Greener and leaner logistics

Saving money, reducing greenhouse gas emissions and converting to greener fuels is becoming increasingly important to all aspects of the logistics sector, writes the Logistics Guild’s Peter Murphy

Ten per cent of the UK’s greenhouse gasses are produced by the logistics industry. The move by the European Commission to ensure that logistics operations ‘internalise external costs’ – which is code for paying the full price for their environmental impacts – presents a challenge for the sector. Companies will increasingly pay for decarbonising the supply chain and that will call for particular skills sets, which will play a vital role in underpinning fuel efficiency and economy measures.

Learning to collaborate with your customers and with your suppliers will create more efficient routing and scheduling; having replenished a store, a vehicle returning to the depot can pick up from a supplier on its way. Moving up a step, you have collaboration between supply chains and then collaborative opportunities with the competition, in other words: ‘co-opetition’. There are undoubted savings that can be made here but you need the right skills sets at the supply chain management level, and here we are talking specifically about communication skills – identifying opportunities and then initiating lines of communication. Our industry must do more to train people in these skills.

Rising fuel costs
Right now, it is handy for our sector that lower bills and lower environmental impact can go hand-in-glove. In the face of rising fuel costs and the threat of carbon-based taxes even the least environmentally concerned amongst us are seeking cheaper, more efficient transport fuels.

The Logistics Guild, established by Skills for Logistics, aims to bring better, cheaper fuels to the Logistics Sector. In partnership with Glamorgan University and the Sustainable Energy Research Centre (SERC) the Guild held a one-day event last autumn to address the issue and to launch its fuel-use adopted programme F.U.E.L. (Fuel Use for Efficient Logistics).

Smart logistics companies are already taking this issue seriously whether it is with driver training, understanding new fuel sources, converting vehicles to more efficient fuel, getting their heads around biomethane, green certificates and CNG for trucks or the potential of hydrogen and how the future refueling network will appear.

Gentle on the pedal
Going easy on the accelerator is in the short term the most effective measure on your bottom line. The CEO of MAN Trucks told me ‘the best future fuel initiative is better drivers’ and he is right. Allied Bakeries can highlight the real‑money value of driver training for efficient fuel use.

The company’s 800 vehicles cover 55 million miles per year and rack up a £14.1m fuel bill. Price rises were set to increase that bill by £1.2m. The company implemented a plan of smarter procurement, better route planning, better load utilisation and, crucially, a driver training programme based on efficient driving practices. Beyond the classroom drivers were briefed daily on their planned versus actual spend, periods of engine idling and over-speed events.

The financial impact was dramatic and remains so. Allied saw a saving of £400,000 in the first year. CO2 emissions dropped 940 tonnes. There was a winning side effect with £56,000 reduction in vehicle damage.

Allied attributed its success to three factors. First, by understanding and focusing on the key causal factors, it could implement a positive and sustainable change. Secondly, effective communication and engagement with the driving community led to a positive behavioural change. Finally, by considering both the driver and the vehicle, Allied could manage all aspects of fuel efficiency.

Green fleet management
The industry is developing methodologies for fleet management that hits money saving and environmental improvements. Sustainable Transport Solutions (STS) has a ‘10-Steps to Heaven’ approach – heaven being defined as reduced fuel use, lower emissions, improved business efficiency and greater profits.

Among the costs of running an HGV, according to the Road Haulage Association, the core costs in terms of sustainable fleet management are: fuel (29 per cent), tyres (three per cent) and maintenance and repairs (12 per cent). The STS method addresses this core 44 per cent running cost.
The ten steps begin with understanding how much you spend on fuel, how much is used, the mileage of each vehicle, where do they go and why, and the MPG by vehicle? Along the journey you train people to be more fuel effective, question whether you have the right vehicles for the job, keep a clean and well maintained fleet, provide incentives to your people and maintain the momentum. Lower fuel costs, better business practices with better financial returns – not a bad image of transport heaven.

Dual fuel
Converting a fleet to operate on dual fuel can have a significant effect on cost per mile. Trials of systems that combust two fuels simultaneously, (bio methane or natural gas) via the air-intake of a diesel engine has shown significantly less fuel costs in the range 8-15 per cent. An HGV serving a trunking route covering around 100,000 miles could save £10,000 to £15,000 every year. Money saving at the same time as burning less harmful fuels has strong merit.

Hardstaff is a leader in the field having converted vehicles in its own fleet. The company, which has developed patents for sequential gas injection to diesel engines, is a living-breathing example that the technology is both safe and supported. It offers an example of the financial returns possible based on diesel @ £1.16 per litre and industry average 8.5 miles per gallon. With single-fuel diesel combustion, the cost equates to £0.62 per mile.

