United States
     Environmental Protection
  martWay Transport
Helping the Freight Industry Save Fuel,
Money, and the Environment
                            2005 Annual Report

(US t
 ouss i

Table  of Contents
      hat I:

   What Is SmartWay Transport?	3

   Summary of Key Accomplishments, 2004-2005 	4

Program Activities..TS^.	5

   The SmartWay Transport Partnership	5

   National Transportation Idle-Free Corridors Project	10

   SmartWay Innovative Financing Program	11

   jmartWay Technologies Program	13

Looking Ahead	14


      Economic prosperity in the United States is inextri-
      cably tied to the commercial movement of goods
      by truck and rail. Trucks and locomotives move
more than 80 percent of the nation's freight—some 9
billion tons each year—valued at nearly $7 trillion.
While essential to business and consumers, the ground
freight transport system also consumes energy and pro-
duces pollution. Trucks and locomotives burn 35  billion
gallons of diesel fuel each year, representing 20  percent
of the fuel used in the transportation sector. Carriers
hauling the nation's goods produce more than 350 million
metric tons of carbon dioxide (CCM, a greenhouse gas,
annually. They also emit nitrogen oxides (NOx) and partic-
ulate matter (PM), air pollutants that have serious health
and environmental impacts.

With factors such as just-in-time manufacturing, faster
delivery services, and demand for imported products
increasing both the volume and value of freight shipments
in the United States, freight-related energy consumption
and pollution are also increasing. Based on current trends,
ground freight transportation will consume more than 45
billion gallons of diesel fuel and produce over 450 million
metric tons of CC>2 by 2012—an increase of more than 25
percent compared to today's levels.
                                                                   SmartWay Transport — 2005 Annual Report

Transport Partnership
 What Is Smart Way Transport?

     To address economic and environmental challenges
     surrounding growth in the freight industry, the U.S.
 Environmental Protection Agency (EPA) has developed
 the SmartWay Transport program to reduce greenhouse
 gas emissions and air pollution from the ground freight
 transport industry. This innovative, voluntary program
 promotes efficiency in the freight sector. Through public-
 private partnerships, SmartWay Transport is helping
 freight companies save money while also reducing fuel
 consumption and harmful environmental impacts. This
 new approach to government/industry cooperation
 demonstrates that environmental protection and
 economic progress can go hand in  hand.

 The objective of SmartWay Transport is to increase the
 fuel efficiency and environmental performance of the
 ground freight industry through four core components:

 The SmartWay Transport Partnership
 •  A strong government/industry partnership among
    freight shippers, carriers, and logistics companies.

 The National Transportation Idle-Free
 Corridors Project
 •  A partnership with federal, state, and local
    government; industry; and other organizations com-
    mitted to eliminating all unnecessary long-duration
    truck and locomotive idling at strategic points along
    major transportation corridors.
SmartWay Innovative Financing Program
•  An innovative financial strategy that helps compa-
   nies acquire fuel-efficient, low-pollution technologies
   through creative financial mechanisms such as low-
   interest loans.

SmartWay Technologies Program
•  A testing and verification program designed to
   quantify emissions reductions and fuel  savings and
   allow companies to assess environmental perform-
   ance of products.
 SmartWay Transport — 2005 Annual Report

Accomplishments,  2004-2005
    Since the program's inception, SmartWay projects
    that its program activities will eliminate more than
3.2 million tons of C02, reduce diesel fuel consumption
by nearly 300 million gallons, and save participating
partners $850 million in fuel costs annually. In 2004 and
2005, the SmartWay Transport Partnership has also
achieved the following:

SmartWay Transport Partnership
•  Established corporate partnerships with 261 freight
   shippers, shipper-carriers (private fleets), carriers
   (truck and rail), and logistics companies in the United
   States and Canada (plus relationships with 22 asso-
   ciations and nonprofit organizations) to promote
   awareness and adoption of SmartWay strategies.

•  Signed a Memorandum of Understanding with
   Canada to expand  SmartWay Transport Partnership
   resources and reach.
National Transportation Idle-Free
Corridor Project
•  Initiated pilot projects in 52 sites and distributed
   $6 million worth of grants to 14 states and nonprofit

SmartWay Innovative Financing Program
•  Started  coordination with Arkansas and Minnesota
   to allow use of technology loans for SmartWay
   Upgrade Kits.

SmartWay Technologies Program
•  Conducted preliminary testing, which demonstrated
   measurable improvements in fuel efficiency and
   reductions in NOx emissions due to single-wide tires
   and trailer aerodynamics.
Environmental Measures of Achievement

Smartway Corporate
National Transportation
Idle-Free Corridors Project
Diesel Fuel
Savings Anticipated
Fuel Savings
         Note: Fuel savings are based on a November 10, 2005, price of $2.85/gallon and do not include capital or labor costs.
                                                                     SmartWay Transport — 2005 Annual Report

Program  Activities

   In just over a year, SmartWay Transport has made a
   major impact on the ground freight transport indus-
   try. Hundreds of companies, state and local agen-
cies, and other organizations are recognizing the
progressive creativity of this program. SmartWay
Transport is setting an outstanding example of the
power and potential of government and industry work-
ing together to achieve mutual goals—environmental
protection and economic prosperity.

The structure, goals, and achievements of the four core
components of SmartWay Transport are described in
more detail in the following sections.
The SmartWay Transport
Partnership: Business  and
Government Working Together

On February 9, 2004, EPA unveiled the SmartWay
Transport Partnership with the full support of the truck-
ing industry, including 15 charter partners and the
American Trucking Associations. The partnership element
of the broader SmartWay Transport program emphasizes
voluntary participation by progressive  companies and
organizations that recognize that they can improve their
business and the environment at the same time.
Companies that provide and/or hire freight delivery and
SmartWay Transport — 2005 Annual Report

logistics services become SmartWay Transport Partners
by committing to improve the environmental perform-
ance of their freight delivery operations. Environmental
performance is calculated using specially designed mod
els that compute reductions in fuel consumption, and
CC>2, NOx, and/or PM emissions.

