View the September 20 2017 seminar recording
Jennifer Symoun
Good afternoon or good morning to those of you to the West. Welcome to the Talking Freight Seminar Series. My name is Jennifer Symoun and I will moderate today’s seminar. Today’s topic is How Freight Shippers Drive EPA’s SmartWay Transport Partnership.
Before I go any further, I do want to let those of you who are calling into the teleconference for the audio know that you need to mute your computer speakers or else you will be hearing your audio over the computer as well.
Today’s seminar will last 90 minutes, with 60 minutes allocated for the speakers, and the final 30 minutes for audience Question and Answer. If during the presentations you think of a question, you can type it into the chat area. Please make sure you send your question to “Everyone” and indicate which presenter your question is for. Presenters will be unable to answer your questions during their presentations, but I will start off the question and answer session with the questions typed into the chat box. If we run out of time and are unable to address all questions we will attempt to get written responses from the presenters to the unanswered questions.
The PowerPoint presentations used during the seminar are available for download from the file download box in the lower right corner of your screen. The presentations will also be available online within the next few weeks, along with a recording and a transcript. I will notify all attendees once these materials are posted online.
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I’m now going to turn it over to Joann Jackson-Stephens of the EPA Office of Transportation & Air Quality to get started. Joann has worked at the US EPA since 1992. She has worked on SmartWay Transport Partnership program since 2001, and currently acts as the program Brand Manager.
Joann Jackson-Stephens
Thank you Jennifer. We will be talking about how SmartWay advances sustainable transportation supply chains. I'm not going to bore everyone by reading what is on the screen. I want to give you a quick overview on the things I will be discussing. I will start about talking of the impacts in the sustainable energy, environment, and community arenas. I want to talk at this time how SmartWay can help communities with challenges they are facing.
Freight accounts for over one third of transportation energy use. It's also the fastest growing transportation mode. According to the international transportation forum, the world will see trade-related transport emissions increase by a factor of 3.9 by the year 2050. In 2010, the global carbon dioxide emissions from trade-related are roughly 2.1 billion metric tons. If action is not taken to reduce this growth, the emissions could increase to 8.1 billion metric tons by 2050. To put this number into perspective, today's total carbon dioxide emissions comes to just over 38 billion metric tons. So smart freight movement is key to sustain energy and reduce these emissions.
Most freight vehicles are diesel, and emit particulate and smog-forming NOx emissions, which contribute to cardio-pulmonary disease and asthma. Families and communities living near freight hubs and in developing markets, where freight vehicles are typically older and dirtier are especially vulnerable. The elderly, those with respiratory problems and children are at higher risk from these air pollutants. As policymakers, we are acutely aware that while transportation is critical to global and economic growth, it has many health and environmental impacts. EPA believes it is possible to reduce these impacts while supporting economic growth. We believe working to enhance freight energy and environmental efficiency can actually enhance economic growth and create a climate of sustainability for the environment, for business, and for the community.
Sustainable freight transportation supply chains begin with collaboration. We are looking across the supply chain, to improve the efficiency of interactions among stakeholders and to empower these stakeholders with information to make more informed and cleaner choices. The EPA SmartWay program was developed to mirror the way freight transportation operates. To leverage the existing market relationship between shippers and carriers and also include third-party logistic providers. In SmatWay, EPA collects and analyzes data from all of these businesses – then provides partners with the emissions information that offers fuller transparency into the logistics supply chains. Armed with this information shippers can identify the greenest modes, carriers, and logistics firms based on their performance captured in the SmartWay ranking. This enables shippers to optimize carrier and mode selection to meet their sustainability goals. It also provides assistance to carriers to improve their environmental performance. Additionally, SmartWay offers shippers, third-party logistics providers, and carriers technical assistance and best practices to help them improve.
A balanced approach for SmartWay incorporates simplicity, accuracy, flexibility, and transparency. SmartWay covers all domestic transportation modes including barge, rail, truck, and air with collaboration under way to incorporate oceangoing vessels for international partners. Using our tools, data, and data processes, companies can accurately and consistently measure, report and verify emissions. Maintaining a high degree of quality ensures that data submitted by EPA SmartWay partners is credible and secure, which enhances the program's usefulness in brand integrity for all participants. Offering a suite of assessment tools also alleviates the need for business to create their own approaches which saves time and money. And, companies can confidently submit their carbon footprint to global reporting protocols like CDP (Carbon Disclosure Project) and the WRI (World Resources Institute) GHG protocol, since EPA collaborates with these initiatives, to ensure the methods and approaches are globally aligned.
I will talk about our technology verification program. When EPA set out to identify the most fuel-efficient, cleanest truck designs and equipment, our goal was to level the playing field and make it easier for businesses to select the cleanest and most efficient equipment while providing a market incentive for continual improvement. To achieve this, we initially reached out to industry experts and national laboratories to develop and refine test procedures and methods. We then conducted our own extensive testing and reviewed test results from other credible sources to establish performance targets. We finally established a technology assessment program using standardized evaluation methods, to verify products that meet or exceed performance targets. EPA uses the SmartWay logo to designate freight tractors and trailers that incorporate the verified technologies. And through the testing and research, we are continuing to lead research for emerging technologies. The SmartWay tractor and trailer program is designed for those companies, primarily truck carriers that either own or control their own fleet, so they make the decisions regarding how the tractors and trailers will be equipped. The shippers can also play an encouraging and educational role regarding the carriers with which they partner in regards to SmartWay Designated tractors and trailers.
