on food miles and on buying local. We just felt we needed to get as far ahead of that as possible to remain competitive in the market.
Q: How did Chiquita go about introducing its program to carriers? A: For the last 18 years, we've held annual carrier conferences, and we decided that would be the ideal opportunity to get the word out. So at our 2007 conference, we started encouraging carriers to participate in SmartWay.
Then, we set a goal of 100 percent SmartWay miles [freight miles logged by SmartWay-certified carriers] and using 100 percent SmartWay-certified carriers in the network. We also put out a challenge that year to push the network to work toward achieving 10 miles per gallon with the new engines that were coming out in 2010 [to meet the EPA's new stricter emission standards].
During the conference, we talked about some of the things that carriers should be doing. Obviously, you need to be thinking about single-wide tires [as opposed to using two thin tires]. We'd done our own internal application of single wides on about a thousand chassis that year, and we've seen a 0.3 to 0.5 mile-per-gallon differential. So we were trying do within our own network—our private fleet and dedicated operations—some of the same things we were asking all the common carriers to do.
We also installed cowlings, which are aerodynamic devices that you put on the roof of a truck, and freight wings, which go underneath the vehicle. We looked at some APU (auxiliary power unit) technology, which eliminates the need for drivers to keep their engines idling during long stops to provide heat, light, and power.
That's what we did at first. We measured ourselves so we'd have baseline numbers. Then, we started introducing small, incremental improvements. Each year since, we've gotten a little stronger.
Probably the most impressive thing we've done is change the way we compensate carriers for fuel. A couple years back, we decided the only way we were ever going to drive the right behavior was to take a different approach to fuel surcharges. Basically, we pulled all costs related to fuel out of the base transportation rate. We then created a new fuel surcharge table for the carrier that incorporates all of the fuel costs that were previously embedded in the base rate. Doing it this way provides full transparency to all costs related to fuel. Bottom line: You cannot impact effectively what you cannot measure.
Q: Was there any grumbling from the carriers? A: Oh, sure. Some didn't understand it or didn't want to change because they had been using the fuel surcharge to their advantage. I would always tell them, "You know, guys, I'm with you when it comes to competing in other areas of the business. But when it comes to fuel, I want all of us to be competing together to reduce fuel consumption levels or to achieve the highest miles per gallon. Now's the time for all of us as an industry to look at fuel because we've got to figure out how to use as little of it as possible."
Q: What else have you done in the past year? A: We've outfitted vehicles in both our private and dedicated fleets with a simple device called an "Eco-flap." Instead of the traditional mud flap you see on tractors and trailers, the Eco-flap features an aerodynamic design that allows for optimal airflow through the flap but still protects the cars behind from rocks and such. You get a pretty interesting increase in fuel efficiency just from reducing rolling resistance and reducing drag in terms of the air that's being stopped by the truck, the tractor, the wheels, and the flaps.
We did two other major things this past year as well. First, we upgraded all of our reefer units and the gensets on our chassis. The genset is the unit that generates the electricity to power the reefer unit. That alone has saved us a tremendous amount of diesel.
Second, we installed more plug-ins for electrical reefer units. Normally, when you're hooked up to a truck, the refrigerated trailer runs off diesel. So we collaborated with a couple of our carriers on the West Coast, and we put electrical plug-ins at our dock doors. Then, we converted some of the fleet to get off of genset fuel and run those reefers on the electrical grid. So they plug into our facility when they're there, and that has had a dramatic impact as well. Taken together, these steps have yielded substantial results.
Q: What was the carriers' response to all of this? Were they willing to partner with you on these efforts? A: People ask me that question a lot. We've had an incredible response from our carrier community. I think it's because of the way we manage our carriers. We're not in this for the short run. We've always taken a long-term view. We don't expect that they are getting disproportionately wealthy, nor are we getting disproportionately advantaged.
As an example, when we got into 2009, we voluntarily elected to hold our rates intact through the balance of the year, because we knew that our carriers were having problems. Everyone else was going out to bid constantly. The carriers were seeing more bids in the market than they had ever seen. But we take a long-term view with our carriers.
That long-term view has enabled us to gain their cooperation because they're more willing to listen to us and try to make things happen. We are constantly putting ideas in front of them, and we listen to them when they have a great idea. It's a nice give and take in terms of trying to push the network to a new level.
Q: What kinds of results have you seen from your sustainability program? A: In our baseline year of 2007, 21 percent of our carriers were SmartWay-certified. We're now up to 88 percent. And in 2007, 75 percent of our miles were SmartWay miles. Now, that number is north of 95 percent.
Also, from 2007 to 2010, we reduced our CO2 emissions by 44 percent in our North America network. Plus, between 2009 and 2010, we improved our fuel efficiency by 9 percent. In addition to the fuel savings, we were able to reduce the total number of trucks. As a result, we consumed 17 percent fewer gallons of fuel in 2010 than we did in 2009. And we reduced our food miles by 8.3 percent.
Supply chain planning (SCP) leaders working on transformation efforts are focused on two major high-impact technology trends, including composite AI and supply chain data governance, according to a study from Gartner, Inc.
"SCP leaders are in the process of developing transformation roadmaps that will prioritize delivering on advanced decision intelligence and automated decision making," Eva Dawkins, Director Analyst in Gartner’s Supply Chain practice, said in a release. "Composite AI, which is the combined application of different AI techniques to improve learning efficiency, will drive the optimization and automation of many planning activities at scale, while supply chain data governance is the foundational key for digital transformation.”