   SmartWay Transport Partnership
   Charter Partners

   These companies helped design and develop the
   SmartWay Transport Partnership:
     Canon USA

     CSX Transportation

     Coca-Cola Enterprises

     FedEx Express


     The Home Depot

     IKEA North America


Norm Thompson Outfitters

Roadway Express

Schneider National

Swift Transportation


Yellow Transportation
How the Partnership Works

There are currently four categories of SmartWay
Transport Partners:

•   Shipper Partners are companies that manufac-
    ture or sell merchandise and ship those goods to
    distribution centers or retail facilities.

•   Carrier Partners are companies  that own and
    operate freight trucks or locomotives that are hired
    to transport materials or merchandise; these include
    truck and rail companies as well as "shipper-carri-
    ers"—companies that ship their merchandise using
    their  own private fleets.

•   Logistics Partners are companies that are hired
    to facilitate the packaging and shipping of goods.
  How Companies Join the SmartWay
  Transport Partnership

  When companies, such as freight shippers, carriers, or
  logistics handlers, join the SmartWay Transport
  Partnership, they commit to:

   • Assessing the environmental performance of their
     current operations using EPA's Freight Logistics
     Environmental and Energy Tracking (FLEET)
     Performance Models.

   • Identifying a goal to improve their environmental per-

   • Developing a plan detailing how the goal will be achieved.

   • Reporting their progress annually to EPA.
•  Affiliate Partners are organizations and associa-
   tions that help spread the word about SmartWay
   and encourage participation.

SmartWay Transport Carriers commit to integrate innova-
tive cost-saving strategies into their fleet operations.
These strategies include a variety of technologies that,
when added to trucks or locomotives in the carrier's cur-
rent fleet, provide significant fuel economy gains, espe-
cially when combinations of these technologies are
installed. In addition, carriers can adopt non-technology
strategies such as driver training and improved logistics
to save even more fuel. These strategies result in sav-
ings on fuel costs and maintenance, can  improve driver
retention, and can result in more business from shippers
that are concerned about environmental stewardship
and corporate social responsibility.

SmartWay Transport Shippers commit to  ship at least 50
percent of their goods with SmartWay Transport carriers.
Shippers also can further improve their environmental
performance by adopting strategies such as no-idling
policies at their docks, evaluating and modifying busi-
ness practices at their distribution  centers and ware-
houses, and using a combination of truck and
                                                                        SmartWay Transport — 2005 Annual Report

locomotive transport to ship their goods. Companies
that meet SmartWay Transport Partnership requirements
will benefit from a reduced environmental footprint and
reduced operating costs.

Like shippers, SmartWay Transport  Logistics Partners do
not generally own or directly operate freight trucks.
Instead, they act as intermediaries  for shippers and carri-
ers, managing the shippers' inbound freight, customs,
warehousing, order fulfillment, distribution, and out-
bound freight to the shippers' customers. Logistics
Partners' role in the SmartWay Transport Partnership is
to inspire the fleets that they manage to join the partner-
ship and adopt the fuel-saving strategies and technolo-
gies SmartWay Transport promotes. Logistics companies
determine the percentage of freight shipped by SmartWay
carriers and commit to increase that percentage by at
least 5 percent per year or increase the number of
SmartWay carriers contracted by 20 companies per year.

All partners commit to improving their environmental
performance, and partners that demonstrate superior
performance  are recognized through press announce-
ments, events, and award ceremonies. They also earn
Recommended Technologies to Improve Fuel Efficiency
Idle Reduction
Device - Bunk
Idle Reduction
Device -Auxiliary
Power Unit
Idle Reduction
Strategy -
Truck Stop
Auto Tire
Small, lightweight, diesel fuel-fired device mounted in the cab
that provides heat for cab comfort. Does not include any air
conditioning capabilities.
Small diesel-powered generator mounted outside the cab that
provides heat, air conditioning, and electrical power to run
The process of shutting down the tractor and trailer (for trans-
port refrigerated units) and using an external source for power
and other amenities.
Traditional dual tires are replaced with one single-wide tire and
aluminum wheel. Can be applied to all tractor and trailer tire
positions except for the steer tires.
Underinflated tires can cause significant losses in fuel efficiency,
plus dangerous blow-outs. Auto tire inflation systems can ensure
the safety of drivers and lower fuel costs.
Fairings added to the front, underside, and rear of the trailer to
reduce drag.
$6,000 - $8,000
$20 for the
adapter kit plus
$1.25 for each
hour of use
Up to $900
5 months
21 to 28
8 months
29 months
45 months
15 months
1 The payback period is defined as the number of months it would take for the reduced fuel costs to compensate for the cost
 of the equipment. Fuel costs are calculated based on the November 10, 2005, diesel price of $2.85 per gallon.
SmartWay Transport — 2005 Annual Report

Beyond Technology
SmartWay Transport promotes many practical policy and
operations strategies to reduce fuel consumption:

 • Improved Freight Logistics can optimize
   trucking operation efficiency, saving fuel and increas-
   ing profits for trucking companies.

 • Warehouse Improvements can be made in
   and around warehouses and will facilitate improved
   efficiency and emission reductions.

 • Driver Training can improve fuel economy consid-
   erably by encouraging such simple techniques as
   cruise control, coasting whenever possible, limiting use
   of cab accessories, smooth and gradual acceleration,
   progressive shifting, reducing  maximum freeway
   speeds, and limiting truck idling and stops.

 • Intermodal  Shipping combines the fuel efficien-
   cy of  rail with the logistical strengths of trucking.
   Standardized containers are easily transferred from rail
   to truck, and vice versa.

