Friday, February 8, 2013

Study Shows Enormous Supply Chain Emission Savings as Juice Producer Cuts Freight Costs

MIT Transport and Logistics Reveal Key to Success
Shipping News Feature

US – WORLDWIDE – It is of course fashionable for every freight forwarder, shipping line and logistics company to try to impress the world at large how careful they are being to cut emissions and produce a supply chain a shade greener than hitherto. It can be a little numbing, if encouraging to hear of the effort being put in by so many diverse groups in a bid to economise and improve the environment at the same time.

Occasionally however the size of the savings, through a mixture of careful planning, an intelligent approach and perhaps a little thinking ‘outside the box’ can result in something really worth looking at. Many readers, both within and outside America, will be familiar with the products of Ocean Spray, whose cranberry products are to be seen on supermarket shelves far and wide.

Ocean Spray, a $2.2 billion agricultural cooperative and household-name fruit juice and food manufacturer has gained a 20% reduction in greenhouse gases on top of a massive 40 % savings in transportation costs by making smart process changes to one of its primary transportation and distribution routes. The results have been an eye opener for the group and Ocean Spray is so impressed with the overall benefits of logistics sustainability, it plans to include emissions reduction methodologies in future transport and distribution plans.

So how did the company, potentially a lumbering giant, manage to effect such a transformation? As might be expected the key to enhanced performance was actually driven, initially at least, by bottom line considerations. Ocean Spray’s first process change to reduce transportation costs, shave delivery distances and, ultimately, trim emissions, was to open a new distribution centre in Florida, bringing product supply closer to demand. The company then did something which others might think foolhardy or perhaps even courageous, they consulted the opposition.

A rival juice producer was discovered to have product flowing between Florida and New Jersey with the railcars used to carry it often returning empty, a lengthy trip tying up many of Ocean Spray’s road haulage equipment. Taking advantage of the backhaul opportunity involved working with a logistics partner as intermediary and coordinating shipments with each other’s schedules. With only a modest investment of time and money, Ocean Spray realized both financial and greenhouse gas emissions savings over a 12-month period.

The company’s efforts were the subject of a study by Center for Transportation & Logistics at the Massachusetts Institute of Technology (MIT CTL), which measured the sustainability improvements and produced some starling results. Ocean Spray managed a shift of 80% of its freight traffic between New Jersey and Florida to a new rail route resulting in a 20% overall carbon footprint reduction in that lane. Transportation costs on the route fell by around $200 per truckload resulting in that 40% saving whilst savings of 1,300 metric tons of carbon dioxide, a 68% reduction contributed to the overall reduction of 20% identified by MIT, the equivalent to saving an astonishing 100,000 plus gallons of fuel. Ken Romanzi, Ocean Spray’s Senior Vice President and Chief Operating Officer, North America, reflected:

“We recognize the importance of managing our food and juice business in a way that advances our environmental sustainability performance. We needed a more efficient way to haul products south. Our competitor was spending money and energy moving empty railcars in that direction. It made good business sense for us to collaborate. Ocean Spray has a history of innovative partnerships, and this case study shows how collaboration in freight operations can boost efficiency and identify opportunities for environmental benefits.”

The MIT study was sponsored by the Environmental Defense Fund (EDF), a national non profit organization designed to link science, economics, law and innovative private-sector partnerships and Jason Mathers, EDF’s Senior Manager, Supply Chain Logistics said:

“Ocean Spray has shown that concrete and measurable sustainability results can be found within projects that were previously identified for cost savings only. We encourage all companies who identify cost cutting opportunities within their logistics operations to also calculate potential emissions reductions to add greater overall value to their organizations.”

“Case Studies in Carbon-Efficient Logistics: Ocean Spray – Leveraging Distribution Network Redesign” can be downloaded HERE.