Sustainability Strategies Addressing Supply-Chain Air Emissions (2014)

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N A T I O N A L C O O P E R A T I V E F R E I G H T R E S E A R C H P R O G R A M NCFRP REPORT 28 Subscriber Categories Environment • Freight Transportation • Policy Sustainability Strategies Addressing Supply-Chain Air Emissions Peta Wolmarans Erin Hyland Susan Atherton Halcrow – a cH2M Hill coMpany Vancouver, BC, Canada David Bovet norbridge Concord, MA Joe Bryan parsons brinckerHoff Boston, MA Alice Cheng cHeng solutions, llc Brooklyn, NY TRANSPORTAT ION RESEARCH BOARD WASHINGTON, D.C. 2014 www.TRB.org Research sponsored by the Research and Innovative Technology Administration

NATIONAL COOPERATIVE FREIGHT RESEARCH PROGRAM America’s freight transportation system makes critical contributions to the nation’s economy, security, and quality of life. The freight transportation system in the United States is a complex, decentralized, and dynamic network of private and public entities, involving all modes of transportation—trucking, rail, waterways, air, and pipelines. In recent years, the demand for freight transportation service has been increasing fueled by growth in international trade; however, bottlenecks or congestion points in the system are exposing the inadequacies of current infrastructure and operations to meet the growing demand for freight. Strategic operational and investment decisions by governments at all levels will be necessary to maintain freight system performance, and will in turn require sound technical guidance based on research. The National Cooperative Freight Research Program (NCFRP) is a cooperative research program sponsored by the Research and Innovative Technology Administration (RITA) under Grant No. DTOS59-06-G-00039 and administered by the Transportation Research Board (TRB). The program was authorized in 2005 with the passage of the Safe, Accountable, Flexible, Efficient Transportation Equity Act: A Legacy for Users (SAFETEA-LU). On September 6, 2006, a contract to begin work was executed between RITA and The National Academies. The NCFRP will carry out applied research on problems facing the freight industry that are not being adequately addressed by existing research programs. Program guidance is provided by an Oversight Committee comprised of a representative cross section of freight stakeholders appointed by the National Research Council of The National Academies. The NCFRP Oversight Committee meets annually to formulate the research program by identifying the highest priority projects and defining funding levels and expected products. Research problem statements recommending research needs for consideration by the Oversight Committee are solicited annually, but may be submitted to TRB at any time. Each selected project is assigned to a panel, appointed by TRB, which provides technical guidance and counsel throughout the life of the project. Heavy emphasis is placed on including members representing the intended users of the research products. The NCFRP will produce a series of research reports and other products such as guidebooks for practitioners. Primary emphasis will be placed on disseminating NCFRP results to the intended end-users of the research: freight shippers and carriers, service providers, suppliers, and public officials. Published reports of the NATIONAL COOPERATIVE FREIGHT RESEARCH PROGRAM are available from: Transportation Research Board Business Office 500 Fifth Street, NW Washington, DC 20001 and can be ordered through the Internet at: http://www.national-academies.org/trb/bookstore Printed in the United States of America NCFRP REPORT 28 Project NCFRP-33 ISSN 1947-5659 ISBN 978-0-309-28399-1 Library of Congress Control Number 2014937177 © 2014 National Academy of Sciences. All rights reserved. COPYRIGHT INFORMATION Authors herein are responsible for the authenticity of their materials and for obtaining written permissions from publishers or persons who own the copyright to any previously published or copyrighted material used herein. Cooperative Research Programs (CRP) grants permission to reproduce material in this publication for classroom and not-for-profit purposes. Permission is given with the understanding that none of the material will be used to imply TRB, AASHTO, FAA, FHWA, FMCSA, FTA, RITA, or PHMSA endorsement of a particular product, method, or practice. It is expected that those reproducing the material in this document for educational and not- for-profit uses will give appropriate acknowledgment of the source of any reprinted or reproduced material. For other uses of the material, request permission from CRP. NOTICE The project that is the subject of this report was a part of the National Cooperative Freight Research Program, conducted by the Transportation Research Board with the approval of the Governing Board of the National Research Council. The members of the technical panel selected to monitor this project and to review this report were chosen for their special competencies and with regard for appropriate balance. The report was reviewed by the technical panel and accepted for publication according to procedures established and overseen by the Transportation Research Board and approved by the Governing Board of the National Research Council. The opinions and conclusions expressed or implied in this report are those of the researchers who performed the research and are not necessarily those of the Transportation Research Board, the National Research Council, or the program sponsors. The Transportation Research Board of the National Academies, the National Research Council, and the sponsors of the National Cooperative Freight Research Program do not endorse products or manufacturers. Trade or manufacturers’ names appear herein solely because they are considered essential to the object of the report.