 • Preferential Docking privileges for SmartWay
   Transport Partners: deliveries  by partner carriers may
   be given prime  docking times and locales.

 • Driver Comfort  Stations at docking facilities
   prevent the need for drivers to idle their trucks to stay
   warm or cool, as necessary.

 • Anti-Idling  Policies at loading docks, combined
   with driver comfort stations, ensure emission reduc-
   tions  and meet driver needs.

 • Improved Pickup/Delivery Scheduling can
   reduce excess  idling  and increase the on-time efficien-
   cy of  freight operations.

 • Operating FullTruckloads instead of partial
   loads not only improves efficiency but also helps
   reduce congestion at docking  facilities.
the right to display the SmartWay Transport logo on a
variety of promotional materials.

By defining clear and achievable goals and committing
to ambitious strategies, participants in the SmartWay
Transport Partnership are actively addressing concerns
about greenhouse gas reductions and air quality while
saving money.
Successes and Accomplishments

Since the partnership's inception in February 2004,
some of the largest national and international freight-
transport companies, product manufacturers, and cor-
porations in the United States and Canada have joined
the SmartWay Transport Partnership, along with many
small and medium-sized truck fleets, rail companies,
and logistics providers.

To date, 262 companies have joined the partnership.
From partner commitments during the first two years,
the SmartWay Transport Partnership projects annual
reductions of 3.1  million tons of CC>2, 777 tons of PM,
and 22,096 tons of NOx. These figures add up to an
annual fuel savings of 283 million gallons of diesel
fuel—worth $807 million per year to the industry.2

To date, SmartWay has enrolled 22 Affiliates, which are
spreading the message of improving fuel efficiency in
freight transport to hundreds of additional companies.
                                                      2 Based on the November 10, 2005, diesel price of $2.85 per gallon.
                                                                      SmartWay Transport — 2005 Annual Report

        SmartWay Transport Partners,
               Percentage by Type
                            Logistics      26
                              4%      Shippers
                 262 Total Partners
At the current rate of company progress in the SmartWay
Transport Partnership,  EPA's partners are well on their
way to achieving Smartway's goals of saving 6.6 billion
gallons of diesel fuel per year and eliminating 66 million
metric tons of C02 and as much as 200,000 tons of
NOx each year.

In addition to these notable environmental achieve-
ments, the SmartWay Transport Partnership has recently
developed relationships with the rail industry and with
Canada to further strengthen its efforts to transform the
way the freight  industry does business.

In May 2005, all seven major freight railroads joined the
SmartWay Transport Partnership. These Class 1 freight
railroads transport more than 90 percent of all domestic
rail freight. Each railroad has committed to evaluate the
environmental impacts of its operations and work jointly
with SmartWay to develop and implement a plan to
improve fuel efficiency and reduce emissions over the
next several  years.  Strategies include  reducing idling,
improving aerodynamics, applying new fuel-saving tech-
nologies, and installing emissions control devices.

The efforts of these seven railroads—BNSF Railway
Company, Canadian National Railway Company,
Canadian Pacific Railway, CSX Transportation, Kansas
City Southern, Norfolk Southern Corporation, and Union
Pacific Railroad—will further help SmartWay Transport
                    increase energy efficiency while reducing greenhouse
                    gas emissions and air pollution. More recently, after learn-
                    ing of the benefits of the partnership, Pacific Harbor Line,
                    a Class 3 railroad, also joined.
Why Are Companies Joining the
SmartWay Transport Partnership?

Direct economic benefits:

 • Reduced cost of fuel use. A one-to-three year payback
   period on most technologies.

 • Up to $3,000 in savings per truck per year after
   payback period.

 • Reduced maintenance costs.

 • Driver retention through driver incentive and training
   programs, and comfort features such as truck stop
   electrification and auxiliary power units.

Additional benefits:

 • An enhanced reputation with the public and stockhold-
   ers for environmental stewardship.

 • An additional way to meet corporate environmental
   sustainability goals.

 • A way to demonstrate corporate values that matter to

 • Business-to-business advantage.
SmartWay Transport — 2005 Annual Report

In September 2005, SmartWay developed a new part-
nership with Canada to share information and technical
tools focusing on idle reduction, deployment of clean
technologies, and driver training and awareness. The col-
laboration brings together the complementary strengths
of EPA's SmartWay Transport Partnership and Natural
Resources Canada's FleetSmart Program, with
SmartWay emphasizing the deployment of innovative
technologies and FleetSmart specializing in driver educa-
tion and training. With more than 13 million truck border
crossings between Canada and the United States each
year, this partnership could save up to 440 million
gallons of fuel and prevent emissions of an estimated
5 million tons of CC>2 per year.
National Transportation
Idle-Free  Corridors Project:
Working  to Dramatically
Reduce Long-Duration  Idling
    Long-duration truck and locomotive engine idling has
    a significant  impact on the environment and economy.
Each year, more than 1 billion gallons of diesel fuel are
consumed, and  11  million tons of CC>2,  200,000 tons of
NOx, and 5,000 tons of PM are emitted  due to long-dura-
tion truck and locomotive idling. In addition, long-duration
idling leads to increased engine maintenance costs and
shortened engine life, impaired driver rest and health, and
elevated noise levels, particularly  in urban areas.

On June  10,  2003, in Atlanta, Georgia, EPA launched the
National Transportation Idle-Free  Corridors Project. The
objective of this  project is to eliminate all unnecessary
long-duration truck and locomotive idling at strategic
points along  major transportation corridors.
How the National Transportation Idle'Free
Corridors Project Works

The National Transportation Idle-Free Corridors Project
addresses unnecessary idling, through studying, evaluat-
ing, and deploying technologies and infrastructure modi-
fications at truck stops, travel centers, ports, loading
docks, terminals,  and even along the side of the road.
The program has  installed truck stop electrification (TSE)
at truck parking facilities across the country along major
interstate corridors, such  as I-95, I-40, I-5, I-35, 1-10, and
I-85.TSE provides for the heating,  cooling, and power
needs of truck drivers on  layovers between transport
trips. While most  truck drivers idle  their engines to sup-
ply the power for these purposes, TSE lets drivers turn
off their engines and plug into a grid—reducing fuel
waste and associated emissions. The program also  pro-
motes mobile idle reduction technologies, such as
direct-fired heaters and auxiliary power units (APUs),
which are installed directly on trucks to provide power
and allow engine  shutdown.

