We are on plan to meet our target to improve the carbon efficiency of our logistics, achieving a CO2 efficiency of 70.6 kg/tonne for 2013 and an 18% improvement since 2010.
Compared to 2012, we reduced total vehicle kilometres driven by 29 million km, equivalent to a 1.7% reduction. We achieved this by implementing smarter distribution networks and filling up vehicles efficiently.
The scope of our target includes transportation of products from our factories and warehousing dedicated to Unilever products alone. We do not currently include the raw materials coming into our factories, multi-user warehousing or air freight in our metrics for the Unilever Sustainable Living Plan.
Whilst our progress continues to be strong, meeting our 2020 commitment remains challenging. We know that it will become increasingly difficult to find and exploit opportunities to lower our carbon footprint. For example, as constraints on rail capacity will be reached, we need to look proactively at building alternative options, which may not exist today.
That is why we are investing now in partnerships across the extended supply chain. For example, we are working to optimise pallet height with our R&D, category and quality assurance teams. We are also working with our external partners, such as our logistics suppliers DHL and Kuehne+Nagel. We are conducting joint research with Kuehne Logistics University to improve our capabilities. We believe these partnerships will enable us to continue to deliver against our commitment.
Efficient transport management
In April 2008, we launched our own internal transport management organisation, UltraLogistik, which manages our transport movements across Europe. UltraLogistik finds the most efficient ways to move raw materials and packaging to our factories and then transport finished goods to around 100 warehouses in Europe.
From this original initiative came the idea to establish global and regional control hubs. These enable us to co-ordinate our transport activities efficiently and ensure that trucks are as full as possible. In total, the hub system promises to reduce total distance travelled by 175 million km in Europe alone from 2013 to 2015 (compared to 2010 levels).
Ultralogistik control tower network
Another successful strategy that we are continuing to roll out is our implementation of the UltraLogistik control tower network. These are designed to give visibility and management control for our multiple transport movements across Europe. We invested in the first control tower in Poland in 2007. The tower in Poland has enabled us to deliver cost savings of €50 million over 2008-2012. We have towers in place in Panama, east coast USA, Durban, South Africa and São Paolo, Brazil, and are establishing more.
We are delivering CO2 savings in a number of ways. For example, by improving the ‘loadfill’ of vehicles, we can maximise how much product we load onto our trucks. Our UK business identified inefficiencies in trucking laundry products across Europe. By double stacking products, we achieved a 60% reduction in vehicle kilometres and a 38% reduction in CO2 emissions.
Re-designing pallets, products and trucks
We estimate that we use over 30 million pallets each year to store and transport our products.
We are trialling new designs that will have both cost and environmental benefits. In France, our successful 2012 pilot using cardboard pallets was implemented in 2013 and will be rolled out in Poland and Benelux during 2014. This combination provides both efficiency and handling benefits. Our partnership in Europe with our pallet supplier, CHEP, maximises efficiency in usage and transport through the pallet pooling system. In addition, the wood used for new pallets and repair of existing pallets comes from certified sustainable wood.
Meanwhile, in Turkey, our R&D team re-designed our packs and pallets to allow us to fill trucks more efficiently. This led to a net saving of over €200,000 and a reduction of 277 tonnes in transport-related CO2 emissions.
Low CO2 transport technologies
We are also looking to introduce new technologies where appropriate. Battery-powered vehicles provide an interesting example. In Rome, in 2012 we trialled a hybrid electric van for our ice cream deliveries. The test demonstrated potential CO2 emissions savings of up to 70% a year compared to a diesel van.
In Spain, meanwhile, we are piloting a technology that allows double temperature truck deliveries by isolating our chilled products from the ambient ones in cross-category deliveries. The technology enables us to combine deliveries of chilled and ambient products without wasting energy to cool the ambient products.
In the UK and Ireland we work with our logistics provider DHL to operate six dual fuel vehicles, which run on liquefied natural gas and diesel. The dual fuel technology has the potential to reduce CO2 emissions by up to 15% compared to diesel.
Working with others
We cannot achieve our target by working alone; we need to work in partnership with our suppliers and others. This is particularly the case in logistics as, in general, we do not own the vehicles, trains and vessels used to transport our raw materials and finished goods. For this reason, we are making sustainability part of our working agreements with infrastructure providers and operators.
Transport by road
An illustrative example of our collaborative approach is our work with Indian integrated logistics firm Varuna. With our encouragement, Varuna invested in trucks that are ideally sized for the efficient delivery of our products. This is helping us avoid around 2,000 truck trips per year and has achieved significant savings. It is also significantly increasing Varuna’s revenue, profile and market share as a transporter in the Indian transport market.
