There may be a contingent of people in the world that deny the existence of global warming, but I think you’d be hard-pressed to find a group of people who reject the assertion that e-commerce has experienced significant growth over the past decade. If you do come across such a group however, feel free to show them the following chart .
While e-commerce companies have certainly benefited from the shift in consumer behavior to online shopping, so too have transportation and logistics companies, like UPS, that are responsible for delivering the products to the consumers that order them. Although the increased deliveries from e-commerce sales certainly drive revenue growth for UPS (daily package volume increased 5.7% in the three months ending on 9/30/2016), these deliveries disproportionately contribute to the company’s total emissions output, as they require more stops with fewer packages being delivered at each stop.
As the world’s largest package delivery company and a provider of supply chain management solutions, UPS consumes a large amount of energy, primarily in the form of fossil fuels, to keeps its operations running. The burning of fossil fuels generates greenhouse gas emissions (GHG) which traps energy in the atmosphere causing temperatures on earth to rise . As the subject of climate change has come to the forefront of public conversation, UPS has taken a multi-pronged approach to reduce its overall emissions and impact on climate change .
Internal Emission Reduction Measures
UPS has committed to reducing its carbon intensity by 20% by 2020, and the company is well on its way to meeting this goal having already achieved a 14.5% reduction since 2012. UPS has employed two primary tactics to drive this change: reducing the total amount of fuel required to make deliveries by reducing the total miles traveled and improving fuel efficiency and increasing the use of alternative energy sources to replace traditional petroleum. Thus far, 70% of ground delivery routes in the US have been equipped with the On-Road Integrated Optimization and Navigation (ORION) system which provides optimized delivery routes from a distance, fuel, and time perspective to UPS drivers. The ORION system will be fully deployed by the end of 2016, and the company expects it to reduce miles driven by 100M miles per year.
Additionally, in order to accelerate the introduction of alternative energy sources in its vehicles, UPS has created a rolling laboratory to determine how alternative fuels and advanced technologies perform in real-world operating conditions. The company has been able to replace the conventional diesel and gasoline fuel with alternative fuels like renewable natural gas and renewable diesel fuel.
Customer Facing Emission Reduction Measures
UPS has also developed ways to involve its customers in helping to achieve its emissions reduction goals. UPS MyChoice® allows consumers to choose a specific date and time to receive packages and UPS AccessPoint™ provides a consolidated delivery location where customers can retrieve their packages. Both of these initiatives reduce emissions by eliminating mileage associated with missed delivery and pickup attempts. Additionally, UPS’ Carbon Neutral Shipping Program enables customers to neutralize the emissions associated with their shipments by purchasing carbon offsets. On the supplier side, UPS has implemented dimensional weight pricing in which the price to ship a package is based on the amount of space the package takes up in relation to its weight rather than just the package’s weight. This pricing scheme encourages companies to ship their products in size-appropriate boxes.
An Eye Toward the Future
As the effects of climate change continue to be widely publicized, and as governments begin to impose more stringent emissions regulations, UPS will need to continue to engage in actions aimed at reducing the company’s emissions of greenhouse gasses (GHG). Thus far, the company’s efforts have been primarily focused on reducing emissions within its ground transportation fleet due to the lack of financially viable/commercially available renewable sources of aircraft fuel. This has created a challenge for the company, as UPS Airlines currently accounts for 57% of UPS’ total GHG emissions, and deliveries that require airplane transportation continue to become a larger share of UPS’ total package deliveries.
Although viable commercial production of renewable fuel for airplanes is still a few years away, as a leader in the industry, I believe that UPS should actively participate and invest in the development of such solutions. United Airlines recently announced an effort to introduce aviation biofuel into its regular operations , and there is no reason why UPS can’t lead this charge as well. In the short term, the company might need to forgo some profits due to higher input costs, but in the end, the investment in sustainable sources of aircraft fuel is sure to pay off. If you were in David P. Abney, the CEO of UPS’ shoes, what would you do? (793 Words)
 “Worldwide Retail Ecommerce Sales: eMarketer’s updated estimates and forecast through 2019.” eMarketer. http://www.emarketer.com/public_media/docs/eMarketer_eTailWest2016_Worldwide_ECommerce_Report.pdf
 “UPS expects holiday package volume to grow more than 16%.” Internet Retailer. https://www.internetretailer.com/2016/10/27/ups-expects-holiday-package-volume-grow-more-16.
 “Causes of Climate Change.” https://www.epa.gov/climate-change-science/causes-climate-change.
 “UPS Committed to More™ 2015 Corporate Sustainability Report.” UPS. https://sustainability.ups.com/media/2015_UPS_CSR.pd.
 “United Airlines Describes Effort To Introduce Aviation Biofuels.” AIN Online. https://www.ainonline.com/aviation-news/air-transport/2016-11-01/united-airlines-describes-effort-introduce-aviation-biofuels.