Even before more than 2,000 retailers got together to create Free Shipping Day 2011 on Friday, Dec. 16, there have been so many free shipping offers this holiday shopping season than even Santa’s elves couldn’t keep up with them.
With FedEx, UPS and the United States Postal Service (USPS) expecting to deliver millions of packages before the last driver heads home for a holiday dinner, how can retailers afford to offer this early present to their customers?
One reason may be from the cuts in fuel costs and other changes to promote energy efficiency that some of the shippers have made, even as FedEx and UPS have added fuel surcharges. (The USPS has a price cap on some of its products, including First-Class mail. But it does have the option of adding a fuel surcharge to its “competitive” product category, which includes Priority and Express mail, said Thomas G. Day, chief sustainability officer for the USPS, in an email interview. “We make sure package shippers are aware the postal service does not add a fuel surcharge to our prices, unlike our competitors,” he said. The service, which is fraught with financial trouble, has highlighted its lack of a surcharge in an advertising campaign.)
Here are four things FedEx and UPS say they’ve done to cut fuel costs.
1. Right Turns Only, Direct Routes and No Idling Driving Techniques. Sometimes, it’s a relatively simple idea that makes a big difference. When supervisors went out on the delivery routes with UPS drivers several years ago, “they determined that turning left is a waste of time,” said UPS spokesperson Elizabeth Rasberry. “Not only is it a waste of time but it’s also a waste of fuel.” That’s because of the time spent idling while waiting to turn. So, in 2004, the company instituted its Right Turn Policy, and mapped its routes so that drivers made right turns wherever possible. Since then, the company has shaved millions of miles off its routes, saved 10 million gallons of gas, and reduced CO2 emissions by 100,000 metric tons, the equivalent of 5,300 passenger cars off the road for an entire year, said Rasberry.
In addition to that policy, UPS – which expects to deliver 120 million packages in the week before Christmas — uses telematics, technology that includes sensors on trucks to determine many factors, including how the driver is braking and when parts need to be replaced. “In 2010, telematics and routing technology helped us avoid driving more than 63.5 million miles,” said Rasberry.
FedEx, which saw the busiest day in its 40-year history on Monday when it moved an estimated 17 million packages, has also implemented ways to make their routes and drivers are efficient as possible. “We start by seeking to decrease the amount of vehicles we have on the road,” said FedEx spokesperson Deborah Willig. “We get each courier’s vehicle to be as full as it reasonably can be – if you think of it as carpooling for packages, they’re able to get as many as they can in a route.”
That includes a system that scans every package to determine its dimensions, so that each trailer’s capacity can be fully utilized. That leads to fewer trucks on the road and less fuel consumed, according to FedEx.
FedEx drivers also follow some basic “eco-driving tips” that Willig says can be helpful to all drivers — not just those who make deliveries. They are: no idling while stopped, use gentle acceleration, maintain a flat speed, ease off the accelerator early before braking and make careful use of air conditioning.
The USPS has also focused on “optimizing delivery routes and transportation between facilities that are owned by the postal service,” said Day. The postal service has also examined routes that can be walked, and Day said it has about 9,000 walking mail routes and 80,000 routes where the carriers park and deliver mail on foot. This has helped “reduce the amount of mileage traveled, and as a result, fuel consumed.” In the next year, the service will be starting a campaign to ensure its drivers are “aware of fuel-saving driving practices,” much like FedEx and UPS. The USPS expects to deliver 16.5 billion packages, letters, and cards this holiday season, with its peak package delivery date on December 19.
2. Plugging In to Fuel Savings. “This holiday season it’s 43 all-electric vehicles that we have on the road,” said FedEx’s Willig. “We see enormous potential for it in the future.” The company is working with Columbia University to determine the impact of a larger electric vehicle fleet on the electrical grid. “The goal is we want to get off of dependence on foreign oil – it’s both an environmental issue and a national security issue,” Willig said. The fleet also includes hundreds of hybrid vehicles, which while only a small a fraction of its overall fleet, are helping FedEx reach its goal to reduce carbon emissions by 20 percent from 2005 to 2020.
Early this year, UPS’ “green fleet” reached 200 million miles driven since 2000. Made up of 1,900 vehicles, this fleet includes six alternative technologies – compressed natural gas, liquefied natural gas, hybrid electric vehicles, electric vehicles, propane, and liquid petroleum gas.
3. Change in in the Air. Of course, shippers hardly rely solely on ground transport – lots of fuel cost cutting can come from their aircraft fleets, too. “We’re constantly looking at what we can do with our vehicles – but it doesn’t stop with vehicles,” said Rasberry of UPS. “It’s our vehicles, our planes, our buildings.”
Both UPS and FedEx said they’ve saved fuel by cutting back the use of the planes’ auxiliary power units, and found more efficient ways to fly them. UPS, for example, uses only one engine while taxiing, and has instructed its pilots to slow their aircraft to more fuel-efficient speeds if time isn’t critical. Meanwhile, FedEx, for example, is replacing “727s with 757s, which will cut greenhouse gas emissions and reduce fuel consumption by 47 percent.”
4. Stocking Up on Energy Opportunity. The parts of the shipping companies that stay in one place—stockrooms, sorting facilities and the like— can be made more energy efficient, too. Rasberry said UPS is looking at ways to expand its solar projects, and FedEx has some facilities that have received certification by Leadership in Energy and Environmental Design.
The USPS is also trying to make its facilities more efficient. “We have already achieved the 2015 target of 30 percent reduction in energy consumption,” said the USPS’ Day. “This was achieved through a combination of facility improvements, including HVAC and lighting upgrades, as well as low-cost, no-cost efforts by employees … to reduce consumption.”
“Fuel efficiency and initiatives to save fuel are always top of mind,” said Rasberry of UPS. “Fuel’s one of our biggest expenses.”
Willig of FedEx said “environmental and economic stability are tied” and the company tries to make “Smart investments that will be viable” where energy efficiency is concerned.
So, some of the savings that the shippers have realized from their cost-cutting measures may (in part) make it possible for the retailers you buy from to give you free holiday shipping. But after Friday, you can expect those costs to jump if you need to ship something before Christmas.