Fuel savings help support retailer’s everyday low prices.
By Eric Kulisch
Walmart is well on its way toward its goal of doubling the efficiency of its truck fleet by 2015, but reaching that milestone involves more than boosting the miles per gallon of its vehicles.
It takes a network-centric approach, says Elizabeth Fretheim, the company’s director of sustainability-logistics.
Since 2005, Walmart has broadened and accelerated its commitment to sustainable sourcing and reducing energy use and waste. As the world’s largest retailer — $415 billion in combined global sales — Walmart is closely watched by the rest of industry, the public and the government. It has used its size to convince suppliers to use less packaging and produce safer, healthier and more energy-efficient products. By taking such a public position on driving green business practices it has spurred the broader market to accept sustainability as a legitimate corporate goal.
Walmart has the largest private truck fleet in North America with 6,500 tractors and 55,000 trailers. Together with its outsourced transportation providers, it logs about 700 million miles per year.
On the transportation side, the discount retailer set an interim goal of improving fleet efficiency 25 percent by October 2008. It exceeded the target with a 38 percent efficiency gain and in 2010 achieved a 65 percent improvement in U.S. fleet efficiency over its 2005 baseline. Since 2005, the Bentonville, Ark.-based retail giant has saved more than $500 million in transportation costs, and avoided 300 million miles and 680,000 tons of carbon dioxide emissions due to sustainability initiatives.
And Walmart Japan beat its goal of improving fleet efficiency 25 percent by 2012, achieving a 33.5 percent gain in 2010 by introducing mixed delivery across different merchandise categories and optimizing store delivery schedules, according to the company’s annual environmental and social responsibility report.
Walmart’s measures fleet efficiency in terms of cases shipped per gallon of fuel burned. Achieving efficiency gains, therefore, encompass the retailer’s entire logistics chain and finding ways to move the most freight on the fewest miles.
“A lot of people thought we were just going to double the fuel economy of our trucks, but it’s a much broader exercise than that,” Fretheim said last November at a summit on clean freight transportation organized by the Environmental Protection Agency.
Walmart is a member of the EPA’s SmartWay program, a public-private partnership that helps carriers benchmark, track and reduce their carbon emissions, and improve fuel efficiency, while encouraging shippers to select SmartWay carriers for their transportation needs.
Better asset utilization and route planning have helped cut waste and air pollution, Fretheim said.
The company tries to put as much freight on its trailers as possible using improved loading techniques and getting suppliers to cut back on the amount of packaging surrounding their products. By turning pallets 90 degrees instead of loading them straight the retailer can get 30 skids on a 53-foot trailer compared to 26 a few years ago.
Walmart officials worked with The Wine Group, the supplier of its Oak Leaf private label, to design a new wine bottle without the punt — or indentation — on the bottom. The flat-bottom bottles weigh 25 percent less than standard wine bottles. The Wine Group is also using more recycled paper for the wine labels and redesigned the shipping case to use less corrugated paper. The new bottles began full production last April and sold for $2.77 a bottle, according to Jason Fremstad, Walmart’s senior buyer of wine, writing on the company’s sustainability blog, The Green Room
In 2008, Walmart started dry-packing most imported flowers in Miami and having club stores cut the stems on site rather than shipping cut flowers in buckets of water, Deb Zoellick, cut flower buyer for Sam’s Club, said on the blog last month. Walmart halved the number of truckloads — from 849 to 419 — per year, saving $12 million on transportation by not hauling the extra weight of the water and packing more flowers on a truck.
But roses are more finicky and could not be processed the same way because they require extremely sharp blades only available to professional flower distributors. Last year, the retailer found a professional flower cutter in New Jersey that made a smaller version of the cutting machines used in Miami that could be deployed in the clubs, allowing Walmart to dry-pack the roses for shipping, Zoellick said.
The machine cuts the roses and sanitizes the sharp blade at the same time, an important step because roses can’t withstand bacteria.
The new machines were tested in 38 clubs served out of a distribution center in Oklahoma.
