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Greening the grocery fleet

Friday, October 24, 2014 > 10:04:55
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(Canadian Grocer)

Canadian Grocer and Kruger's third annual sustainability roundtable looks at how logistics can help the planet breathe easier

Big rigs have proven themselves a gold mine for songwriting inspiration, from Stompin’ Tom Conners’ “Bud the Spud,” about a P.E.I. potato hauler; to the Grateful Dead’s shuffling plea to “just keep truckin’ on.”

Trucking’s allure doesn’t seem to translate to the environment, though. Sustainability pundits prefer to chatter about local food and solar power than how to green the supply chain.

Too bad. Every product is transported in some way, mostly by truck, and all those miles add up. Last year, 9% of total greenhouse gas emissions from Canada’s largest grocer, Loblaw, were due to fleet fuel.

With traffic congestion stubbornly rising, fuel costs soaring and the emergence of e-commerce (what’s the carbon footprint of millions of Canadians having groceries delivered?), making grocery logistics sustainable is tough, but necessary.

Many grocers have taken green steps on logistics, albeit quietly.

Last year, Metro opened a warehouse in Laval, Que., that uses CO2 and ammonia in refrigeration, a better ozone-saver solution compared to traditional refrigerants such as Freon. And as of last year, Loblaw replaced 78% of its fleet with more efficient trucks. Small steps, yes, but significant.

For its part, Sobeys, in its 2013 sustainability scorecard, reported a 13.6% drop in CO2 emissions for every 100 kilometres travelled by its trucks since 2008, and a 14.5% decrease in emissions for every 100 cases shipped from its warehouses. Sobeys’ distribution centres also cut waste to landfill by 52.8%.

These are all big numbers that look great on paper. But can grocery do more? And if so, how?

That was the topic at our third annual Leaders in Sustainable Thinking roundtable, in Toronto, hosted by Kruger Products and Canadian Grocer. We brought together logistics pros from top grocers, including Walmart and Metro; and CPGs such as Nestlé.

A few of our roundtable participants were surprised we invited them. “I’m not in charge of sustainability at my company,” one told us. “Exactly!” we replied.

Then we explained our goal was to hear from people with lots of road miles, so to speak, in distribution; folks who know more about the benefits of backhauling, route optimization and side skirts, the problems of diesel fuel, traffic bylaws and, maybe, drones, than anyone else.

First up, though, a lay of the land. Canadian Grocer and Kruger Products surveyed grocery logistics decision-makers coast to coast.

Among the findings: 81% said their company has a specific logistics, transportation or procurement sustainability policy. Eighty-three per cent said they factor the environment into many of their decisions, while 64% admitted that they often struggle to do so.

Among the obstacles to go green: getting those they work with to make sustainability a priority (19%), and that companies choose the cheapest option available (39%) and are therefore often loath to invest in green (23%).

But our roundtable was quick to point out that cost can be a strong persuader for green action. Using less fuel, for instance, has the twin benefit of less pollution and saving money. In this regard, many small actions have already been taken by grocery chains and manufacturers.

For instance, route-optimization software, which tells drivers the fastest way to make deliveries, is now widely used. “It does the work for you and tells you what makes the most sense for time and fuel consumption versus the old days of Bob the truck driver and his map,” says Jeff Allen, senior director of logistics and distribution at Metro Ontario.

As well, better driver training and side skirts that reduce drag on the undercarriage and wheels of a rig, thus improving fuel efficiency, are also commonly employed.

Collaboration between CPGs and retailers is also happening more often. One idea: share space in trucks when space is available so one truck delivers to a store rather than two.

As Michael Buna, senior manager of strategic transportation management at Walmart Canada, pointed out, the retailer has worked with Kruger Products and Nestlé to consolidate shipments of Nestlé bottled water and Kruger Products’ paper items.

“We’re putting the water on the bottom and paper on top,” he said.

Another practice that calls for industry co-operation is backhauling, whereby one company’s truck, empty after making a delivery, picks up another’s goods to haul back to its destination.

Backhauling by Loblaw increased 4% last year over 2012. Metro says it aims to increase backhauling 8%.

Sharing loads and backhauling aren’t easy to do in an industry where making sure shelves are stocked is priority No 1. Collaboration requires crack timing and communication between suppliers and retailers.

Also needed: trust and transparency. All companies involved need to know that they are in some way benefiting financially, says Stephen Smyth, senior director of logistics at Walmart Canada.

Our roundtable was blunt when assessing collaboration across distribution: It’s not incorporated nearly enough and companies don’t always share information required to make it work. Only 13% of logistics pros surveyed cited collaboration as one of the most effective methods of reducing their company’s environmental impact.

The good news: half said they were considering implementing collaborative logistics within the next five years.

The No. 1 method of greening their business, according to our survey: load optimization with trucks (74%).  It’s no wonder that companies are turning their attention to stackability of products and package design.