Successes and Accomplishments

The National Transportation Idle-Free Corridors Project
currently has 31 active anti-idling projects and 27 new
sites under construction to evaluate the  potential bene-
fits of idle reduction technologies that provide power,
heating, and cooling without using the engine.

To help states assess the environmental benefits of idle-
reduction strategies in state air quality planning, the
National Transportation Idle-Free Corridors Project pub-
lished formal air quality guidance in January 2004 for
including idle reduction projects in  state implementation
plans and conformity determinations. And during the
summer of 2005, the program began working with state gov-
ernments and industry representatives to develop a model
state or local idling law for heavy-duty trucks and buses.

Over the last two years, the SmartWay team has award-
ed 14 grants to states and nonprofit  organizations total-
ing approximately $6 million for the deployment of idle
reduction technologies around the  country. Once fully
                 SmartWay Transport — 2005 Annual Report

implemented, these technologies are expected to yield
yearly reductions of 52,233 tons of C02, 877 tons of
NOx, and 22 tons of PM, saving 5.1 million gallons of
diesel fuel each year. These reductions will help states
and counties achieve their air quality goals.
SmartWay Innovative
Financing Program:  Making
Technology Accessible
      ost freight fleets are small. In fact, 96 percent of
      all trucking companies operate 20 or fewer trucks,
and 87 percent operate six trucks or fewer. These small
businesses are the most affected by rising fuel prices
and the least able to absorb the added cost and high
competition in the freight industry. For these companies,
the SmartWay Transport Partnership represents a tremen-
dous opportunity to take advantage of technologies, corpo-
rate policies, and driver training programs, which save fuel
and money and help  protect environmental quality.

For many of these companies, however, the major barri-
er to adopting these fuel and cost-saving strategies is a
lack of investment capital.

To help make these technologies more accessible to these
trucking companies, SmartWay Transport is establishing
the SmartWay Innovative Financing Program and Upgrade
Kit program.
"SmartWay Upgrade Kits." These kits, which can include
idle reduction devices, single-wide tires, and trailer
aerodynamics, along with the PM control device, will
be offered to trucking companies through flexible low-
interest loans managed through state and national
loan programs.

SmartWay Upgrade Kits create a monetary incentive for
trucking companies to retrofit their trucks because the
monthly fuel savings achieved from the technology
upgrade exceed the monthly cost of the loan. In effect,
these innovative financial packages actually put money in
a truck owner's pocket.
How SmartWay Innovative Financing
and Upgrade Kits Work

To assist these companies, SmartWay
has developed an innovative program,
bundling highly fuel-efficient technologies
with emission control devices, such
as an oxidation catalyst or PM filter, into
SmartWay Transport — 2005 Annual Report

    SmartWay Upgrade  Kits
    How Do SmartWay Upgrade Kits Work?

    To receive a loan for a SmartWay Upgrade Kit, companies must choose one or more of the following technologies:
    •  Idling-Control Technologies (APU or bunk heater):   6 - 10% fuel savings
    •  Wide-Base Tires with Aluminum Wheels:          4 - 10% fuel savings
    •  Improved Aerodynamics:                        5 - 7% fuel savings
    •  Emission Reduction  Device:                     20 - 90% PM reductions

    Fuel and emissions savings begin as soon as the technologies are installed. Most companies will begin to see
    financial benefits right away.  The following example demonstrates the profitability of this type of loan program.*
    Example  Kit
Direct-Fired Heater
Super Single Tires
w/Aluminum Wheels
Trailer Aero Kit
PM Filter
Cost/Unit (Retrofit)*
PM Reduction
NOx Reduction
Fuel Economy
    'For a truck traveling 100,000 miles/year @ 6 mpg (16,667 gallons/year)
         Fuel savings:           2,833 gallons @ $2.75/gallon
         Payback period:         $13,900/$7790
         or a 3-year loan @ 4.8% APR:
                Monthly fuel savings:    $649
                Monthly loan payment:   ($415)

                Monthly cash for driver: $234
Successes and Accomplishments

The SmartWay Innovative Financing Program is coordi-
nating with small business loan programs in Arkansas
and Minnesota to offer SmartWay Upgrade Kits at
below-market interest rates. These two programs are
just the beginning—SmartWay Innovative Financing is
actively working with six to 10 additional states to
expand these programs.
The SmartWay Innovative Financing Program is also part-
nering with private lending institutions and other private
investors to expand these innovative financing strategies
into the private sector.
                 SmartWay Transport — 2005 Annual Report

Smart Way Technologies
Program:  Evaluating  Fuel
Efficiency and Environmental
     Numerous technologies designed to improve fuel
     efficiency are available today. However, beyond
manufacturer specifications, little is known about the
actual effects these technologies have or how a combi-
nation of these technologies applied to a single truck will
cumulatively impact fuel consumption.

To better understand the fuel economy impacts of these
technologies and evaluate the relationship between fuel
economy improvements and NOx reductions, SmartWay
Transport initiated an ambitious testing program called
the SmartWay Technologies Program.

How the SmartWay Technologies
Program Works

The goals of the SmartWay Technologies Program are to:

•  Develop a testing methodology and drive cycles
   needed  to evaluate and verify fuel-saving products
   for heavy-duty trucks used in highway application;

•  Better quantify the fuel-saving impacts of innovative,
   emerging technology options; and

•  Evaluate the potential  to reduce per-mile NOx emis-
   sions by retrofitting heavy trucks with the new tech-
   nology options to reduce engine load.