A little bit about SmartWay, we started with 15 charter partners in 2004. Today we encompass a broad cross-section of over 3500 businesses and industries in the U.S. and Canada. That includes Top 100 U.S. truck carriers in all class I rail lines. Fortune 500 companies from key economic sectors such as retail, food, and beverage, manufacturing, and consumer products among others, major logistics firms, and hundreds of small and family-owned businesses. Since 2004 SmartWay partners have saved billions of dollars in fuel costs and reduced a substantial amount of emissions. As you can see on this slide, 84 million metric tons of carbon dioxide. Additionally, 1.7 million tons of NOx and 70,000 tons of PM have been reduced; 197 million barrels of oil were saved. These savings cover 64% of all freight ton-miles across trucks, rail and barge transportation in the US. When compared with the cost of administering this program, the fuel savings alone, are greater than the program cost. These top level numbers serve to demonstrate the effectiveness of the program, but the benefits go beyond fuel savings. Greater transparency and disclosure lead to better long-term value for partners and the benefits that could be realized by participating in SmartWay.
What does EPA see as some of the key challenges for communities, rapidly changing geopolitical landscapes, large demographic shifts, unprecedented technical change, and urgent environmental challenges. To address key freight sustainability challenges, government policymakers will need to develop smart policies that spark innovation. Major innovations and logistics are being ushered in using IT, big data and connected vehicle technology. Government will need to develop innovative test methods that accurately assess the emerging IT system, including vehicle to vehicle infrastructure technologies. We will need thoughtful regulation, and policy development so these and other advanced technologies do not end up increasing emissions. Government can also use its national platform to improve access to information on new technology. Similar to what we do in SmartWay, by offering technical assistance, case studies, even online efficient driver training to help truck operators and fleets optimize their fuel savings potential of today’s trucks.
SmartWay is relevant for communities because freight supply chain businesses occurs within communities. Smart Logistics is more than smarter vehicles and fuels. It includes smarter goods and packaging, smarter modes, smarter routing, smarter driver behavior and smarter consumers. These multiple interests perspectives and areas of expertise serve as entry points for governments to collaborate and engage with the logistics freight community. Government can engage by serving as a trusted source of information and data, a neutral third-party convener of stakeholders, and is a credible and honest broker of information and data to advance the collective understanding of what is working. We can provide national and international forums and opportunities for companies in the U.S. and globally to share the best practices and operational strategies. Government can also provide technical assistance and funding to clean up existing vehicles with retrofit technologies. We can speed up the development deployment of cleaner fuel and replacement technologies, with testing, analysis, and research to evaluate emerging new and retrofit technologies.
This slide points out some of the goals metropolitan planners may have. Not that this is necessarily an exhaustive list, but I want you to consider how SmartWay technologies & strategies aid agency freight planning & development efforts. The implementation of an effective sustainable freight transportation effort like SmartWay could have some positive community impacts.
. When you're considering developing plans to meet the goals outlined, consider sustainable freight transportation along with passenger transportation and residential development. Reach out to establish partnerships with companies that are SmartWay partners in your community, or even those that are not currently SmartWay partners. Educate shippers about strategies and technologies to reduce the emissions and fuel use. Encourage Shippers to employ those strategies and technologies. Collaborate with affiliates that support your philosophy on freight sustainability. An affiliate is an organization that is not necessarily a shipper or any type of freight carrier or logistics provider. But they play other roles within SmartWay. EPA has had success working with the American Trucking Association, air quality agencies, councils, and government, training associations, as well as academia. Think about implementing efforts that encourage consumers to support businesses with a sustainable freight mindset.
Some strategies to improve efficiency include:
These could be improved by planning, public right of ways for delivery, and considering opportunities for regulating land-use and development.
Many fuel saving strategies and technologies, the SmartWay shippers and carriers can improve the neighborhood experience of partners’ facilities and operations.
I want to outline here quickly some of the things that the shipping company may do at their facilities in terms of the logistics under their control. Idling can be reduced through the use of onboard devices, appointment times, and weight management. In locations where there is heavy daytime traffic, shippers can employ after hours delivery and pick up in cooperation with public officials and also establish deliveries to reduce emissions and other impacts while enabling a more efficient truck movement. Urban deliveries could be improved due to the use of lower emission vehicles and as I mentioned off-hours operation. Other things to consider, in terms of urban planning, identify how to maximize freight movement. That would give you air quality and health benefits. Think about locating new facilities in a manner that would reduce trips and miles and complement nonindustrial roadways and consolidate the delivery for operations. Design new facility layouts that minimize on-site and off-site islands including tree islands and unnecessary loops. You can see this on your screen, we are talking about where to find parking compensation for drivers. Think about Shore Power. I'd like to turn over now to talk about the strategies and technologies that we are actually engaging in.
and anJennifer Symoun
Thank you Joanne, we’ll now move to Kara Hegg of Whirlpool Corporation. Kara joined Whirlpool Corporation in 2004 focused in export. She has held various positions of increasing responsibility in Supply Chain Logistics. Today, Kara is part of the transportation management team responsible for the movement of raw materials and finished goods for the North American manufacturing operations.
Kara Hegg
Thank you so much. I want to start with a brief overview of Whirlpool Corporation and talk about the integrated supply chain w movement in North America and fuel consumption working with our SmartWay partnership.
Whirlpool Corporation is a leading manufacturer in appliances. We operate in nearly every country around the world. Our brand is sold across the world targeting 90% of consumers globally. Seven of the leading brands generate over $1 billion in annual sales. Over half the sales are in the U.S. market. Brands you likely know, Whirlpool, KitchenAid, Maytag, Jenn-Air. With all this movement in the country, the operation fits into integrated supply chains.