The National Academy of Sciences is a private, nonprofit, self-perpetuating society of distinguished scholars engaged in scientific and engineering research, dedicated to the furtherance of science and technology and to their use for the general welfare. On the authority of the charter granted to it by the Congress in 1863, the Academy has a mandate that requires it to advise the federal government on scientific and technical matters. Dr. Ralph J. Cicerone is president of the National Academy of Sciences. The National Academy of Engineering was established in 1964, under the charter of the National Academy of Sciences, as a parallel organization of outstanding engineers. It is autonomous in its administration and in the selection of its members, sharing with the National Academy of Sciences the responsibility for advising the federal government. The National Academy of Engineering also sponsors engineering programs aimed at meeting national needs, encourages education and research, and recognizes the superior achievements of engineers. Dr. C. D. Mote, Jr., is president of the National Academy of Engineering. The Institute of Medicine was established in 1970 by the National Academy of Sciences to secure the services of eminent members of appropriate professions in the examination of policy matters pertaining to the health of the public. The Institute acts under the responsibility given to the National Academy of Sciences by its congressional charter to be an adviser to the federal government and, on its own initiative, to identify issues of medical care, research, and education. Dr. Harvey V. Fineberg is president of the Institute of Medicine. The National Research Council was organized by the National Academy of Sciences in 1916 to associate the broad community of science and technology with the Academy’s purposes of furthering knowledge and advising the federal government. Functioning in accordance with general policies determined by the Academy, the Council has become the principal operating agency of both the National Academy of Sciences and the National Academy of Engineering in providing services to the government, the public, and the scientific and engineering communities. The Council is administered jointly by both Academies and the Institute of Medicine. Dr. Ralph J. Cicerone and Dr. C. D. Mote, Jr., are chair and vice chair, respectively, of the National Research Council. The Transportation Research Board is one of six major divisions of the National Research Council. The mission of the Transporta- tion Research Board is to provide leadership in transportation innovation and progress through research and information exchange, conducted within a setting that is objective, interdisciplinary, and multimodal. The Board’s varied activities annually engage about 7,000 engineers, scientists, and other transportation researchers and practitioners from the public and private sectors and academia, all of whom contribute their expertise in the public interest. The program is supported by state transportation departments, federal agencies including the component administrations of the U.S. Department of Transportation, and other organizations and individu- als interested in the development of transportation. www.TRB.org www.national-academies.org

C O O P E R A T I V E R E S E A R C H P R O G R A M S CRP STAFF FOR NCFRP REPORT 28 Christopher W. Jenks, Director, Cooperative Research Programs Joseph D. Navarrete, Senior Program Officer Terri Baker, Senior Program Assistant Eileen P. Delaney, Director of Publications Hilary Freer, Senior Editor NCFRP PROJECT 33 PANEL Freight Research Projects lee B. Kindberg, Maersk Line, Charlotte, NC (Chair) Sara J. Clark, TranSystems, Kansas City, MO Benjamin V. Medina, cmQue, Inc., Chicago, IL Joseph Monaco, Port Authority of New York & New Jersey, New York, NY Jonathan R. Peters, The City University of New York, Staten Island, NY Thomas H. Wakeman, iii, Stevens Institute of Technology, Hoboken, NJ M. J. Fiocco, OST Office of Research & Technology Liaison Michael M. Johnsen, FMCSA Liaison Quon Kwan, FMCSA Liaison Christine Gerencher, TRB Liaison

F O R E W O R D By Joseph D. Navarrete Staff Officer Transportation Research Board NCFRP Report 28: Sustainability Strategies Addressing Supply-Chain Air Emissions provides insight into the effects of policies and regulations designed to reduce supply chain greenhouse gas emissions. Both public- and private-sector decisionmakers will find the report particularly valuable, given that it provides nine suggested practices based on an extensive literature review, industry interviews, and the research team’s experi- ence. In addition, readers can explore the outcomes of actual greenhouse gas reduction initiatives through a review of domestic and international case studies included in the report. Transportation networks are a key component of the complex, dynamic, time- sensitive, and integrated systems known as supply chains. If a transportation supply chain becomes uncompetitive, it can quickly lose market share and suffer immediate adverse economic consequences. Supply chains also affect the environment in several ways, including air emissions. The increased recognition of the environmental and human impacts of supply-chain activities may lead to public pressure to quickly implement policies to reduce these impacts. These initial efforts can sometimes result in fragmented, conflicting, and multi-layered regulatory structures. Such efforts may also make compli- ance challenging, impede supply-chain innovation, and, ultimately, may not achieve the desired environmental outcomes. Research was needed to help decisionmakers develop strategies and tools that would lead to sustainable outcomes that both enhance economic development and improve the environment in a socially responsible manner. The research, led by Halcrow, a CH2M HILL Company, began with a high-level identifi- cation and assessment of potential public- and private-sector strategies to advance environ- mental goals through supply-chain management. These strategies were organized into nine key themes, and in-depth case studies were undertaken to illustrate the benefits of creating a “win-win” environment by incorporating changes in supply-chain tactics (including new technology) and ensuring successful implementation. Chapter 1 provides background and describes the research method. Chapter 2 explores how stakeholders can collaborate to help balance supply-chain emissions reduction initiatives with environmental, social, and economic goals. In Chapter 3, the benefits of operational improvements are discussed, including an assessment of the extent to which these improvements are attributable to either private-sector efforts or public policy. Chapter 4 focuses on how newly implemented technologies are being used to achieve

