Transport Partnership
U.S. EHVI RCJ NM i N Til I'ROT ECTION AGE NCV
Carrier Partners
Stakeholder Meeting
Summary
Con-way Freight
Ann Arbor, Michigan
September 18, 2008
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Tara Meier, Ruan Transportation
Phillip Norman, FedEx Freight
Lance O'Daniel, Greatwide
Randy Ofiara, Menlo Worldwide
Matt Payne, U.S. Environmental
Protection Agency—SmartWay
Steve Perry, Con-way Truckload
Buddy Polovick, U.S. Environmental
Protection Agency—SmartWay
Bruce Stockton, Con-way Truckload
Jerry Swart, FedEx Ground
Gary Whicker, J.B. Hunt Transport, Inc.
Al Zahn, Con-way Truckload
George Luostari, Ryder Truck Rental, Inc.
Participants
Kyle Alexander, Transplace Texas, LP
Scott Allen, Ruan Transportation
Tommy Barnes, Menlo Worldwide
James Bigelow, DHL Express
Bryan Gerl, Schneider National, Inc.
Mitch Greenberg, U.S. Environmental
Protection Agency—SmartWay
Dave Guernsey, UPS
Alan Hammons, John Christner Trucking, Inc.
Matt Harding, Transplace Texas, LP
Carl Heavener, Con-way Freight
Leslie Johnson, J.B. Hunt Transport, Inc.
Mike Kelley, YRC Worldwide Inc.
Gay MacGregor, U.S. Environmental
Protection Agency—SmartWay
Call-in Participants
Dave Berry, Swift Transportation Co., Inc.
Alison Bird, FedEx Express Corporation
Overview
EPA updated attendees on the state of the Partnership, existing greenhouse gas (GHG) quantification
methods, SmartWay's supply chain vision, and potential improvements to Partner performance
evaluations, and summarized outcomes of the recent Shippers meeting. EPA encouraged SmartWay
Partner input on the long-term vision of the program. Key discussion questions included:
• How can EPA help reduce the burden for carriers due to shippers asking for environmental
information from Carrier Partners?
• What type of performance metrics are equitable and feasible for the carrier industry?
• What changes would Carrier Partners like to see in the SmartWay program?
• What should the Future FLEET Model look like?
• How can EPA assist Partners, considering resource and data constraints?
Highlights
Shippers' Environmental Information Requests
There was a general consensus that shippers were increasingly requesting carrier operation information in
order to develop their own carbon footprint estimates. These requests are often highly detailed, and differ
in specifics from one shipper to another. EPA hopes to leverage the new SmartWay reporting data to
decrease such reporting burdens, as well as to provide a standardized reporting approach across all freight
modes.
• EPA and Carrier Partners agreed that SmartWay could help reduce the Carriers' reporting burden
by creating a standard reporting protocol to respond to shippers' environmental information
requests. This information could potentially be made available on the SmartWay Web site.
• One Partner strongly favored a standardized measurement/format to provide information to
shippers. This Partner noted that a common measurement will help shippers to better judge which
carrier to select.
• Another participant asked if shippers were actually making decisions regarding Carrier selection
based on SIF scores, or simply based on SmartWay participation status. EPA responded that
shippers are increasingly requesting actual quantification of carrier performance in terms of
carbon footprints, as opposed to simply looking at Carriers' SIF scores.
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• A Partner suggested posting all information to the SmartWay Web site. Shippers could then refer
to the Web site, just as they do for ISO information.
New Performance Metrics
A central focus of the meeting was the discussion of adopting quantitative metrics to characterize Carrier
performance. These new metrics will replace the qualitative SIF scores assigned under the current FLEET
model approach. The discussion focused on what metrics may prove feasible, reliable, and equitable for
the different carrier operator types (e.g., LTL, TL, parcel). Potential performance metrics include, for
example, miles per gallon (MPG) (or, equivalently, grams of CO2 per mile) and grams per ton-mile.
• Many Carriers wish to refine their reporting, especially those with high SIF scores, as a means of
differentiating themselves from other Carriers.
• A participant indicated that he is not aware of shippers choosing Carriers based on SIF scores, but
he believes they eventually will. He did not, however, believe shippers would pay more for a
carrier with a better score. He felt shippers think a "green" carrier should save money and pass
those savings on to the shipper.