The company plans to deploy the new machines in 475 more clubs during the next two years, taking the annual truckload-count down to 224.
The apparel packaging team did its part by taking control of the production for replenishment boxes, cartons used to ship loose footwear not sold in traditional shoeboxes. Thirty million boxes flow through Walmart’s U.S. supply chain every year. Walmart standardized the various types and sizes of boxes from suppliers. The redesigned box uses 43 percent less paper, saving 28 percent in costs, Tim Wilson, director of packaging, said in a blog post.
In the first 10 months of 2011, about 14.4 million boxes were produced, saving 692 tons of paper, more than 2,500 trees, 400,000 pounds of solid waste, 2.4 million gallons of water and 14,500 BTUs of energy, he said.
Carriers like Wal-mart use transportation management systems to help identify the optimal route for their trucks, but the best route isn’t always the shortest one, Fretheim said. Taking a longer highway route instead of going through an urban area or business district is often more economical in terms of time and fuel burned.
Walmart loses almost 3 miles per gallon in stop-and-go traffic, she said, almost halving a truck’s normal fuel efficiency.
Onboard communications also help trucking companies track their assets and make sure drivers stay on assigned routes.
Other routing efficiencies come from arranging loaded backhauls and readjusting the service area of distribution centers to reduce trips. Reducing empty miles often involves picking up product from a nearby vendor after a store delivery and carrying it back to the distribution center. Walmart also markets its fleet to third parties to gain revenue rather than returning with an empty truck, a practice that has become more common among private fleets in recent years.
Minute Maid previously shipped its Simply Orange Juice product from a factory in Florida to its own warehouses in Texas, Michigan, Florida or California before shipping it out to Walmart distribution centers. Walmart took more control of the process and many of those shipments are now directly sent from the Minute Maid production plant to Walmart DCs. The retailer estimates the change saves 1 million miles, 144,014 gallons of diesel fuel and 1,465 metric tons of CO2 emissions per year, according to a corporate fact sheet.
In 2010, Walmart made a commitment to double the amount of locally grown produce sold in its U.S. stores. By buying food locally the company has taken transportation miles out of the system, reducing its costs and increasing farmer pay, officials say.
During the past two years, the merchant has replaced almost two thirds of its fleet with more efficient tractors and outfitted 3,000 trailers with aerodynamic side skirts.
To maximize fuel efficiency of its equipment, Walmart calibrates engines to the optimal range, trains drivers on good driving habits, utilizes devices that cap the truck’s top speed, makes sure vehicles are properly maintained, installs aerodynamic skirts and deflectors, uses synthetic oil and fills tires with nitrogen — tactics that are followed by many carriers.
Using alternative fuels is one way to meet the corporate aspiration of producing zero waste, but the retailer makes sure it actually has a net benefit for the environment before being adopted. The company’s criteria for alternative fuels include the impact on a vehicle’s longevity, maintenance, and emissions reduction, as well as a prohibition on the use of food-based alternatives such as ethanol.
Walmart, for example, tried using cooking grease from stores in Arizona and converting it into fuel for its trucks, but experienced some equipment degradation, Fretheim said.
Test failures don’t mean the company sours on alternative fuels, she explained in a follow-up interview.
“We’re working with some first generation equipment, so with a lot of these tests that we run the objective isn’t necessarily a pass or fail, but to learn from them and then improve the equipment and move to a second test if possible,” she said. “We don’t go into these expecting to change the world. We really go into them with an open mind to learn and improve.”
The company has also tested liquefied natural gas tractors and three different types of electric-diesel hybrids — two hybrid-assist vehicles and one full propulsion — as well as an advanced turbine engine that could be 20 percent more efficient and weigh half as much as a normal engine, while producing near zero emissions with no after-treatment system required. The new technology, however, would require a redesign of the traditional tractor, she said.
A hybrid assist truck has an electric motor that boosts the diesel engine in high load applications, such as acceleration or climbing hills. The system generates and stores electricity by capturing the energy released from braking. The electric motor in a full propulsion truck can propel the truck on its own.