both greater supply-chain efficiency and reduced emissions. Many companies improv- ing their supply-chain sustainability are actively promoting their efforts; this concept of the “sustainability brand” is described in Chapter 5. The research also identified several instances of unforeseen and unintended consequences stemming from air emissions regulations; these are discussed in Chapter 6. The research culminates in suggestions that policymakers may want to consider as they address supply-chain emissions (Chapter 7). The case studies are provided in six appendices focused on the international experience, domestic examples, ports and the coastal perspectives, the inland perspective, private- sector initiatives, and supply chain sustainability metrics.

C O N T E N T S 1 Summary 7 Chapter 1 Research Objective, Method, and Context 7 1.1 Research Objective 7 1.2 Research Method 9 1.3 Supply Chain Emissions Context 12 1.4 Defining Supply Chain Sustainability 12 1.5 Supply Chain Sustainability Metrics Map 12 1.6 Report Structure 15 Chapter 2 Partnerships and Win-Win Opportunities 15 2.1 Elements of the Win-Win and Partnership Approach 16 2.2 Challenges and Trade-Offs 18 2.3 Fundamentals of a Sustainable Approach 20 2.4 Components of Public-Private Collaboration at the State and Local Levels 24 2.5 Unique Role of Ports 25 2.6 Public-Private Collaboration at the National Level: EPA SmartWay Partnerships 25 2.7 Other Federal Initiatives 26 2.8 Non-U.S. and International Public-Private Collaboration 26 2.9 Cross-Private-Sector Collaboration 27 2.10 Industry-Based Supply Chain Sustainability Initiatives 28 2.11 Conclusions 30 Chapter 3 Operational Optimization 30 3.1 Significance of Transport and Supply Chain Operations 30 3.2 Main Elements of Optimization 31 3.3 Planning Optimization 36 3.4 Impact of Evolving Trends: Online Ordering and Delivery 37 3.5 Conclusions 39 Chapter 4 Equipment and Technology 39 4.1 Main Elements 39 4.2 Equipment Upgrades and Improvements 41 4.3 Engine Improvements and Alternative Fuels 45 4.4 Warehousing Developments 46 4.5 Encouraging Continued Progress 47 Chapter 5 The Sustainability Brand 47 5.1 Setting and Leading the Sustainability Agenda 48 5.2 GHG Reduction as Major Focus of Corporate Efforts 48 5.3 Supply Chain Sustainability Initiatives 50 5.4 Metrics and Reporting

52 5.5 Branding Supply Chain Sustainability 53 5.6 Rationale for Shipper and Carrier Sustainability Efforts 56 Chapter 6 Unforeseen and Unintended Consequences of Air Emissions Regulation 57 6.1 Unintended Consequences—Evidence from Literature 59 6.2 Unintended Consequences and Increased Costs—Evidence from Industry Consultation 63 6.3 Conclusions and Implications 66 Chapter 7 Suggestions for Policymakers 66 7.1 Consult Closely with Stakeholders to Craft Win-Win Solutions 67 7.2 Analyze Trade-Offs and Options 68 7.3 Coordinate Across Jurisdictions 68 7.4 Develop Supply Chain Sustainability Metrics 69 7.5 Adopt Performance-Based Approach to Regulation 69 7.6 Provide Incentives to Change 70 7.7 Push the Boundaries of Technology 70 7.8 Redefine Operational Optimization in Metropolitan Areas 71 7.9 Promote Sustainability Branding 72 7.10 Conclusions 73 Abbreviations 76 References and Bibliography 82 Appendix A International Case Studies 92 Appendix B National Initiatives 100 Appendix C Ports and the Coastal Context 110 Appendix D Inland Perspectives 118 Appendix E Corporate Programs 124 Appendix F Supply-Chain Sustainability Metrics Note: Many of the photographs, figures, and tables in this report have been converted from color to grayscale for printing. The electronic version of the report (posted on the Web at www.trb.org) retains the color versions.