In 2004 when SmartWay was getting started, Whirlpool joined early on. When things really shifted for us, was around 2006. We finished an acquisition of Maytag which caused an overhaul to look at where our footprint was in the U.S. In 2007 as we continued to fold Maytag into the corporation, we ramped up the SmartWay partnership as we learned more about what that meant and how we could use it to our advantage. We set a goal of moving 50% of the volume on SmartWay carriers and succeeded at that goal and have continued to expand on that success ever since. In 2011, we combined traditional supply-chain functions that were scattered across the different pieces of the company into 21 integrated supply chains, which we have today. This is where the planning and operations footprints and logistics planning are as well. Today we are moving over 99% of our product with SmartWay carriers. We have eight distribution centers and nine regional centers and over 90 local distribution centers. A lot of movement.
This is a brief look at the supply chain operation. As I said, we are moving over 22 million appliance units per year. That equals to over 200 million miles or 22 million gallons of fuel per year. There is a lot of movement to get through to the consumer. Of that, Whirlpool manages over 80% of the freight within that supply chain and raw materials through the home delivery into the consumer's homes. We are moving in all markets in the U.S.
In terms of reducing the fuel consumption and controlling the carbon emissions, the strategy is to improve the relationship with carriers and the operational efficiencies and network management. The first piece of that would be looking at the carrier relationship. As we talked about in 2007, we set the goal of having 50% on SmartWay carriers. We added that to the request for information for any new carrier to be added to the network. It's a requirement when they start this process. They must acknowledge if they are a SmartWay carrier or not, or if they plan to complete that before the next bid to go into effect so we can consider them for the following year for movement of goods. If they are not considered in the bid we will work with them to encourage them become a SmartWay partner so that they can participate in the network and we can have the benefit of that partnership.
We have an aggressive fuel program so the team researches and follows innovations in transportation and consumption. We do our best to understand the capabilities of the equipment in the market which allows us to better understand and analyze the efficiencies of the carriers’ fleet. By understanding what they are capable of, we are able to get the right mix of carrier fleets to be able to equitably compensate carriers for the fuel they are consuming. While we pressure our carriers to use the best equipment in the market, holding our carriers to higher standards reduces fuel consumption. It's used to support the value chain of development in the truck manufacturing. Over the year, the fuel reimbursement program has shifted, today we reimburse for 6.8 miles per gallon. We pay attention to mode conversion wherever we can.
Whirlpool is a leader in long haul movement. 30% of our 500 miles or more are often moved by rail. Rail is an integral part of the network allowing us to be aggressive at reducing the total fuel consumption. The regional distribution centers have a rail side as well. We work to move those by rail for each market first before the final delivery. Finally we work with a carrier relationship to manage through what we need changing in the regulatory environment. Shippers and carriers are concerned and have a vested interest in ensuring driver safety and general pedestrian safety as well as social and environmental sustainability efforts. This will focus on policies that could be over burdensome to the transportation industry, which ultimately costs consumers more money for the goods and services to get them to the market. We work with the carrier base to understand and plan for changes in legislation and government mandate that would impact driver capacity.
The next piece of the strategy is really around our own efficiencies in the warehouse operation. We are really looking at physical targets or operational processes. This is the physical target to really be how we can improve that loadability and how many appliances could we get onto the piece of equipment? The first image on the bottom left is an example from earlier this year of a boxcar mover. We were able to reconfigure how to use those for being loaded into the equipment. They were able to get an additional six units per move on there. That had a huge impact to our ability to move and take additional real boxcars out of the network completely.
We use drop and hook process whenever possible. This helps us build loads, but also allows drivers quick turns as they bring equipment in and out of our facilities, which is a benefit for carriers. We can use that for flexibility with carriers so they could grab a full trailer and be on their way out and not have any of that lag time. We do our best to reduce that and reduce the trailer return time. We measure our performance at each location and take action on the things we can control. We also measure the freight cars performance. That's an example of what the measurement of the trade partners are so we could go back and so they can understand the root cause of having to keep those trailers on their sites longer so that we can work to improve that for everyone involved. We done a lot of work to understand what it means to be a server of choice for carriers. The biggest part of that is also keeping drivers happy and finding resources for them to help their work be as smooth as possible. We are launching communication posters, launching that across the network to give them information like vending or rest areas, wi-fi connections, etc. So if they are at these locations, they could reduce the idle time to get out of the truck or go find the closest option.
The last piece that we focus on is the network management. The first piece of that is looking at the total supply chain optimization. The network management team tries to look for changes in demands to adjust with optimization for the network. Throughout the year we make small network adjustments such as sourcing a lane from a different regional distribution center. We have the demand for the customers in the markets they are moving to. They also make long-term adjustments to the network. We opened up another distribution center in the Chicago market in 2015. By the end of next year will have a new location opening up in Stockton, California. We’re looking at the U.S. footprint and where the availability and capacity is for transportation to reach consumers. Our inventory and planning, the deployment team, they have been part of the network management. They are determining where the best position is for the inventory and anticipating where things should go through.
Over the past 18 months we have redefined and created a rigid process to reduce and control out-of-region movements. So when things are mis-deployed or demand signals are off, we are not unnecessarily moving goods causing more transportation miles. We work to triangulate shipments, especially in the Ohio region where we have the privacy of the manufacturing plant. We will fill inbound trailers with raw material and run those to the plant and take the outbound one to the customer base so we can have the back all coming into the network. We are able to use a dedicated fleet within that network. We focus on shifting customers since their volume and demands have it to a direct and complete lease for the distribution piece for the total miles it takes to get to the end consumer.