The SmartWay Technologies Program  began preliminary
testing of Class 8 tractor-trailers in late November 2004,
at a test track operated by the Department of Defense
in Aberdeen, Maryland. The purpose of the Technologies
Program was to determine whether or not it was possi-
ble to simultaneously measure fuel use, engine perform-
ance, and NOx emissions in a simulation of real-world
operating conditions. Two  identical 2004 model year
Mack Vision CX-13 Class 8 trucks, with identical Wabash-
Fruehauf 53-foot box trailers, were loaded to a typical 65
SmartWay Transport — 2005 Annual Report
percent payload. The test truck was modified to include
single-wide tires (lower rolling resistance and reduced
weight) and trailer aerodynamic devices to reduce wind
resistance and drag. SmartWay used a Portable
Emissions Measurement System (PEMS) to quantify
NOx emissions, and used the industry-standard SAE
1321 fuel economy test. A total of 72 tests under vary-
ing speeds and in-use conditions were conducted.

This testing ran through January 2005, and was an
important first step to developing a technology verifica-
tion program for SmartWay Transport. The results have
been evaluated, and will be presented at the SAE
Commercial Vehicle Engineering Congress in November,
2006, and  published in a peer-reviewed technical paper.
EPA plans  to conduct additional tests to gather more
data and further refine a test methodology that could be
used by the freight industry to assess the environmental
benefits of innovative technologies.

Successes and Accomplishments

The testing done to date shows that components
designed to reduce power load and improve fuel econo-
my may also reduce NOx  emissions. These test results
should be of particular  interest to the freight industry
because most fleets and operators will be using existing
heavy-duty trucks for many years or even decades to
come, and could benefit significantly from upgrade tech-
nologies. These simple, cost-effective components not
only have the potential to  reduce fuel costs; they may
also provide a method  of NOx control "retrofit" that
pays for itself. Through this testing program, the
SmartWay Technologies program has demonstrated a
correlation between fuel efficiency improvements and
NOx reductions. This study is truly groundbreaking—
although the relationship between fuel efficiency and
NOx emissions has been assumed, it has never been
tested or quantified.

Looking  Ahead
      Based on the first year's achievements and the
      growing interest in and support for this initiative,
      SmartWay Transport is expected to continue to
grow and expand its reach. Along with continued work in
the four core areas of the program, SmartWay Transport
is expanding into several new areas.

The foundation of the program has been,  and will contin-
ue to be, the SmartWay Transport  Partnership. The
actions of SmartWay Transport Partners, affecting more
than 300,000 vehicles, have reduced emissions at levels
exceeding the first year's goals.  However, the fact that
most of the industry is made up of small to medium-size
fleets, and these fleets tend to comprise older trucks,
leaves considerable room for fuel efficiency improve-
ments through technology upgrades. To continue to
make progress towards the 33 million to 66 million met-
ric ton C02 reduction per year goal, the SmartWay
Transport Partnership will further emphasize enrollment
of small and medium-size fleets to help them benefit
from the technology and non-technology fuel efficiency
strategies the partnership endorses.

Because of their smaller size and tighter profit margins,
these companies often find it difficult to get information
and capital for the best available transport efficiency
technologies and strategies. To support these companies
and to increase the penetration of fuel-efficient technolo-
                SmartWay Transport — 2005 Annual Report

   SmartWay Transport Indicators at a Glance
   Projected C02 reductions (tons/year)
   Projected NOx reductions (tons/year)
   Projected PM reductions (tons/year)
   Projected fuel savings (gallons/year)
   Projected dollar savings through reduced fuel use
   Partner companies
   Trucks/rail/vehicles affected by SmartWay Transport
         3.28 million
         298 million
         $850 million
gies into the market, SmartWay Transport will expand
the SmartWay Innovative Financing Program and is
actively working with six to 10 additional states to
increase the reach of these technology bundles and
funding strategies.

SmartWay Transport is exploring ways of distinguishing
low-emission, high-efficiency "SmartWay Trucks" that
represent the highest level of environmental perform-
ance in freight truck technology. Plans are in the works
to define criteria for outstanding truck performance and
to label these trucks with special identifiers.

Another way that SmartWay Transport is expanding its
reach  is through the development of a new SmartWay
partnership category—SmartWay Transport Truck Stops.
By introducing truck stops as partners, the partnership
will be recognizing truck stops for going above the law
by creating  non-idle zones and deploying electrified park-
ing spaces. In fall of 2005, SmartWay Transport launched
a pilot study in New York.

The SmartWay Technologies program will continue to
test technologies to verify fuel savings and emissions
reductions and to develop procedures with the ultimate
goal of being able to designate specific fuel-efficiency
technologies as "SmartWay Technologies."
To share the concept of SmartWay Transport with more
segments of the freight transport industry, the program
will continue to work with Smart Transport Affiliates to
promote the benefits of the SmartWay Transport and
encourage more companies to join the partnership. Also
planned are recognition and award ceremonies to honor
high levels of partner achievement, and other promotion-
al activities such as press events and public relations

With all trends pointing to future increases in freight
transport, fuel prices, and an increased need for com-
munities to find ways to  reduce pollution, it is clear that
SmartWay Transport's voluntary, innovative, and econom-
ical strategies and technologies will become essential
assets for the freight industry—and the environment.
SmartWay Transport — 2005 Annual Report

Appendix 1

Partnership Requirements
for Freight Shippers, Carriers,
and Logistics Companies

To meet their goals, all partners must:

• Sign the SmartWay Transport Partnership Agreement.
  Create and submit an Action Plan describing how
  shippers or carriers will achieve their goal.
  Report progress toward achieving the goal to EPA

Carriers must:
• Measure current environmental performance with the
  SmartWay Transport FLEET (Fleet Logistics Energy and
  Environmental Tracking) Performance Model for carriers.
  Commit to improve performance within three years.
Shippers must:
 Assess the current proportion of goods dispatched
 with SmartWay Transport partner carriers using the
 FLEET Performance Model for shippers.
 Commit to ship at least 50 percent or more of goods
 with SmartWay Transport partner carriers.
 Assess and commit to improve facility transportation
 emissions within three years.