Their pursuit of those roadmaps is often complicated by frequent disruptions and the rapid pace of technological innovation. But Gartner says those leaders can accelerate the realized value of technology investments by facilitating a shift from IT-led to business-led digital leadership, with SCP leaders taking ownership of multidisciplinary teams to advance business operations, channels and products.
“A sound data governance strategy supports advanced technologies, such as composite AI, while also facilitating collaboration throughout the supply chain technology ecosystem,” said Dawkins. “Without attention to data governance, SCP leaders will likely struggle to achieve their expected ROI on key technology investments.”
The British logistics robot vendor Dexory this week said it has raised $80 million in venture funding to support an expansion of its artificial intelligence (AI) powered features, grow its global team, and accelerate the deployment of its autonomous robots.
A “significant focus” continues to be on expanding across the U.S. market, where Dexory is live with customers in seven states and last month opened a U.S. headquarters in Nashville. The Series B will also enhance development and production facilities at its UK headquarters, the firm said.
The “series B” funding round was led by DTCP, with participation from Latitude Ventures, Wave-X and Bootstrap Europe, along with existing investors Atomico, Lakestar, Capnamic, and several angels from the logistics industry. With the close of the round, Dexory has now raised $120 million over the past three years.
Dexory says its product, DexoryView, provides real-time visibility across warehouses of any size through its autonomous mobile robots and AI. The rolling bots use sensor and image data and continuous data collection to perform rapid warehouse scans and create digital twins of warehouse spaces, allowing for optimized performance and future scenario simulations.
Originally announced in September, the move will allow Deutsche Bahn to “fully focus on restructuring the rail infrastructure in Germany and providing climate-friendly passenger and freight transport operations in Germany and Europe,” Werner Gatzer, Chairman of the DB Supervisory Board, said in a release.
For its purchase price, DSV gains an organization with around 72,700 employees at over 1,850 locations. The new owner says it plans to investment around one billion euros in coming years to promote additional growth in German operations. Together, DSV and Schenker will have a combined workforce of approximately 147,000 employees in more than 90 countries, earning pro forma revenue of approximately $43.3 billion (based on 2023 numbers), DSV said.
After removing that unit, Deutsche Bahn retains its core business called the “Systemverbund Bahn,” which includes passenger transport activities in Germany, rail freight activities, operational service units, and railroad infrastructure companies. The DB Group, headquartered in Berlin, employs around 340,000 people.
“We have set clear goals to structurally modernize Deutsche Bahn in the areas of infrastructure, operations and profitability and focus on the core business. The proceeds from the sale will significantly reduce DB’s debt and thus make an important contribution to the financial stability of the DB Group. At the same time, DB Schenker will gain a strong strategic owner in DSV,” Deutsche Bahn CEO Richard Lutz said in a release.
Transportation industry veteran Anne Reinke will become president & CEO of trade group the Intermodal Association of North America (IANA) at the end of the year, stepping into the position from her previous post leading third party logistics (3PL) trade group the Transportation Intermediaries Association (TIA), both organizations said today.
Meanwhile, TIA today announced that insider Christopher Burroughs would fill Reinke’s shoes as president & CEO. Burroughs has been with TIA for 13 years, most recently as its vice president of Government Affairs for the past six years, during which time he oversaw all legislative and regulatory efforts before Congress and the federal agencies.
Before her four years leading TIA, Reinke spent two years as Deputy Assistant Secretary with the U.S. Department of Transportation and 16 years with CSX Corporation.
Serious inland flooding and widespread power outages are likely to sweep across Florida and other Southeast states in coming days with the arrival of Hurricane Helene, which is now predicted to make landfall Thursday evening along Florida’s northwest coast as a major hurricane, according to the National Oceanic and Atmospheric Administration (NOAA).
While the most catastrophic landfall impact is expected in the sparsely-population Big Bend area of Florida, it’s not only sea-front cities that are at risk. Since Helene is an “unusually large storm,” its flooding, rainfall, and high winds won’t be limited only to the Gulf Coast, but are expected to travel hundreds of miles inland, the weather service said. Heavy rainfall is expected to begin in the region even before the storm comes ashore, and the wet conditions will continue to move northward into the southern Appalachians region through Friday, dumping storm total rainfall amounts of up to 18 inches. Specifically, the major flood risk includes the urban areas around Tallahassee, metro Atlanta, and western North Carolina.
In addition to its human toll, the storm could exert serious business impacts, according to the supply chain mapping and monitoring firm Resilinc. Those will be largely triggered by significant flooding, which could halt oil operations, force mandatory evacuations, restrict ports, and disrupt air traffic.
While the storm’s track is currently forecast to miss the critical ports of Miami and New Orleans, it could still hurt operations throughout the Southeast agricultural belt, which produces products like soybeans, cotton, peanuts, corn, and tobacco, according to Everstream Analytics.
That widespread footprint could also hinder supply chain and logistics flows along stretches of interstate highways I-10 and I-75 and on regional rail lines operated by Norfolk Southern and CSX. And Hurricane Helene could also likely impact business operations by unleashing power outages, deep flooding, and wind damage in northern Florida portions of Georgia, Everstream Analytics said.
Before the storm had even touched Florida soil, recovery efforts were already being launched by humanitarian aid group the American Logistics Aid Network (ALAN). In a statement on Wednesday, the group said it is urging residents in the storm's path across the Southeast to heed evacuation notices and safety advisories, and reminding members of the logistics community that their post-storm help could be needed soon. The group will continue to update its Disaster Micro-Site with Hurricane Helene resources and with requests for donated logistics assistance, most of which will start arriving within 24 to 72 hours after the storm’s initial landfall, ALAN said.