When we wrap all that together, under those three buckets, the carrier relationship, operations, and network management, we are able to put it all together for aggregation to work with the SmartWay partnership. The SmartWay partnership gives us a common, measurable approach across carriers. It helps us understand how we are performing and set new goals. This helps us leverage the carriers who are really performing well in the marketplace. It gives us measurable results, internally and structurally. Beyond Whirlpool our trade partners also participate in SmartWay. That gives everyone an opportunity to collaborate and grow with great efficiency for everyone.
Jennifer Symoun
Thank you Kara. Our next presentation will be given by Jason Lau of Medtronic. Jason is currently a Senior Manager of Logistics for Medtronic. His group is responsible for Carrier Selection, Operations and Negotiations for all modes of transportation globally within the Diabetes and Minimally Invasive Therapies Division of Medtronic that totals in excess of $220 Million in expenses. He has 19 years of experience in the Logistics Transportation fields working in distribution, 3PL logistics, and transportation provider business sectors.
Jason Lau
Thank you very much for the introduction, Jennifer. We are excited to be here with you today. I will tell you a little bit about Medtronic for those who are not as familiar with the brand. It's not as well-recognized as other ones like Whirlpool and Pinnacle. We are talking about what grounds our company and its purpose - the products and sustainability management program. And we will take a deeper dive into the SmartWay strategy at Medtronic, the carrier selection, sustainable roadmap, and success stories we have had so far.
At the core of the company, founded in 1949 in a garage, it's the Medtronic mission. We are bigger now in a facility larger than a garage. Our mission has remained the same. The core focus is to contribute to human welfare by the application of biomedical engineering to alleviate pain, restore health, and extend life. All of our presentations begin with this mantra. It helps us to remain focused on the core purpose as an organization. As I said, we are a global organization servicing healthcare institutions across the world in about 160+ countries. 85,000 employees globally. We have 84 manufacturing facilities. 60% reside within the Americas. We have 56 research centers across the globe. As you can see here, the Americas, Europe and Middle East, Africa, Asian-Pacific, and greater China. We are a multinational corporation. Corporately, incorporated in Dublin, Ireland, we are located in Minneapolis, Minnesota; Mansfield, Massachusetts; and Connecticut from a corporate perspective. I won't go through the list of the products. Hopefully this will give you a bit of an understanding of the different breadth and depth in products in which we service our patients. We have assorted therapies and care and minimally invasive therapy groups for surgical centers.
I want to focus specifically on the sustainability management model. That's where the partnership largely comes in. You will see here on the screen the 2020 environmental performance goals. This came out in the product plan. While our core focus only talks about sustainability management, we don't focus specifically on just the environment. For us it's about being a sustainable organization to satisfy patients and customers globally. And obviously with that, we need energy consumption management that leads to a true environmental sustainability component of the company. Our goal is to reduce risk as much as possible with patient interaction and the manufacturers approach delivery to the customers. We want to work responsibly and create opportunities that allow us to have sustainable supply chains and leverage partnerships of those like SmartWay ,which is why we are privileged to be on this call. We have an aggressive goal to change gas emissions. One of the leverage points is the cornerstone from a logistic standpoint, the SmartWay partnership.
We have a very similar approach as Whirlpool when it comes to SmartWay carrier selection process. We were the division that was a member of quality Medtronic. We were a small group. Most of what you see and hear are I believe, consumer packaged goods retail and e-commerce. We have an opportunity to continue to drive change to be more leveraging on the SmartWay approach. I think patients’ safety tends to come first. Our purpose obviously, is to sponsor the SmartWay program to drive the understanding to our insurers. When we look at the current selection process, 90% of the carriers, they are SmartWay certified. Our target is 100% by 2018. We make it mandatory if the provider is going to participate in one of these that they are SmartWay certified. Kara you mentioned that you help achieve the status if your customers are not there. When we are doing what is needed, we didn't see the value, that's where the partnership with SmartWay comes in. We have the opportunity to leverage relationships and hopefully drive more understanding and more visibility to the SmartWay program. Not so unsimilar to Whirlpool we review performance data and share it with our providers. As we have meaningful conversations around carbon usage the goal is to understand what the target really has been year after year. We help the carriers understand that this continues to be an important part of what we are trying to accomplish. We are a small packaged shipper. We are a sizable player in the States, when we talk about relationships like shippers with FedEx and UPS, they are global brands. When we talk about partnerships with SmartWay, they are highly engaged and benefiting from it. They see a lot of value in the partnership.
When we talk about the supply chain roadmap, when it comes to transportation, we have four key focus areas. The first is an increase in carriers using alternative fuel sources such as electric, natural gas, and other sustainable resources for fuel consumption. We have had significant conversations with players on the SmartWay side excited to show what they are capable of on the natural gas side. We are interested in talking about that with our partners as well. We're finding in a lot of cases, the carrier is open to discussion as long as they could find a partner or a shipper that is willing to make an agreement, to be able to drive that long-term. Rather than looking for something like a flash in the pan and enjoy six months of it. When we talk about an alternative fuel resource we are in it for the long haul.
We are targeting 20% of full loading movements by intermodal. We are under 15% currently. We have more room to grow. For the most part the shipments are coming out of the manufacturing sites, sterilization sites, and contract manufacturers. Where the predominance of the weight and packages are really moving small packages out of the distribution centers to customers. A 5% growth for us will be quite a struggle only because we are fully resourced for lanes into the facility.