Logistics companies  must:
 Determine the percentage of freight shipped by
 SmartWay carriers.
 Increase the percentage of freight shipped by
 SmartWay carriers by at  least 5 percent per year, or
 increase the number of SmartWay carriers contracted
 by 20  companies per year, and report this information
 in EPAs FLEET Performance Model.
 Provide a link to the SmartWay Transport Partnership
 Web site on the company Web site.
 Inform contracted carriers about the  partnership and
 the benefits of participating in the  partnership through
 various means, such as including SmartWay member-
 ship in contracting criteria, mailing brochures and pam-
 phlets, and giving presentations at meetings.
                                                                SmartWay Transport — 2005 Annual Report

Appendix 2
SmartWay  Transport

Partnership  Partner List

Freight Carriers (Trucking)
AAA Cooper Transportation (AL)
A&A Express, Inc. (SD)
Ace-Way Freight Systems 2003 Inc. (Canada)
Accelerated Freight Group (AL)
ADM Trucking, Inc. (IL)
AJ SaragusaTrucking Company Inc. (TX)
Alabama Motor Express, Inc. (AL)
Alert Motor Freight, Inc. (NJ)
Alvan Motor Freight (Ml)
American Cartage, Inc. (Canada)
AMI Transport Service (MA)
ArfstenTransfer Inc. (MN)
ArndtTrucking (SD)
Arnold Transportation Services (FL)
Arrow Trucking Company (OK)
A & STrucking Service, Inc.  (MD)
ASLTransportation (NJ)
Atkinson Freight Lines (PA)
Averitt Express (TN)
B.R. WilliamsTrucking, Inc. (AL)
BartelsTruck Line, Inc. (MN)
Baxter Healthcare (IL)
Bear Cartage & Intermodal,  Inc. (IL)
Behnke  Dedicated (Ml)
Bell City Transport Systems  (Canada)
Bison Transport, Inc. (Canada)
Braun's Express, Inc. (MA)
Brakebush Transportation  (Wl)
Bright Transportation, L.R  (TX)
Burns Motor Freight, Inc.  (WV)
California Cartage Express (CA)
Camionnage C.R, Inc. (Canada)
Can-Am West Carriers Inc. (Canada)
Cardinal Freight Carriers, Inc. (NC)
Celadon Trucking Services, Inc. (IN)
Central Freight Lines (TX)
Circle City Transport,  Inc. (AL)
Commercial Transportation,  Inc. (PA)
ContainerFreight EIT, LLC (CA)
Contract Freighters, Inc. (MO)
Coomes Inc. (KS)
C. R. England, Inc. (UT)
Currier Trucking Corp. (NH)
Cynthia Wilson (MO)
DamianTrucking, Inc. (IL)
Dart Transit Co. (MN)
Davis Cartage Co. (Ml)
Davis Express, Inc. (FL)
DeecoTransportation (Ml)
Deep South Freight (AL)
Denmark Express, Inc. (Wl)
DHL Express (FL)
Dick LavyTrucking, Inc.  (OH)
Diversified Transfer and Storage (MT)
Dizco, Inc. (SD)
Double NNTransport Ltd.  (Canada)
Douglass Distributing Carriers (TX)
Eagle Motor Freight, Inc. (AL)
ECM Transport, LLC (PA)
Estes Express Lines (VA)
Excargo Services (TX)
FastraxTransportation (Canada)
Farruggio's Express (PA)
FedEx Express Corp. (Charter Partner) (TN)
FedEx Freight System, Inc. (TN)
Floyd & BeasleyTransfer Company, Inc. (AL)
Floyd Wild Trucking, Inc. (MN)
Food Lion, LLC (NC)
Frerichs  Freight Lines, Inc. (IL)
Frito-Lay, Inc. (TX)
Frock Bros. Trucking, Inc. (PA)
Gangloff Industries, Inc. (IN)
Garufi Logistics, LLC (OH)
GenmarTransportation, Inc. (MN)
George's Foods, LLC (VA)
G.I. Trucking Company (CA)
Gordon Trucking, Inc. (WA)
Grand Island Express (NE)
Great Plains Trucking, Inc.  (KS)
Green Mountain Coffee Roasters (VT)
Greenbush Logistics, Inc.  (AL)
GTL Transportation (IA)
GwaltneyTransportation Co.,  Inc.  (VA)
Hall's Fast Motor Freight,  Inc. (NJ)
HannafordTrucking Company (ME)
H.F Campbell  & Son, Inc.  (PA)
Hilltop Transportation, Inc. (OH)
Hirschbach Motor Lines, Inc.  (NE)
Hodges Trucking Co.  (GA)
Hub Group, Inc. (IL)
Hudson's Bay  Company (Canada)
SmartWay Transport — 2005 Annual Report

