By working with a competitor to boost transportation efficiency, Ocean Spray cut freight costs by 40 percent and greenhouse gases by 20 percent in one major lane.
Peter Bradley is an award-winning career journalist with more than three decades of experience in both newspapers and national business magazines. His credentials include seven years as the transportation and supply chain editor at Purchasing Magazine and six years as the chief editor of Logistics Management.
You could call it a classic case of serendipity. Agricultural cooperative Ocean Spray had just hit a major milestone in its supply chain sustainability program when it received an unexpected proposal that promised to take its carbon reduction efforts to the next level.
As part of a network redesign, the Massachusetts-based producer of fruit juice and food—most notably its iconic cranberry juice—had recently opened a new DC in Lakeland, Fla., to serve customers in the Southeast. By centralizing supply closer to clients, the company had already slashed millions of miles out of its distribution network, cutting both freight costs and carbon emissions.
But soon after the Lakeland facility opened in 2011, Ocean Spray was approached by Wheels Clipper, an Illinois-based third-party logistics service provider (3PL) that specializes in intermodal, truckload, and refrigerated shipping. The 3PL had an intriguing business proposition for the cooperative. One of its clients, Tropicana, which is also one of Ocean Spray's competitors in the fruit juice business, was already shipping fresh fruit by boxcar on CSX Transportation trains from Florida to New Jersey—and sending empty boxcars back to Florida. Since much of Ocean Spray's Lakeland-bound freight originated in Bordentown, N.J., Wheels Clipper suggested that Ocean Spray could take advantage of that backhaul capacity. That would mean a substantial savings in both transportation costs and carbon emissions.
Both are significant goals for Ocean Spray. "For us, sustainability is an enterprisewide focus," says Kristine Young, who leads the cooperative's sustainability efforts. She works with growers and suppliers on a variety of sustainability efforts that encompass energy and water use, packaging, and transportation, among others.
Young believes that Ocean Spray's commitment to sustainability may be what attracted the attention of the third party. Ocean Spray has been a partner in the Environmental Protection Agency's (EPA) SmartWay program for several years, as are 95 percent of the company's carriers. Participants in the program commit to benchmarking their shipping operations and taking steps to reduce fuel use and emissions. "Our SmartWay participation was a clear indication we are interested in sustainability," she says.
COST AND EMISSIONS REDUCTIONS
Ocean Spray decided Wheels Clipper's proposal was worth pursuing. After looking into the matter further, it determined it could indeed take advantage of the backhaul opportunity—though it would require a few minor adjustments in its shipping patterns.
"One thing we had to look at was our load planning," Young recalls. Each truckload shipment held 19 pallets of goods, but boxcars handle 38. "We had to take that into consideration in our order fulfillment planning," she says. "We had to do a little bit of work on the pallet size and the configuration of the pallets."
Delivery schedules also required some adjustment. Shipping goods by truck takes three days, while the journey by rail takes four to five days. That meant asking the Florida DC to carry more inventory than it might otherwise have done.
The payoff, however, promised to be enormous. The arrangement that was eventually put in place resulted in Ocean Spray's shifting 80 percent of the New Jersey-to-Florida shipments to rail over a 12-month period, yielding reductions in both shipping costs and emissions.
The emissions cuts attracted the attention of the Environmental Defense Fund (EDF), which was putting together a series of case studies on companies that have cut freight costs and carbon emissions through improved logistics practices. EDF, in turn, approached the Massachusetts Institute of Technology's (MIT) Center for Transportation and Logistics (CTL) and asked it to conduct a study of the Ocean Spray program under EDF's sponsorship. In January, the CTL released its study on Ocean Spray and the results it achieved.
The emissions reductions in the lane were also impressive. According to the MIT analysis, the shift resulted in a savings of 1,300 metric tons of carbon dioxide—or CO2—a 68-percent reduction in the lane, meaning an overall emissions reduction in Ocean Spray's distribution network of 20 percent. The MIT study says that was the equivalent of cutting fuel use by 100,000 gallons.
SUCCESS FACTORS
In addition to quantifying the savings, the CTL report looked at the factors that made the program successful. In Ocean Spray's case, the company had a number of things working in its favor, says Dr. Edgar A. Blanco, research director for the CTL and leader of the study.
First, Ocean Spray owned the facilities at each end of the lane. That was crucial, Blanco explains, because it meant the company could increase inventory at the Florida DC and not ask customers to adjust their own order patterns. "Without opening the Florida DC, they would not have had the flexibility to move that many goods by rail to Florida," he says.
Second, Ocean Spray had the right kind of freight profile. Rail shipping works well for products that move in fairly regular volumes. Although Ocean Spray had all kinds of shipments, Blanco says, much of its freight consisted of what he characterizes as "constant and continuous" shipments. "The warehouse still had to plan for some products that don't [fall into this category], and those still move by truck," he notes. "While that increased complexity, it was worth it from a cost perspective and an environmental perspective."
Third, the shift to rail proved workable because of the rail terminals' proximity to the Ocean Spray DCs at each end. The dray from the New Jersey DC to the CSX rail terminal is about 60 miles, and the dray from the Florida terminal to the Lakeland DC about 65 miles. "That's crucial for a couple of reasons," Blanco says. "One is simply the ability to coordinate shipping. But it is also crucial from a CO2 perspective." Longer drays would quickly have eroded the cost and emissions savings, he explains.
The success of the project has led Ocean Spray to begin evaluating other lanes for possible conversion to rail. "It took us a little while to work through [the program]," Young says, "but it has been a huge success. Internally, we talk about how we can [identify] other high-volume lanes where we might be able to find rail opportunities.
"This whole project shows there are real savings in both cost and carbon," she adds. "It just makes good business sense for us to collaborate."
