How does technology play a role in UPS’s sustainable logistics strategy?
Technology and efficiency underpin everything we do. We are constantly innovating to drive efficiency across our global network, optimizing the work of our people and operations to achieve both our business and sustainability objectives – being the premier logistics provider while reducing our and our customers’ carbon footprint is the goal. We believe it’s our path to long-term success.
One example is our ORION system – On-Road Integrated Optimization and Navigation – which calculates delivery routes in real-time based on traffic, delivery orders and pickup commitments. This system has been a game-changer, allowing us to reduce miles driven by 10 to 14 miles per driver per day, which is a significant reduction in fuel use, emissions, and operating costs. We like to say that the greenest mile is the one not driven or flown.
We’re also embracing vehicle technology including Compressed Natural Gas (CNG), Electric (EVs) and other alternative fuel options. We have over 18,000 alternative fuel and advanced technology vehicles in our fleet, including around 1,000 electric and plug-in hybrid electric vehicles. However, electric vehicle infrastructure and automotive manufacturing remain a challenge, especially in the U.S., where we don't yet have sufficient options for the size and scale we require. Despite these obstacles, we're rolling out hundreds of EVs globally, with a lot of progress being made in Europe.
You mentioned that reducing emissions can be achieved with existing technologies. Could you elaborate on how UPS is doing this right now?
Yes, one of the most important alternative fuels today is renewable natural gas (RNG). It's a game-changer for our operations because it’s made entirely from organic waste from dairy farms, landfills and other waste streams. It is not a fossil fuel and does not involve drilling or fracking, while reducing our CO2 emissions by 85% well-to-wheel. While electrification continues to play a growing role in decarbonizing our fleet, RNG is today’s solution.
For example, on an August 2024 year-to-date basis we have increased our usage of renewable natural gas by 18.5 percent and renewable diesel by 11.7 percent compared to the same period last year.
This kind of innovative thinking allows us to serve our customers and reduce our overall environmental footprint.
RNG serves as an excellent solution that will help us achieve emission goals as both the infrastructure for electric vehicles and the electric vehicle technology continues to develop. This approach aligns with our broader mission of finding sustainable solutions that work in the present while we continue to invest in future technologies.
What progress is UPS making in reducing its environmental impact?
We’re pragmatists and aren’t going to promise something we can’t deliver. Based on rigorous engineering principles, we’ve set clear goals and plans to achieve 100% carbon neutrality by 2050. While challenges exist, there are emerging technologies and innovative solutions that are promising. We’re continuing to learn, pilot and collaborate with others on new opportunities while also making progress with our sustainability milestones. We reported in our 2023 GRI that we purchased 28.8% alternative fuels for our ground fleet, putting us on track to hit our 2025 goal of 40%. Additionally, 10.9% of our global facilities are now powered by renewable electricity, with a target of reaching 25% by 2025. We expect another year of progress in both goals when we report the 2024 sustainability results.
How has your approach to sustainability been received internally at UPS, and what impact have you had on shaping the company's sustainability strategy?
One of the most significant changes my team has made is the development of advanced dashboards that provide accurate data on our emissions across Scope 1, 2, and 3. This level of insight enables us to make data-driven decisions on where to allocate capital expenditures for the greatest impact across all our operations. Having access to this level of emissions data also allows us to generate detailed emissions reporting for customers that can identify the carbon impact generated when UPS moves packages/freight. This kind of visibility is becoming more important as more customers are looking to decarbonize their own supply chains.
Additionally, we are building low-carbon solutions for our customers to help them speed up their own decarbonization journey. These programs combine customer emissions reporting and low-carbon options within the same platform to give customers a better understanding of emission drivers and options for reducing their carbon footprint. We’re still in the early days with this initiative, but we’re extremely excited about this opportunity.
Going back a few years, I am also proud of the fact that in 2003, UPS was one of the first companies to issue a Corporate Sustainability Report and has voluntarily followed Global Reporting Initiative (GRI) reporting guidelines ever since.
Can you expand on how UPS is addressing the challenges of sustainable air transportation and what future initiatives you have in this area?
Air transportation is indeed one of our biggest challenges when it comes to sustainability, especially since we are a key player in healthcare logistics, where timely deliveries can literally be a matter of life and death. Our goal is to have 30% of our air fleet running on Sustainability Aviation Fuel (SAF) by 2035. Based on the latest International Air Transport Association (IATA) decarbonization pathway to net-zero by 2050, SAF is expected to represent approximately 65% of the sector’s emission target. We are taking a multi-pronged approach to address the challenges of SAF economics and scalability. This includes collaborating with other airlines, academic institutions, suppliers and government bodies to find opportunities to scale SAF production and lower the cost. Today, SAF supply remains limited and is cost prohibitive which challenges wide adoption.
We’re also looking into solutions like Beta's electric vertical takeoff and landing aircraft, which offers a potential pathway to reducing emissions from short-haul flights. We're excited about the possibilities and progress in this area.
How does UPS balance the push towards sustainability with maintaining operational efficiency and cost-effectiveness?
One of the core principles of our sustainability strategy is ensuring that every initiative is financially viable and operationally efficient. For instance, our use of ORION technology not only reduces emissions but also saves costs by cutting down on miles driven, fuel consumption, and vehicle wear and tear. We also work closely with the operating team to maximize alternative fuel asset utilization. Our team has a ‘by building, by vehicle’ program that helps us select low-carbon vehicles for route deployment, daily. Integration into the operating teams in this way ensures that our cross-functional sustainability efforts align with the company’s business strategy – Customer First, People Led, Innovation Driven.
We believe that sustainability and operational efficiency go hand in hand, and our experience has shown that investing in more efficient technologies and continuously reviewing our operational processes can lead to cost savings over time. It is about making smart decisions that benefit the planet, our business and our customers.
What’s next for UPS in terms of sustainability, and how do you see the future of logistics evolving in this context?
The future of logistics is undoubtedly rooted in sustainability, and UPS is committed to being at the forefront of this evolution. We also listen to our customers and will continue to advance solutions such as low-carbon shipping, supply chain optimization, and customer emission reporting to help them with their sustainability journey.
Our goal is to decarbonize the UPS network and show that it’s possible to grow a global logistics business while reducing emissions and supporting our customers. We’re excited about the journey ahead and are committed to pushing the boundaries of sustainable logistics, for UPS customers and for the industry.