I will be working directly with customers more. We will have regional TMS deployment for the Americas region by 2019. Despite being a significant shipper in size, we have not made the past commitment to hope to drive sustainability into the supply chain by using the right mode. We talk a lot about green saves green. It's so true when we look at the optimization of the network, especially on this package side where multiple parcels could be consolidated or taken from a two to three day. There is significant value in that.
Last but certainly not least, we target 40% of all export and import shipment by cubes via ocean. It's going to be a stretch hold. From an inventory standpoint it's set up around air as a predominant mode. The reason being, like large global organizations, we are focused heavily on inventory. When we look to leverage inventory down, it's normally when we will spend more on freight and spend more on carbon usage as well. We work specifically with planning supply-chain functions to really drive toward that conversion opportunity. This is by no means an exhaustive list. There are exciting smaller projects occurring within our ability to be more SmartWay friendly and work with carriers and carbon usage. These four here will drive with a significant outcome for the organization.
I want to highlight a few examples to close out this presentation here, one in particular which I thought was fascinating to share with the team, a plant to plant tntermodal transportation conversion that we perform. The product itself, it's actually another sustainability project that the manufacturing team went through. We were recycling material for adult pads. We were shipping it to another side of ours to use and produce sharp needles in plastic containers. The beauty of this conversion, it was only drawing over a 15% savings annually. What we are able to benefit from was obviously an overall expense reduction, sustained capacity, and the environmental sustainability that came with it. It was a great success for the group because we are talking about moving a product that is a recycled product. Something we are to be proud to reuse then scrap. What better mode of transportation than to use intermodal where we can keep our carbon footprint as low as possible.
We talk about the role of converting intermodal for the customers, our finished products tend to be I would say, a replenishment cycle, with quite a rapid replenishment cycle at that. For the most part this is based on the requirement and needs and inventory habits. We had the opportunity to partner with one of our partners out of Michigan. We provided 30% annual savings versus trucks. It's a significant amount of loads, 300 a year, which is large for us. The goal was to sustain reduction in expense and increase capacity and overall sustainability of the environment.
We view our supply chain as one that needs to be accessible. We have had the fortunate opportunity to see that a number of events that have occurred globally, we are searching for an opportunity to have performance conversion to be sustainable. Not just for the organization but certainly for the environment as well. Thank you for the opportunity to speak today.
Jennifer Symoun
Thank you Jason. Our final presentation will be given by Darren Conner of Pinnacle Foods. Darren has been with Pinnacle Foods for 2.5 years as Senior Director of Transportation. His current responsibilities include strategic oversight within transportation, performance metrics, budgetary responsibilities, and transportation sustainability, etc. Darren has had a 20 year career in transportation and various aspects of the supply chain with Church & Dwight Company and Campbell Soup previously.
Darren Conner
Thank you, I appreciate the opportunity to speak. A lot of people do not know who Pinnacle Foods is. Quickly as you can see in the shopping basket, some of the products we have. We are responsible for about 85% of household foods today. A lot of people who don't know the name, you recognize our brands. I will begin today to talk about a couple of things. How is Pinnacle reducing the carbon footprint in partnership with SmartWay? What are we doing in order to achieve that?
The first thing I will talk about is the heavy hauls program. This encompasses a few areas. We partnered with certain carriers to get more weight on shipments. It doesn't increase the overall weight of the truck, just what the truck can haul. We utilize this for the customer loads as well as replenishment loads. We do those with our dry products such as canned meats, Vlasic pickles, Mrs. Butterworth, etc., as well as refrigerated carriers for products like Birdseye. Most of these are in a dedicated environment. We partner with the carriers in the state of Michigan for example. We use eight axle trucks where we can get 96,000 to 105,000 pounds. In Michigan and cities where we make Vlasic pickles, it's a heavy product. Rather than sending it in the regular 43,000 pounds, Michigan allows you to use eight axle trucks. By increasing the weight, we are taking trucks off of the road, eliminating the carbon footprint.
That's one thing we utilize. I understand not everyone can do that. The other thing that we do with the heavy hauls program, with the dry shipments and frozen, these carriers have specialized equipment and we can get 52,000 for payload dry shipments and 48,000 pounds for frozen. It takes trucks off the road. Now that we can get this extra weight on, it's not increasing the overall weight including the truck. These carriers have specialized equipment that allows us to get more product on there. It's not only just the replenishment orders, we are making it and sending it to distribution centers that are doing this. We partnered with a lot of customers. The customers are places where most of you shop every day. They have to help write orders. Instead of writing a 48,000 pound order, now they're writing a 52,000 order. I can tell you customers are excited about this as well.
Again, how are they able to do it? They do it by modifying equipment. Wider tires, fiberglass bottoms, honeycomb doors, smaller fuel tanks, specialized transmission. As we spoke about, the more weight we get on these trucks, the less trucks on the road and less CO2 emissions. In the Michigan program, as well as other dedicated heavy haul drives, we have taken over 600 trucks off of the road. That is something we are extremely proud of. That's in partnership not only within Pinnacle but also the customer base. That allows us to do that.