Calculating CO2
Looking to calculate your own freight transportation carbon footprint but don't know how to go about it? We asked Edgar Blanco, research director for MIT's Center for Transportation and Logistics and author of the Ocean Spray study, what's involved.
According to Blanco, a number of factors go into the calculation of total CO2 emissions from freight transportation: the type of equipment, the weight of the equipment and the load, how it's operated, and more. That kind of information may be readily available to equipment owners, but it's a bit more complicated for shippers who hire truckers and railroads to move their freight.
Still, Blanco argues, it can be done. Over the past few years, carriers like CSX Transportation have published network-level data showing the amount of CO2 emitted. Blanco says those numbers are broken down by distance and weight. As a result, researchers can derive a "rail emission factor" that he considers a fairly good estimate for shippers to use in their own calculations.
Trucking gets more complex because of the sheer number of motor carriers and their wide diversity. But Blanco contends that it's also possible to get a broad measure to compare modes. He cautions, however, that there is not enough precise data to differentiate among carriers in the same mode.
Here's a brief look a the calculations that Blanco used in his research for the Ocean Spray case study:
The road emission factor represents the CO2 generated by moving one U.S. ton of cargo (2,000 pounds) one mile using road transportation. For the study, MIT used 149.7 grams of CO2 per ton-mile, a number that the study says corresponds to the average emissions of all fleets included in the EPA's SmartWay Shipper Tools.
The rail calculation was a bit more complex, as it had to include the origin and destination drayage as well as the rail shipping. The formula:
MIT used 25.2 grams of CO2 per ton-mile as the rail emission factor, a number developed by the Greenhouse Gas Protocol, an internationally used accounting tool for quantifying greenhouse gas emissions. For the drayage, it used the same factor as for the truckload shipments.
The result of the calculations, based on Ocean Spray's annual shipping of 11,550 U.S. tons: Carbon emissions would be 1,900 metric tons for truckload shipments and 565 metric tons for intermodal shipments. (A metric ton is equal to 1,000 kilograms or 2,205 pounds.)
But it could also be argued that the Ocean Spray shipments to Florida were zero net emissions, the MIT study notes. Why? CSX was already moving goods by train from New Jersey to Florida, and those emissions were already being created. The additional weight added by Ocean Spray products was negligible and therefore, contributed little to nothing to the existing carbon emissions.
The number of container ships waiting outside U.S. East and Gulf Coast ports has swelled from just three vessels on Sunday to 54 on Thursday as a dockworker strike has swiftly halted bustling container traffic at some of the nation’s business facilities, according to analysis by Everstream Analytics.
As of Thursday morning, the two ports with the biggest traffic jams are Savannah (15 ships) and New York (14), followed by single-digit numbers at Mobile, Charleston, Houston, Philadelphia, Norfolk, Baltimore, and Miami, Everstream said.
The impact of that clogged flow of goods will depend on how long the strike lasts, analysts with Moody’s said. The firm’s Moody’s Analytics division estimates the strike will cause a daily hit to the U.S. economy of at least $500 million in the coming days. But that impact will jump to $2 billion per day if the strike persists for several weeks.
The immediate cost of the strike can be seen in rising surcharges and rerouting delays, which can be absorbed by most enterprise-scale companies but hit small and medium-sized businesses particularly hard, a report from Container xChange says.
“The timing of this strike is especially challenging as we are in our traditional peak season. While many pulled forward shipments earlier this year to mitigate risks, stockpiled inventories will only cushion businesses for so long. If the strike continues for an extended period, we could see significant strain on container availability and shipping schedules,” Christian Roeloffs, cofounder and CEO of Container xChange, said in a release.
“For small and medium-sized container traders, this could result in skyrocketing logistics costs and delays, making it harder to secure containers. The longer the disruption lasts, the more difficult it will be for these businesses to keep pace with market demands,” Roeloffs said.
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.
As the hours tick down toward a “seemingly imminent” strike by East Coast and Gulf Coast dockworkers, experts are warning that the impacts of that move would mushroom well-beyond the actual strike locations, causing prevalent shipping delays, container ship congestion, port congestion on West coast ports, and stranded freight.
However, a strike now seems “nearly unavoidable,” as no bargaining sessions are scheduled prior to the September 30 contract expiration between the International Longshoremen’s Association (ILA) and the U.S. Maritime Alliance (USMX) in their negotiations over wages and automation, according to the transportation law firm Scopelitis, Garvin, Light, Hanson & Feary.
The facilities affected would include some 45,000 port workers at 36 locations, including high-volume U.S. ports from Boston, New York / New Jersey, and Norfolk, to Savannah and Charleston, and down to New Orleans and Houston. With such widespread geography, a strike would likely lead to congestion from diverted traffic, as well as knock-on effects include the potential risk of increased freight rates and costly charges such as demurrage, detention, per diem, and dwell time fees on containers that may be slowed due to the congestion, according to an analysis by another transportation and logistics sector law firm, Benesch.
The weight of those combined blows means that many companies are already planning ways to minimize damage and recover quickly from the event. According to Scopelitis’ advice, mitigation measures could include: preparing for congestion on West coast ports, taking advantage of intermodal ground transportation where possible, looking for alternatives including air transport when necessary for urgent delivery, delaying shipping from East and Gulf coast ports until after the strike, and budgeting for increased freight and container fees.
Additional advice on softening the blow of a potential coastwide strike came from John Donigian, senior director of supply chain strategy at Moody’s. In a statement, he named six supply chain strategies for companies to consider: expedite certain shipments, reallocate existing inventory strategically, lock in alternative capacity with trucking and rail providers , communicate transparently with stakeholders to set realistic expectations for delivery timelines, shift sourcing to regional suppliers if possible, and utilize drop shipping to maintain sales.