• Another participant believed some shippers are in fact willing to pay more for improved carrier
performance (and therefore reduced carbon footprints), pointing out that certain shippers have
established a two-tiered fuel surcharge system, benefiting more efficient carriers. Quantitative
metrics are therefore desirable in order to further differentiate carrier performance.
• A Partner felt that tailored metrics should be developed for specific operator categories because
all operate differently. The Partner continued by stating one metric may work in one situation, but
not in another. EPA agreed, noting that several factors including payload, percent empty hauls,
and cargo type, greatly influence both grams per mile and grams per ton-mile metrics,
necessitating differentiation by carrier type and/or SCAC code. Another Partner also agreed, but
noted that shippers will necessarily restrict their carrier comparisons within a carrier type, thereby
leveling the playing field and reducing the need for absolute "apples-to-apples" comparisons
across all carriers.
• The many variables and reporting limitations that could affect (and potentially bias) a grams per
mile score we mentioned. These variables included actual versus estimated miles, actual network
versus PC miles, actual versus estimated fuel consumption, and paid versus unpaid miles. For
example, calculating grams per ton-miles for package deliveries is simply not feasible.
• EPA noted that in principal, quantitative performance metrics fundamentally rely on the reporting
of miles and gallons. EPA requested carrier guidance regarding feasible, reliable, and equitable
sources for this data.
• Two Partners commented that it might not be feasible to standardize the mileage system that
carriers use. For example, the distance associated with a given route may vary depending on the
mileage table used. It was later suggested using the mileage that carriers report to the U.S.
Department of Transportation (DOT).
• A Partner expressed concern about how to address empty miles, paid and unpaid miles, and no-
idling rules. EPA pointed out that a grams per mile metric would be an absolute performance
metric because it wouldn't matter how emissions and fuel savings were achieved. EPA also
mentioned that a grams per mile metric would benefit both Carriers and Shippers because the
FLEET Model doesn't capture everything (such as driver training and empty miles), whereas a
grams per mile metric would reflect true performance.
• EPA noted that providing percent of uncharged miles is primarily needed for more complete
shipper carbon footprint reporting, and won't be used to make carrier efficiency look worse. One
Partner noted that his company tracks empty miles and "variance" miles, all separately. Variance
miles are unplanned deviations from standard routes (e.g., for detours), and can constitute a
substantial fraction of total miles. Tracking of both variance and empty miles would be needed to
back into revenue/non-revenue mile estimates.
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Another Partner noted that certain hauls (e.g., milk) are so specialized that empty back-hauls are
almost mandatory. This example was used to point out that it can be difficult to determine the
extent to which shippers are charged for empty back-hauls.
A participant noted that the package delivery network cannot assign miles to specific customers.
EPA suggested that average haul distance calculations might be necessary for such situations.
There was concern that carriers might have an incentive to inflate mileage reported in order to
improve their performance scores. EPA acknowledged the need for standardized reporting
requirements, at least by carrier category, as well as possible verification/auditing provisions.
One Partner was reluctant to release to the public a grams per mile metric and calculations
necessary to assign this score because he felt there is no uniform way to report the information.
Another Partner agreed that it shouldn't be released because the data could be considered
confidential business information. It is acceptable, however, to post the grams per mile metric if
calculations are not revealed.
Another participant wondered if carriers could be held to unreasonable standards because
shippers would not be able to verify or fully appreciate why a carrier has a certain score.
One participant stated that rather than reporting a specific grams per mile value for each specific
company, he prefers that EPA categorize different companies' grams per mile values into
performance bins (e.g., deciles). In this way the company is not labeled with a misleadingly
precise performance value, but the shippers still obtain a quantitative estimate of carbon
emissions on which to base their carrier selection decisions.
It was expressed that there would be great variability within bins. EPA said this would be
addressed through separating and segmenting by SCAC code and/or operator type.
EPA noted that an analysis of carrier MPG performance bypayloadbin demonstrated very large
variability across bins. A participant stated that there is a strong, definitive correlation between
payload and MPG. EPA agreed on a truck basis, but noted that other factors such as drive cycle
and driver variability cause most of the spread seen in the MPG data on a company basis.
A Partner recommended refining carrier categories to distinguish "regional" (i.e., <500 miles)
from long-haul operation.