In a dual fuel scenario the costs come down significantly. If you substitute 60 per cent of the diesel for gas the sums look good:

• 60% @ £0.63 per litre = £0.378
• 40% @ £1.16 per litre = £0.464
• Aggregate cost per litre is £0.842

Converting this to a cost per mile gives £0.41 per mile versus the diesel-only £0.62 per mile.

There are many factors to consider but with a growing roster of engine platforms suitable for conversion, logistics firms should be putting this on their radar. There are platforms ready for conversion from Mercedes and Volvo.

Alternative fuels
Meanwhile, what about switching to the innovative fuels that are beginning to gain traction? Biomethane has been trialed by Coca Cola, Viola, Camden and Leeds City Council and others because it offers the best CO2 savings on heavy vehicles. Cenex (the Centre of Excellence for Low Carbon & Fuel Cell Technologies) conducted a biomethane trial with a 53 per cent CO2 saving over CNG. When compared to Euro VI, particulate matter (PM) was 30 per cent and NOx down 53 per cent. The vehicle, a new Iveco Daily, gave a six per cent improvement in fuel consumption.

Another of Cenex’s examples is Coca‑Cola Enterprises. It wanted to compare a diesel versus a gas Iveco Stralis for CO2, air quality (PM & NOx), noise levels, driver acceptance, economics and operational reliability. The gas vehicle showed significant reductions in PM (97.1 per cent) and NOx (85.1 per cent). Driver feedback for the gas truck was positive, scoring excellent for acceleration, refueling experience and safety of refueling.

Drivers scored ‘good’ for noise, braking transmission and comfort. Braking-feel and response brought up the rear, scoring ‘acceptable’. The gas truck outperformed its diesel counterpart on virtually every aspect of driver feedback.

The cost of fuel in the gas vehicle was 12 per cent lower than diesel. Not surprisingly, however, given the early stage of adoption there was an overall total cost of ownership differential of 15.3 per cent based on a six‑year contract hire period in favour of the traditional vehicle. Nevertheless, it is clear that bio methane is beginning to bubble up.

Refueling network
For any fuel to gain acceptance there needs to be a readily accessible refueling network. The fuel needs to be priced competitively; it needs to be produced effectively; and it needs to have the least harmful environmental effect as possible. Biomethane is starting to tick a few of these boxes. But to make its way to vehicles it must first be produced. This is done in a renewable way using anaerobic digestion to derive the gas from sewage and then fed directly to the gas grid.

The grid provides a storage buffer for biogas, which is necessary because production is a function of feedstock input whilst vehicle refueling is based on need/usage. The two rarely match. The grid allows for gas to be input at source of production and taken out at point of need.

Once in the grid the biogas mingles with fossil fuel gas. For logistics companies that want renewably sourced gas in their trucks, the Green Gas Certificate Scheme (GGCS) aims to allow the gas purchaser to work with the producer. The launch members of the GGCS were, National Grid, British Gas, E.ON, Thames Water, Adnams Biogroup, Milton Keynes City Council and CNG Services.

CNG Services believes that the HGV sector provides the best opportunity for biogas because although there are fewer HGVs than cars, they burn a lot of diesel and on a unit basis cause significant CHG emissions. The company points to the fact that gas is 40 per cent cheaper than oil on an energy basis. DECC figures predict a steady rise in oil costs whilst gas is predicted to remain flat, making the cost and environmental case for gas versus diesel compelling.

There are now 74 biogas-producing facilities in the UK and there will be more. Dr Sandra Esteves, director of SERC, has been involved with the development of biomethane for several years. She has pointed to the growth in municipal waste to energy projects, particularly organic waste via anaerobic digestion as an indication that the UK is beginning to grasp the power of this renewable energy source.

There are technical challenges to solve for grid injection at relatively small plants but Germany has begun connecting anaerobic plants directly to the grid. Logistics companies should, therefore, watch this space with interest. Renewable, cheap gas could be on its way to power our vehicles.

Smart companies have begun to measure fuel costs and their emissions. They have started to look to new forms of energy. Their people are being incentivised and encouraged to save money by saving fuel. In an industry that works on tight margins every penny to the bottom line is a winner. In an industry that contributes large amounts of GHG a parallel reduction in emissions is an added bonus.

Further information
peter.murphy@logisticsguild.com
guild@skillsforlogistics.org
www.skillsforlogistics.org