HunkesTransfer, Inc. (MN)
Hospira Fleet Services, LLC (IL)
H.O.Wolding, Inc. (Wl)
I FA Trucking (FL)
International Motor Freight (NJ)
Interstate Distributor Co. (WA)
JKTrucking (Canada)
J&L Wilson Transportation, Inc. (IL)
J&MTank Lines, Inc. (GA)
J.B. HuntTransport, Inc. (AR)
John ChristnerTrucking, Inc. (OK)
Jones Brothers Trucking, Inc. (MT)
Joseph John  Belovich, Jr. (TX)
J&R SchugelTrucking,  Inc. (MN)
KBDTransportation (Canada)
KennesawTransportation, Inc. (GA)
Knight Transportation, Inc. (AZ)
Lakeville Motor Express, Inc. (MN)
Langford, Inc. (MN)
Lasco BathwareTrucking Company,  Inc. (Ml)
LavigneTruck Lines, Inc. (Canada)
LBAS Transportation (GA)
Lester Fellows Co. (NJ)
Linde Gas, LLC (OH)
Li-Way Transfer and Storage (GA)
Mark IVTransportation and Logistics (NJ)
Maverick Transportation, Inc. (AR)
May Trucking  Company (OR)
McFarlandTruck Lines, Inc. (MN)
McKelvey Trucking Company (AZ)
MDE&ETrucking (TX)
Metropolitan Trucking,  Inc. (NJ)
Michel Distribution Services, Inc. (MD)
Midwest Specialized Transportation, Inc. (MN)
MST Freight Services, Inc. (FL)
Muir's Cartage Limited (Canada)
Muir's International, Inc. (Canada)
National Distributors, Inc. (IN)
National Freight, Inc. (NJ)
New Century Transportation, Inc. (NJ)
New England Motor Freight (NJ)
New Penn Motor Express, Inc. (PA)
NickStrimbu, Inc. (OH)
Overnite Express, Inc. (MN)
Overnite Transportation Company (VA)
PAFTransportation, Inc. (ME)
PA.M. Transport, Inc. (AR)
Panther 11 Transportation, Inc. (OH)
Paramount Truck Lines Ltd. (Canada)
PaschallTruck Lines, Inc. (KY)
PCC Logistics (CA)
Perdue Transportation, Inc. (MD)
Pike Transportation, Inc. (AL)
Pitt Ohio Express, LLC (PA)
Plains Transportation (TX)
Pottle's Transportation, Inc. (ME)
Quad/Graphics, Inc. (Wl)
Quantum Logistics, LLC (AL)
Rapid Freightways  (CA)
Refrigerated Food Express, Inc. (MA)
R & E Enterprises of Mankato, Inc. (MN)
Reliable Liquid Transport (CA)
Rhett ButlerTrucking, Inc. (AL)
Rinchem Company, Inc. (NM)
R<rucking, Inc. (AL)
Roaco Logistics Services (IL)
RoadLink USA East (PA)
Rock Creek Transportation, Inc. (MD)
RoehlTransport, Inc. (Wl)
Schneider National, Inc. (Charter Partner) (Wl)
Shaw Transport, Inc. (GA)
Signature Truck Lines, Inc. (Canada)
Smithfield Packing Transportation  Co., Inc. (VA)
Southeastern Freight Lines, Inc. (SC)
Southern CalTransport, Inc. (AL)
Sprint Recycling (NY)
Stevens Transport (TX)
StylineTransportation, Inc.  (IN)
Sub Zero Transportation, Inc. (NE)
SummittTrucking, LLC (IL)
Swift Transportation Co., Inc. (Charter Partner) (AZ)
TazTrucking (Canada)
T.D.T., Inc. (FL)
Terra Renewal Services (AR)
Texas Department  of Transportation (TX)
Texas Star Express (TX)
Tig Transportation (NY)
TP Freight Lines, Inc. (OR)
Transport America (MN)
Transport Industries, L.P (TX)
Transways Motor Express Co., Inc. (NJ)
Transport Robert LTEE (Canada)
TrailwoodTransportation, Inc. (MN)
Triple  STrucking (NE)
Two Cool Trucking Corp. (NC)
Two Flags Transportation (Canada)
Unisource Worldwide, Inc.  (GA)
UPS (Charter Partner) (GA)
US Xpress Enterprises, Inc/Xpress Global
   Systems, Inc (TN)
  iA Motor Express, Inc. (AL)
USA Cartage, Inc. (MD)
USA Truck, Inc. (AR)
VaughanTransport,  Inc. (GA)
Vitran Logistics (Canada)
VOA Corporation (FL)
VTL Group (Canada)
Walgreen Co. (IL)
                  SmartWay Transport — 2005 Annual Report

Watkins Motor Lines, Inc. (FL)
Watkins & Shepard Trucking, Inc. (MT)
Wausau Carriers, Inc. (Wl)
Wellborn Transportation, Inc. (AL)
Werner Enterprises,  Inc. (NE)
Western Aries Co., LLC (NY)
Whitehead Bros, Inc. (AL)
Whole Foods Market, Midwest Distribution (IN)
WSETransportation,  LLC (AR)
YellowRoadway Corporation (Charter Partner) (OH)

Freight Carriers (Rail)

BNSF Railway Company (KS)
Canadian National Railway Company (Canada)
Canadian Pacific Railway (Canada)
CSXTransportation (FL)
Kansas City Railway  Company (MO)
Norfolk Southern Corporation (VA)
Pacific Harbor Line, Inc. (CA)
Union Pacific  Railroad (NE)

Freight Shippers
American Clean Energy Systems, Inc.  (OH)
Canadian Hydrogen Energy Company Ltd. (Canada)
Canon U.S.A., Inc. (Charter Partner) (NY)
Clean Diesel Technologies, Inc. (CT)
Cozort International,  LLC (MO)
Dell Products L.P (TX)
DENSO Manufacturing Michigan, Inc. (Ml)
IdleAire Technologies (TN)
IKEA North America  Services,  LLC
    (Charter Partner) (PA)
Interface, Inc. (Charter Partner) (GA)
JC Penney (TX)
J &J  Industries, Inc. (GA)
Labat-Anderson, Inc. (VA)
Lowe's (NC)
Lubri-Loy (MO)
Michelin North America, Inc. (SC)
Nike, Inc. (Charter Partner) (OR)
Owens Corning (OH)
Philips &Temro  Industries (MN)
Pressure Systems International (TX)
Sharp Electronics Corporation (NJ)
Shurepower, LLC (NY)
The Home Depot, Inc. (Charter Partner) (GA)
Transportation Systems Solutions, LLC (NC)
Volvo Logistics North America  (NC)