Another participant asked how performance metrics should be developed for fleets tracking hours
rather than miles. No suggestions were provided; EPA requested information on the commonality
of such fleets.
Another Partner asked if there was a need for auditing. EPA indicated that it would be good to
audit, but could be difficult in voluntary program.
It was agreed that EPA, with input from Carriers and Shippers, needs to continue development of
the binning approach, evaluating the optimal number of bins and the different operator categories
in order to obtain an accurate, equitable performance metric scheme.
EPA stated that ultimately it wants to assign an average emission factor to each bin so that
shippers can quantify actual carbon impacts.
EPA also noted that although shippers expressed minimal interest in quantifying NOX/PM
impacts, EPA believes these impacts should be integrated in some way into the overall
performance metric reporting. For example, Carriers agreed that the fuel economy penalty
associated with adoption of 2007 and 2010 engines shouldn't be "penalized" under the new
quantification system.
A participant also requested that if a carrier is utilizing specific alternative fuel and/or advanced
technology applications dedicated to a specific customer, the customer should be credited
directly.
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Future FLEET Model
EPA presented a draft template displaying the format and data elements potentially to be included in the
new FLEET 2.0 model. Comments were sought regarding the feasibility of providing the required data,
the necessity for the data fields, any missing data, and format/presentation.
• A Partner expressed concern that if EPA modifies the FLEET Model to exclude technology
specifications, it will be removing those aspects of the model that ensure improved performance.
EPA responded that a grams per mile metric can be obtained from Parts 1 and 2 of the FLEET
Model and will reflect true performance of technology changes.
• Another Partner indicated that [in the new FLEET Model] they did not want to lose information
about which technologies are used. EPA noted that Part 3 submissions containing this information
would be retained but optional, and could be used for a Carrier to benchmark against itself over
time.
• Various Carriers raised concerns about the current treatment of rail usage in the FLEET model
because rail usage is currently not captured in Parts 1 or 2 of the Model, only in Part 3, which
would become optional. EPA indicated that separate modules are being developed for other
modes such as rail and short sea shipping and these modules will be designed to quantify
performance as well. EPA also noted that a quantitative performance metric (e.g., grams per mile)
will better capture intermodal impacts. EPA commented that an emissions factor needs to include
the benefit of intermodal because customers might not know if the Carrier decides to use rail.
• There was general consensus to segment the new FLEET Model by truckload, LTL truck,
package delivery, dray, reefer, flatbed, tanker, and bulk operations. Other specialized categories,
such as auto carriers, might also be considered.
• A Partner indicated that performance credits for use of rail should be integrated into the ground
strategy because they cannot separate ground and rail.
• It was suggested that the Fleet Control section should be refined based on percentages.
• A participant pointed out that horsepower isn't used in performance calculations. EPA concurred,
and noted that cube utilization wasn't used either, so both of these factors might be removed.
• Another participant recommended adding options for electric vehicles in the future.
• There was a question about what to do if the amount of biodiesel purchased on the road was
unknown. EPA said it should be considered 100 percent conventional diesel if unknown in order
to be conservative and to incentivize improved record keeping for validation of alternative fuel
use.
• A Partner stated that the best way to quantify total gallons of fuel used is to report the actual
amount purchased as reported to the Internal Revenue Service.
• Another Partner referenced DOT mileage reporting requirements under MCS150. This approach
is auditable, and may include subcontractor miles as well if the sub is running under the same
carrier DOT number; however, a different approach might be merited for non-asset based
carriers. This Partner also noted that mileage is tracked by vehicle type, and commonly by
payload as well (-50 percent).
• A participant suggested including payload/load factor reporting as a means of rewarding carriers
for limiting empty miles.
• It was also noted that because of the fundamental difference in how non-asset based carriers
operate and collect data, separate submissions might be needed for these carriers.
• EPA requested an annual snapshot of what Carriers' fleets look like; they do not need to know
every detail, such as every replacement. Carrier updates might be conducted at any time of the
year before the annual deadline.
• EPA requested input regarding the criteria for SmartWay logo qualification under the new
quantitative system: Should it be restricted to the top X percent? Should it be CO2-based only, or
also account for NOX and PM reductions?