That's one section that addresses how do we take trucks off of the road? The other that we have done and some others we have touched on is the use of private rail fleets. We have 40 railcars that we have on a long-term lease, mostly used for frozen freight. This is been a big success. As we mentioned, we make Birdseye frozen vegetables. We are pulling a lot of those vegetables at their source - California, the Pacific Northwest, Parts of Mexico. It used to be that a lot of it was trucks at that time or even intermodal. Through the use of these cars now, we are able to really increase the payload, which I will show in a minute. We are able to get on there about four truckloads depending on the product. It’s roughly about four truckloads in one railcar. Cutting down on the emissions and taking trucks off the road. We are starting to use it as well on the finished goods side. We are partnering with customers that can take these cars and ship the finished goods as well. Raw materials is what we started with, now we evolve into the next phase of this, which would be the customer shipments as well with the finished good products.
What are the benefits of the private rail fleets? We save money obviously with that. Fuel efficiency, taking trucks off the road. We are able to transport higher weights and you can have your products at a lower cost. As I mentioned before, depending on the product mix, we are able to get roughly about four trucks depending on the product in one railcar.
Finally, the last thing I will talk about which is everyone that speaks about it as well, we are really trying to leverage intermodal. Others have touched on it. I won't get into that but, as you can see here we have increased it. In 2017 it was only 19%. That is in fact increasing. One of the reasons that is not as high as it was before is because we transfer a lot of the truckloads over the railways. Now I can do them with the private rail fleet. Again intermodal is a very large part of what we do. It plays into the overall transportation strategy and especially now with truckload capacity being what it is. More importantly, it's something that really allows us to cut down on the carbon footprint. That's one of the things that we partnered with SmartWay for. How do we do that? We have a TMS system, we try to ship the most efficient way. We try to take trucks of the road. These are just three of the steps we have taken to do that. Taking trucks off the road is part of the goals and objectives here at Pinnacle. Our goal is to increase efforts as much as we can to be more efficient and take trucks of the road and level CO2 emissions.
Jennifer Symoun
All right, well thank you Darren. We have a number of questions that have come in come in during this presentation. We are going to go ahead and start the question and answer session with the questions that have been typed in. For those that have additional questions, please continue to type them in and we will get through as many as possible. If we have time after this, we will also open up the phone lines.
I'm going to start with you, Darren. We will start up with questions for you since you just finished up. Have heavier loads and higher axel trucks in Michigan impacted roadway and pavement conditions or added any safety concerns for your network?
Darren Conner
No it has not, keep in mind those were put in place in Michigan because of the auto industry out there. These have already been in place, this is not something new that we have done. Eight axle trucks have always been in Michigan to help support the auto industry. There has been nothing in terms of safety that has changed. There has been no more wear and tear to the roadways to my knowledge because were using something that that is that is simply already existing in the state.
Jennifer Symoun
All right thank you. Another question for you, what percentage of annual truck trips does the 600 removed through using heavier loads represent?
Darren Conner
Probably roughly about five, I'm guessing. I would have to do more research on that.
Jennifer Symoun
Let's see here, Jason, we have questions for you. You mentioned that you ship small packages to individuals. Can you talk about the smaller shippers and the SmartWay program?
Jason Lau
For the most part the small packages are going to a clinical care facility in the hospital setting. The surgical suite, for 98% plus of the small package utilization it's gone through FedEx and UPS. When we talk about partnering with them on the opportunity that we have to be frank with the team, the biggest challenges that a lot of what we are shipping are in packages that are larger in size than they would like to be. I usually make them akin to an Amazon box where you could buy a box pencils and it arrives in a box the size of your dog. We are constantly looking for ways to take advantage of the weight and size available within trailers. It has been an excellent partnership again for both large and small package providers that continue to thrive in the marketplace around vehicles with alternative fuel and continue to challenge us as far as how large the packages are.
Jennifer Symoun
Do you use any SmartWay partner 3PLs to find network efficiencies, or negotiate shared loads?
Jason Lau
We actually do. That's a great question. I think it was brought up by Joann when she talked about looking for leverage in the community locations for aggregating passages so we are not making home deliveries. We have two different 3PL's that are SmartWay certified. For those in the field that are having to wait for the one individual package for their location and for those that stock inventory at a shared location, centrally located closer to them. So the value of course for us is, less small packages. It reduces carbon usage. It's also a big win for us because then we have the inventory as close as we can to the necessary parties. We have done so in a sustainable matter.
Jennifer Symoun
Thank you. One more question for you, do you find that doing business with SmartWay carriers, and using SmartWay tools as a platform, helps you describe and negotiate emissions-reduction and money saving strategies?
Jason Lau
That's an interesting question because I would say that, we have been able to level the playing field, historically, with 95+ % SmartWay certified carriers. I would say we found a good percentage of the markets to drive down the cost. We are pragmatic in the shippers’ side in making investments and SmartWay technology comes at an expense. We understand and appreciate that. The biggest goal we are looking to leverage discussions around in service is, are all the providers operating on equal footing? Are they using similar access to equipment? Similar networks? That's where we have found a significant percentage of SmartWay carriers where they don't have to drive that. The biggest concern historically, is that we are not a real level playing field. Are we really going to get the long-term value from a provider who maybe isn't investing in the technologies that another carrier could be? We know that these cost money. We understand these providers save from a fuel standpoint. We understand that money gets reinvested to similar ways that we would as a manufacturing company. We understand that part of the cost model. Our goal is to make it as even as possible.
Jennifer Symoun
All right thank you. Kara we have some questions for you. Can Whirlpool account for Canada shipping in the SmartWay shipper tool? How about Mexico?