The Freightliner full-propulsion hybrid tried by Walmart is the only known Class 8 tractor of its kind, but it has a 2,000-pound lithium-ion battery that only produces 20 minutes of power.
Walmart recently took possession of a compressed natural gas tractor and hopes it produces better results than the LNG trucks tested the past three years, Fretheim said.
The retail giant will test newer versions of LNG technology and reexamine how it operated the LNG trucks to determine if it can unlock their potential as it further explores how to incorporate natural gas into its fleet, she said.
Even if alternative fuel trucks prove effective in commercial operations they will be limited in their use until fueling station infrastructure is developed across the nation, trucking industry officials say.
Focusing on basic principles of lean operations often produces the best efficiency results, Fretheim told the audience of freight industry representatives and government officials in Washington.
“We need to make sure that we’re using the equipment we have most effectively. You can have the most advanced truck out there, but if they’re driving it like they did in 1979 you’re not going to see any of those efficiencies,” the Walmart executive said.
Each week, Walmart presents drivers with metrics about their driving habits, such as speed, braking, idling and other measurements captured by onboard computers so they can see how their habits affect fuel economy, she said.
The company also calibrates engines to the specifications dictated by terrain because trucks operating in the plains of Texas don’t need the power as trucks hauling goods through the mountains of Colorado.
The sustainability initiatives in transportation enabled the retailer to deliver 57 million more cases driving 35 million less miles in 2010 versus the prior year, saving the company $81 million.
Walmart and other national carriers have felt the effects of the California Air Resources Board (CARB) requirement, effective January 2010, that new, 53-foot trailers comply with SmartWay guidelines and use low rolling resistance tires to reduce carbon dioxide emissions that heat up the atmosphere.
SmartWay recommends various types of aerodynamic technologies, typically side skirts for trailers, without specifying any particular devices. A SmartWay-designated trailer is one that a company can verify shows an improvement in mileage through before-and-after road testing using the same tractor.
Beginning January 2012, CARB required trucking companies to retrofit pre-2010 trailers with an aerodynamic kit. Large motor carriers, defined as those with more than 20 trailers, have a phase-in option that allows them to retrofit 20 percent of their fleet each year over five years.
The rule applies to any truck that touches California, not just ones domiciled in the state. California’s size and economic importance effectively means that many carriers are treating the rule as a national requirement because it is too cumbersome to operate dual fleets that would need to be swapped out at the state line.
“We’ve had to switch over for the entire region, not just that state. So it is a significant cost with unproven benefits,” Fretheim said.
The retailer will use the regulation as an opportunity to evaluate the skirts in different operating environments to help determine how much further to retrofit the rest of its fleet with the aerodynamic devices, she added later.
“None of these technologies is a silver bullet. What works for one company may not work for others, and the benefits can change” depending on the operating conditions, she told American Shipper
(CARB also set requirements for new tractors to have fairings or other aerodynamic devices approved by SmartWay.)
The California Trucking Association complains that CARB took a voluntary program designed to share best practices for fuel efficiency and made it mandatory, without a strong economic justification.
According to the EPA, aerodynamic kits achieve their maximum benefit for trucks traveling above 62 mph. CARB assumed that trucks operate 84 percent of the time in excess of 62 mph when the speed limit in California is 55 mph and many trucking companies have automatic speed regulators on their vehicles, Michael Shaw, the organization’s vice president for external affairs, said in a phone interview.
Surveys of California Trucking Association members show they achieve 55 mph about 42 percent of the time because of congestion and speed limits.
“We’ve yet to see from CARB any scientific evidence of the value of adding side skirts to trailers,” Shaw said.
There are long-haul truck applications in which side skirts, trailer tails, under tray systems and other drag-reduction devices pay dividends, but mandating that all trucks invest $1,000 to $2,000 per trailer for the systems doesn’t make sense, he added.
“If there were such a savings, wouldn’t companies already be doing this?” he said.