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Carbon Trading
Several Carriers raised questions regarding the basis for establishing carbon credits for trading in the
future. There was substantial interest in who would retain ownership of any credits generated.
• In a carbon emissions trading scheme which party would reduce their carbon footprint and which
would get credit for the reductions? EPA responded that both parties could report reducing their
carbon footprints. "Double counting" of credits would not matter with respect to informal
reporting (e.g., shareholder reports), but only for formal trading and emission inventory purposes.
EPA does not offer carbon trading at this time, but generally in most trading schemes, the party
who paid for the technology would get the credit. (This is not necessarily the case where certain
parties institute performance improvements for public projects, however.) EPA pointed out if a
Carrier were to sell/trade its carbon offsets, the SmartWay grams per mile score would
theoretically be affected.
• A Partner stated that carrier emission reductions are a Scope 3 issue for shippers, and are
therefore not part of shipper portfolio.
• Another Partner clearly stated that he does not wish to see SmartWay performance data become
the basis for establishing trading baselines. He pointed out that SmartWay was always intended as
a means to voluntarily change behavior, not just as a means for improving margins.
• Concern was expressed that shippers might have a hidden agenda when it comes to carbon
emissions trading. Mitch Greenberg, EPA, did not feel like this would be a big issue because
most shippers are just trying to belter understand their carbon footprint.
Requests for Shippers
• A Partner said that he does not want policies that prohibit idling on shipper's property because the
driver will just go down the street. Such programs simply displace emissions to a different
location while misrepresenting shipper emission reductions.
• EPA mentioned using this discussion to look at shipper infrastructure and determine if it could be
improved for efficiency.
Miscellaneous
* Shipper Activities. A question was asked regarding what Shippers are doing to reduce their
carbon footprint through logistics improvements and "carbon-friendly" capital options. EPA
responded that Shippers are looking at their global supply chains, shipping options, and package
sizes. Logistics software companies such as Llamasoft are aggressively investigating these and
other options. EPA is also working with SmartWay to measure and reduce Shippers' impact, and
new metrics from Carriers could help Shippers make better assessments. A Partner recommended
including revenue-miles as well as tons in the Shipper model in order to promote overall
improvements in system energy intensity. EPA noted that the upcoming Shipper model will
output composite grams per mile per unit load.
• Testing. A participant asked about EPA retrofit product testing and verification efforts. EPA
referenced example Society of Automotive Engineers (SAE) papers with results on the program
Web site.
• SAP. A Partner expressed concerns about a commercial entity having access to confidential data.
EPA responded that commercial entities would only receive the grams per mile number and
compared it to a stock market ticker price (lots of factors go into setting this number, but the input
data are not made public).
• Annual Awards. There was a request for greater transparency regarding the basis for SmartWay
awards.
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Agreements
There was general consensus on the following items regarding development of new metrics and the
upcoming Carrier FLEET Model update:
1. Carriers want a standardized measurement approach and reporting format to provide data to
shippers to help reduce data request burdens and to create a more level playing field for
assessment of carrier performance.
2. Carriers prefer a quantitative metric tailored for each operator category that is grouped into
between five and 10 performance bins.
3. Carriers do not want complete transparency regarding how the new scores are calculated.
4. The FLEET Model should be segmented by operation type and mode.
5. Driver training should be actively promoted, with the possible adoption of a driver certification
program in the future.
6. EPA should continue to act as a clearinghouse for technical information.
Action Items
• Carrier Partners will consider what information they want included on a standardized form to
provide environmental information to shippers. EPA will consider how SmartWay could store
this data and make it available to shippers without compromising confidential business
information.
• EPA, with input from Carriers and Shippers, will continue development of the binning approach,
evaluating the optimal number of bins and the different operator categories
• EPA will explore whether using mileage reported to DOT would be the most appropriate mileage
system to use for SmartWay.
• EPA will continue considering use of SAP/commercial software and how data provided to vendor
would be used, again without compromising confidential business information.
Next Steps
• EPA will conduct a Webinar and include an announcement in eUpdate to let the entire
Partnership know about the SmartWay 2.0 vision and the outcome of the Shippers and Carriers
meetings.
• EPA will schedule a joint Shipper/Carrier Partners meeting for late fall 2008. This meeting will
be geared toward reporting and identifying a bin system that is acceptable to both Carriers and
Shippers.
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