Kara Hegg
Whirlpool Canada is affiliated with Whirlpool U.S. We are under one business umbrella. I account for the movement in Canada both across the border and entering Canada when I file with SmartWay each year because of how the business is structured. There is a similar program to the EPA. It's younger than the SmartWay program. There is a little more of a distinction with us and how the umbrella is with things that go across the border. I believe Mexico is developing a similar program that is to my knowledge in its infancy stage. I think there will be more growth and opportunity there as it matures in that market partnering with the cross-border carriers especially.
Joann Jackson-Stephens
Hello this is Joann. She is right. There is a similar program in Mexico, it's called a transport method right now. We are working with them so that they will establish a SmartWay program there. There program isn't as long as the SmartWay program is in U.S. and Canada. We are doing a lot to provide support for them so they could get up on the same level as Canada and the U.S.
Jennifer Symoun
All right, thank you. Another question for you. Can you comment on the trend toward intermodal and away from truckload? What is driving this and are there ways that the public sector can help encourage/facilitate more of it?
Kara Hegg
The shift between this, there is an ebb and flow in the market of what ends up being, whether there is capacity and capacity strength. A couple of years ago we saw a change in the truckload market. The rate and availability made it more attractive. It's significantly going into the back half of this year. Really for us it's the balance of where we could find the capacity and equipment to move the freight. From the public sector, a local level encouraging the intermodal movement, I think it's probably the same policy that made it easy for truckloads to move as it does for rails. If the rails in the community were in the market, they could be utilized, there is a great portion, and it takes it from the rail yard and the final need for the intermodal move. The hours of service, the driver ages, all of these things that will affect the availability of trucks on the road, it will help to improve the intermodal availability as well.
Jennifer Symoun
Another question for you, do the amenities you provide under your “Shipper of Choice” program seem to help engage the best carriers, or get responses from carriers to shipping needs faster? Do you have any data on whether the amenities reduce idling at your facilities?
Kara Hegg
In terms of data that we use at the facilities, it's focused on our own trailer turnaround time. I don't track that specifically to when a driver enters the yard or could be sitting attached to the trailer. We don't today measure it to that level of granularity. As far as the shipper of choice program, that's been a focus and has grown over the past couple of years. It started with us asking questions around what does it take for us to be a shipper of choice to the carriers and really become strategic partners versus hiring them to move the trucks. One of the main points, one of the important parts of that relationship is taking care of the drivers and making sure that they know where the resources are. This calendar year we didn't actually physically make any changes to the building. It highlighted that drivers basically don't know what is available. We talk about the ease of finding where you need to go, ease of finding the shipping and receiving office, whatever the drivers needs are, we have not used these as a standard across the network. We can communicate some of those basic things. Our first pass at that is to say let's get this information in front of the drivers to help reduce those. There is a lot that goes into the carrier relationship beyond taking care of the driver. It's just one piece of the puzzle. We continue to put pressure on the carriers and talk to the management throughout the challenges becoming of us.
Jennifer Symoun
All right, thank you. Joann, we have questions for you as well. Let's see here, can shippers and trucking companies get recognition from EPA for using some of these strategies than make a difference locally?
Joann Jackson-Stephens
Yes, I didn't really talk about that today. But we sort of have a good number of efforts actually for companies to get recognition for what they are doing. Our premier recognition is the SmartWay excellence reward, we offer that each year. We have been recognizing partners with the SmartWay awards since 2006. It's where we recognize the top 1-2% of partners from all partner categories for environmental performance that is assessed for the most part on the assessment tools that they submit to us each year. We also consider some leadership characteristics for shippers and logistics companies as well as multimodal carriers as well. A new initiative that we launched a few weeks ago, is what we call a high performer. It's not our premier EPA award but it's a way for us to pat the companies on the back that are doing a good job in terms of environmental performance as well. Those companies fall within the top 5-10% of the partnership. The other way that we offer recognition for companies that are participating and are doing maybe some innovative and excellent things, we do profiles, we do maybe between 3-4 profiles each year. When we do those we put the information in our updates about the departments that we are profiling. Those are some of the ways per we provide recognition for the top-performing partners as well as those companies that are doing unique or innovative things. It's another way for us to kind of share the best practices. We also like to provide recognition by offering companies that are doing great things with opportunities to do the best practices on forums like this one. It could be a webinar or conference. That's another way that we provide recognition to partners.
Jennifer Symoun
Another question for you, can you define "fence-line communities' and suggested solutions.
Joann Jackson-Stephens
I think what they were referring to is when I spoke about gate locks. That is a way to control access to a facility to minimize piling or controlled delivery times. It's as simple as that. I hope that answers that question.
Jennifer Symoun
Joann, another question, how can transportation planners find out what nearby freight-intensive businesses are SmartWay partners?
Joann Jackson-Stephens
I will type the web address for that in the chat pod in a moment. We have a partner list on our website. It's updated quite frequently. Whenever a new partner is joining, or registered with SmartWay they are added to that list. It's sorted alphabetically and you can sort it by state. That's the easiest way to find out who the SmartWay partners are. If you have a relationship with the SmartWay contact in your EPA region, they may also be able to connect you with the SmartWay partner. If there are companies that you might be interested in working with for sustainability efforts, that are not partnered with SmartWay, please reach out to us here at EPA, we have a list of companies that we have ongoing discussions with that we are working with registering for SmartWay and are considering for SmartWay. Sometimes it takes a company several years because they are working through their system in order to answer questions and make sure they're pulling data from the right places like that. It sometimes takes a while. There are quite a few companies that we have on this list that are not SmartWay partners but we are working closely with in hopes that they become SmartWay partners in the near future.