Bridgestone-Firestone North American Tire, LLC (TN)
Coca-Cola Enterprises, Inc (Charter Partner) (GA)
Dennis K.  Burke, Inc. (MA)
H-E-B (Charter Partner) (TX)
Schwan's Logistics, LLC (MN)
Tyson Foods, Inc. (AR)
Wal-Mart Stores, Inc. (AR)

Logistics Companies

AFN (Advantage Freight
Network) (IL)
APL Logistics (FL)
BNSF Logistics (AR)
Bullet Freight Systems,
    Inc. (CA)
Celtic International (CA)
CH Robinson Worldwide,
    Inc. (MN)
CRST Logistics, Inc.  (NJ)
NYK Logistics (Amends) (FL)
Pacer Global Logistics (OH)
The Radiant Group, LLC (KY)
Total Logistic Control, LLC (Ml)


Alliance to Save Energy (DC)
Association of American Railroads (DC)
Businesses for the Bay (MD)
California Trucking Association (CA)
Clean Air Minnesota (Ml)
Iowa Motor Truck Association (IA)
Iowa State University Center for Transportation
    Research and Education (IA)
Lane Regional Air Pollution Authority (OR)
Maine MotorTransport Association, Inc. (ME)
Maryland Motor Truck Association (MD)
Michigan Trucking Association (Ml)
Mid-West Truckers Association,  Inc. (IL)
Minnesota Trucking Association  (MTA)  (MN)
Nebraska Trucking Association (NE)
New Jersey Motor Truck Association (NJ)
Ohio Trucking Association (OH)
Pennsylvania Motor Truck Association (PA)
Texas Commission on Environmental Quality (TX)
Texas Motor Transportation Association (TX)
Washington Trucking Associations, Inc. (WA)
Wisconsin Motor Carriers Association (Wl)
Wisconsin Partners for Clean Air (Wl)
SmartWay Transport — 2005 Annual Report

What  Smart Way  Partners  Are  Saying
"Our participation in SmartWay is an
 important piece of our global fleet strategy.
 With our first sustainability report issued last fall, we set
 aggressive goals for reducing emissions and increasing
 fuel efficiency. SmartWay provides another way to push
 ourselves to meet, and exceed, those goals."
    — Mike Herr, Vice President of Environmental Affairs
     United Parcel Service (UPS)
'H-E-B has always believed in putting
 customers and community first.
 Being a good neighbor means safeguarding the health
 and welfare of our customers and partners. SmartWay
 Transport offers opportunities to learn and lead the way
 toward a clean transportation future."
    — Charles Butt, Chairman and CEO
"I encourage everyone to join Swift in
 becoming a member of SmartWay.
 The very worst thing that'll happen to you is you'll save
 fuel which means you'll make more money."
    — Dave Berry, Vice President
     Swift Transportation
"SmartWay...incorporates elements that we
 feel are consistent with how we approach
 our business and  how we want our service
 providers to approach things as well."
    — Sabina Strautman, Environmental Transport
"By joining the SmartWay Transport
 Partnership, BisonTransport demonstrates
 its strong environmental leadership and
 corporate responsibility.
 SmartWay Transport is a perfect fit for us as an
 organization, and its goals tie directly into Bison
 Transport's ongoing mission of becoming more
 efficient and environmentally responsible."
    — Don Streuber, President & CEO
"Averitt Express understands that the future
 of our world rests on the investments we
 make to care for the resources of today.
 Whether that manifests itself as following safe driving
 and freight handling procedures or fulfilling our obligation
 to protect the environment through avenues such as
 EPAs Smartway program, Averitt Express is answering
 the future's call."
    — Scott Wo If, Vice President of Corporate Services
     Averitt Express
                                                              SmartWay Transport — 2005 Annual Report


"Part of the mission of Interface, Inc. is
 to honor the places where we do business
 by endeavoring to become the first name
 in industrial ecology.
 We are striving for zero emissions in our operations,
 including the transportation of our raw materials and
 finished products. We believe that cooperative initiatives,
 such as SmartWay Transport, are an important step
 toward measuring and reducing our environmental
 ground transportation footprint."
    —Michael Bertolucci, Senior Vice President
      Interface, Inc.
"I have good news for you.
  New Environmental Protection Agency (EPA) programs
  are providing some of these requirements that are a high
  priority in the training business to achieve performance
  improvements within the transportation industry.
  These improvements can mean substantial savings for
  transportation companies. Who would have thought that
  EPA might become one of our best allies?"
    — Richard Ross, President
      Training Alternatives, Inc.
 'By designing this program, it shows me
 and other carriers that EPA is concerned
 about our business as well as clean air."
    — Rick Coomes, President
      Coomes Inc.
"This program gives us the opportunity to
 work with our carriers and logistics centers
 to develop practices and technologies that
 significantly benefit the environment."
    —Mark Servidio, Vice President
     Sharp Electronics
"This EPA SmartWay grant is another step
 forward in our nation's efforts to conserve
 fuel, achieve energy independence,  and
 reduce emissions that contribute to  soot
 and smog.
 By taking actions, both big, and small, to reduce our
 facilities' energy usage, we are responding to the
 President's call to conserve and promoting the common
 sense efforts we can all make as individuals to reduce
 our energy demand."
    —Stephen Johnson
     EPA Administrator
"The freight industry's achievements
 in SmartWay are consistent with
 President Bush's national call to conserve
 our country's energy resources and use
 collaborative, innovative approaches to
 resolve environmental problems."
    — Bill Wehrum, Assistant Administrator
     EPA Office of Air and Radiation
SmartWay Transport — 2005 Annual Report

United States
Environmental Protection Agency
Office of Transportation and Air Quality (6401 A)
June  2006