Varuna won one of Unilever’s Partner to Win awards in 2012. Partner to Win is a programme that enables us to create long-term partnerships with our suppliers in order to achieve mutual growth for both.
We realise that reducing the carbon footprint of our distribution activities requires us to rethink traditional ways of working. Backhauling is a good case in point. The term describes the use of another company’s trucks during their return journey, when they are generally empty. In Hungary, we have put this arrangement in place with retailer Tesco, one of our biggest customers. This reduces our costs as well as the CO2 emissions between our businesses. In China, we have had a similar system in place with Walmart.
Between 2009 and 2012, this backhaul approach reduced vehicle distances by 50,000 km and shaved 10% off our distribution costs.
Unilever supports a range of cross-sector sustainability initiatives at a national level. For example, we are a key player in the haulage element of a UK industry efficiency initiative to reduce transport impacts – the Sustainable Distribution Group of the Efficient Consumer Response (ECR).
In France, we are collaborating with three companies (our logistics provider STEF, food and beverage company PepsiCo and cheese manufacturer Bel) to share deliveries of our chilled products from our north Paris distribution centre. This delivered a net saving of over €600,000 in 2012 compared to 2011, while at the same time reducing CO2 emissions by 40%.
Transport by sea
Shipping is an important part of the Unilever supply chain. We use ships to transport our raw materials and packaging to our factories and finished goods to markets.
Unilever became a member of the Sustainable Shipping Initiative (SSI) in 2011 and sits on the steering committee. A coalition led by Forum for the Future and WWF, the SSI aims to define what sustainability looks like for the industry in 2040.
It seeks to address the three main challenges facing the industry: rising oil prices; structural changes in world trade; and increasing scrutiny of the industry’s social and environmental impacts. The SSI aims to lead the industry to promote understanding of sustainability and best practice. Other members include Cargill, Maersk Line, RSA and ABN AMRO.
Transport by rail
Transporting our goods to markets by rail is an effective way for us to grow our business sustainably. However, in many markets, lack of adequate rail infrastructure represents a major constraint.
In Germany, we are one of the first fast-moving consumer goods (FMCG) companies to deliver our products to the retail market using rail wagons. Instead of using two trucks to transport our goods over 600km, we now use rail wagons which provide improved flexibility to reach the required destinations.
In India, since 2012 we have been delivering over 100,000 tonnes of our products by rail from two of our large factories in the north of the country. This has reduced CO2 emissions by around 7,000 tonnes a year. At the same time, switching from road to rail is saving us over €500,000 in road transport costs a year.
Our increase in rail use in India is facilitated by close co-operation with the Container Corporation of India Ltd of Indian Railways.
In Italy, we took 6,500 truck trips off the road onto rail between our ice cream factory in the south of the country, and our warehouse in the north (700km apart). This was good for our business and also traffic and pollution levels. We worked in partnership with our logistics provider Catone and rail company Trenitalia under the aegis of the Italian Ministry of the Environment. With our commitment, Catone made an investment into refrigerated containers, building a capability in the market that did not exist before.
In 2013 Unilever won an award for the ‘Best Project between ZAR1 million and ZAR10 million’, conferred by the 2013 Green Supply Chain Awards, for energy saving measures at our large warehouse in Jozi Park in South Africa.
The warehouse holds over 100,000 pallets, and electrical lighting contributes over 80% of total electricity consumption. Electricity in South Africa is very reliant on coal, which means a high level of CO2 emissions. By implementing a lighting management system, including occupancy sensors to control lighting usage and turning the lights low in low-traffic areas, we maximised energy saving whilst still ensuring sufficient lighting.
The project has reduced CO2 emissions by 3,400 tonnes, equivalent to around a 30% reduction. In addition, it delivered a saving of ZAR1.2 million and we are applying the learnings to our other warehouse in South Africa.
In 2012, Unilever won a Logistics and Distribution Operations award for our work with DHL at the European Supply Chain Excellence Awards.
In 2011, Unilever received the Contribution to Environmental Improvement award at the annual European Supply Chain Excellence Awards. The awards recognise organisations that demonstrate excellence in their supply chain operations. The judges commended our achievements in reducing the carbon footprint of our logistics operations through more efficient use of vehicles, using an optimal vehicle loadfill solution, and energy-saving initiatives in our warehouse network. These delivered a 33% improvement in absolute CO2 emissions from 2008 to 2010.