Jennifer Symoun
Another question for you, do you know of any way facility or fleet owners can get help affording SmartWay -verified technologies?
Joann Jackson-Stephens
Well, I could follow up with you on that. There are some funding mechanisms. It's just that’s not my primary area that I work in. I could follow up with if you let me know who the individual is. I could follow up with them.
Jennifer Symoun
Thank you. We have a question for Kara, Jason, and Darren. Do you have any “asks” for transportation folks, by way of planning and building infrastructure to better enable you to accomplish your SmartWay and other efficiency goals for moving freight…and maybe even share credit with you for emission reductions?
Kara Hegg
That's a lot in there. I think it really comes into making movement easier and working to improve the main arteries and corridors to make it easier access for the carriers alike. And also it goes back to policies that are smart, that are appropriately restricted but not really burdensome. I think that's a big piece in understanding how it could impact long-term, whether things will benefit the community or have a negative impact on the ability to move goods in the community. Making sure that there are things that are appropriately balanced.
Jason Lau
I like to build on what was said, certainly we understand that shipper regulations are out there to protect the motoring public. From our side we agree with that. We think that the legislation out there should absolutely support the safety of everyone on the interstate that is encountering one of our loads. We have seen predominantly on the sustainable fuel side, many infrastructure builds has been in the private sector. That's probably where it belongs. It will be interesting to see how that plays out as electricity starts to become a fuel source for the heavy truck industry as well. There are not a lot of opportunities there. I would echo a lot of areas with congestion with opportunities to review the infrastructure and to keep flow moving. It's critically important. We operate out of the northeast corridor and the Memphis, TN market. Quite a gateway for the most part. There are many opportunities for the public sector to allow congestion to flow. It's critical for us. When we talk about this based on hold times for facilities. This would be important to us.
Darren Conner
It would be more so from the carrier partner side that we have done than with partnering with the lightweight equipment I mentioned. Also partnering with others, even local governments where we work to get real insight into some of the locations. That helps also to decrease the emissions.
Jennifer Symoun
A follow-up question for all three of you on how to improve the transportation system - how much do you (SmartWay shippers) interact directly with state DOTs and Metropolitan Planning Organizations, and if you do, how can that partnership be enhanced from the shippers' point of view?
Kara Hegg
That's handled more locally at the plant and warehouse level rather than from a corporate side of things. I'm not saying that's not something that couldn't improve certainly from this. But a lot of that today, it's handled at the actual physical site from where they are locally in the municipal governments and so forth. Something we probably should and could take a more active role in versus just the plants.
Jason Lau
We have not taken an active role when it comes to the SmartWay partnership or the ground transportation side but our company has been active in working with the federal government regulations for lithium batteries, other dangerous goods and items that we transport because we feel like we have responsibilities to be engaged and part of this conversation to help build a better solution for the safest part of the country. It's really not of the transportation side but more on the dangerous goods side. We see value in working with government agencies. It's our responsibility for the larger shipments.
Darren Conner
I think my response would be similar to theirs, more of that interaction. We might get more at the corporate level. The majority is also at the local level.
Jennifer Symoun
Okay thank you. Joann, another question for you. Can describe the types of technology that SmartWay verifies now, and may in the future? Is it all for trucks?
Joann Jackson-Stephens
It's not offered just for trucks, some of it is for trailers. The types of equipment that SmartWay verifies currently, it's aerodynamic devices for trailers. That would include things like rear end steering, for the trailers, as well as low rolling resistance tires. That could be for both tractors and trailers. As well as idling reductions technology. You can find the list of SmartWay verified equipment on the SmartWay website. It’s there in quite a lot of detail with information specifically for manufacturers by model names, and in some cases there is equipment that makes them the most fuel-efficient vehicles with the equipment on the road today. As far as what we are hoping to do in the future? There has been a lot of pressure to think about designation for daytime, that’s something that we are working on with us for the organization here that does the verification program for SmartWay. And, that would be the main reason for it. If we could pull it back to focus on in the future. I think there's a big demand for that.
Jennifer Symoun
All right, Jason, I have another question for you. Approximately how many truck carriers are in your pool, and on average how many years do they work with you?
Jason Lau
The question is quite timely because we are just reviewing the 2017 goals for the core carrier policy. When it comes to how we look at a core carrier, all modes of transport locally when we are talking about just North American truckloads less than the parcel and carrier, over 60-62 to be exact. The top 10 providers, those have individually on average over 15 years of experience with the Medtronic part of the company. We feel like the long-term ownership is the way to go. We try to do the same, we try to put systems in place so that carriers could be long-term successful with us so it is not a transactional discussion. When you have an opportunity, I say you have that discussion around long-term sustainability for your organization. The carriers will want to partner with you long-term on that rather than the other side.
Jennifer Symoun
All right thank you. We have about six minutes left. I don't see any additional questions so
I will go ahead and close out. As I am reading this, if anyone thinks of any questions type them in and I will go ahead and pause to ask the question.
I want to thank all of the presenters. Thank you for everyone who attended today's seminar. The recording of the seminar will be available online in the next few weeks on the talking freight website. And also I will send out an email once it is available.
There will be another Talking Freight seminar held tomorrow on Freight and Passenger Rail Operations Coordination Issues and Needs. Registration is still available for this seminar, you may register through the link shown on this slide.
I encourage you to join the Freight Planning LISTSERV if you have not already done so.
Also, if you wish to receive a PDH certificate for attending the live seminar, please visit the link on the slide.
Thank you everyone. Enjoy the rest of your day.