Frank Scali, director of supply chain and customer service at Nestlé, says that today’s logistics officials are having a say in product design. “Now we have a stakeholder at the table to say, ‘No, it has to be stackable.’ ”

Alternative fuels are piquing attention, too. Metro has put 10 hybrid trailer refrigeration units on the road in Quebec. These use a combination of diesel fuel and electricity.

Natural gas is also starting to be seen as an alternative to diesel, thanks to the ever-growing amount of shale gas piped from the ground. Production of shale gas in Canada is growing 9% and will account for 24% of Canada’s total natural gas output by 2035.

Natural gas and electricity have yet to prove themselves though. It’s one thing for Mom to drive a few bags of groceries home in her hybrid Prius. It’s quite another for an electric motor to help haul thousands of pounds of potatoes up a steep hill in an 18-wheeler.

Hybrid trucks have proven remarkably expensive to operate and maintain. Likewise, because natural gas isn’t as dense as diesel, trucks might need bigger tanks or to refuel more often to drive the same distance.

A simple solution to greening long-distance trips might be rail. Indeed, Loblaw upped its shipments by train 15% last year.

However, our roundtable quite rightly pointed out that shipping by train isn’t nearly as convenient or timely as trucks. And with no rail spur hooked to Canada’s supermarkets, products must hit the road sooner or later.

No wonder, then, that the industry is looking at “road trains” in the form of bigger trucks. Long-combination vehicles, comprising two or even three trailers, are able to haul more without using significantly more fuel. Simply increasing the length of trailers to 60 feet, from the standard 53 feet, will also help.

Perhaps one of the most fascinating experiments in this regard is Walmart Canada’s Supercube. With a 60-foot trailer and added storage between the cab and trailer, it carries 40% more product than a regular 18-wheeler. It has been tested by the retailer for two years, with intriguing results: a 24% reduction in the cost to deliver merchandise and a 14% cut in greenhouse gas emissions.

Grocers are also greening their warehouses. A Walmart fresh food distribution centre in Balzac, Alta., is a good example. It’s designed to be 60% more energy efficient than the company’s traditional refrigerated warehouses.

Its green features include wind turbines and solar panels to generate electricity, ammonia refrigeration, LED lighting and high-efficiency dock doors to prevent cold air from escaping. Also, material handling vehicles are powered by fuel cells, thereby cutting C02 emissions 55%.

All the above initiatives are commendable. But going the next step in green logistics will require more work and collaboration between vendors and retailers, notes Wayne Currie, general manager of supply chain and e-commerce at Overwaitea Food Group.

The use of thin slip sheets rather than wooden pallets to lighten truck loads, for instance, means companies will have to work together.

Retailers and suppliers must also develop a “green culture.” Our roundtable spoke of the need to track and celebrate sustainability’s progress.

“Any time you want to change behaviour you have to measure it, you have to set up some goals and then you reward people for getting to them,” said John O’Hara, vice-president of logistics at Kruger Products. But our survey of logistics pros found only 22% of companies attach financial bonuses to green.

Finally, government needs to play a part. Traffic congestion in the Toronto and Hamilton areas alone costs companies untold billions in delays and fuel, says Ontario transit planning agency Metrolinx. Yet urban trucking doesn’t nearly get the same attention in government as tackling commuter transit woes.

Possible solutions to ease truck traffic include designated truck lanes and so-called “intelligent” lane utilization, in which lanes used by carpoolers during peak commute times are devoted to truck traffic in off-peak hours.

Within cities, bylaws might also need to be tweaked to give truck drivers a wider window to deliver to stores. Local residents may object, of course. But these are the hard decisions required to resolve gridlock.

Government will also need to weigh in on emerging transport methods that, up until recently, seemed straight from science fiction. Driverless trucks save on gas and congestion (because they drive closer together in convoys).

The Dutch government expects to have self-driving trucks on its roads within five years. Next up: drones, which Amazon hopes will deliver groceries to homes.

As it picks up, online shopping will no doubt have a profound and lasting impact on grocery logistics. Forty-two per cent of respondents to our survey agreed with the statement that e-commerce “will transform the organization of business.” Indeed, a significant number of Canadians ordering groceries online could play havoc with grocery’s efforts to lower its carbon footprint.

One solution may be click and collect, in which shoppers order online and pick up their groceries at a store or other specified location. Loblaw and Overwaitea both are starting such a service, with other chains sure to follow.

But in cities, where traffic congestion is the worst, many shoppers want the convenience of having orders delivered to their homes, says Dave Mastroieni, VP of distribution operation and transportation at Longo’s in Toronto, which operates Grocery Gateway, an online grocer.

Balancing the environment and shoppers’ desire for everything, right now, seems the next big challenge for grocery logistics pros in the quest to be green.



 


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