Ford's logistics activities include the internal transportation of parts, materials and vehicles during the manufacturing and vehicle delivery process. This is a relatively small part of Ford's environmental footprint, accounting for about 0.5 percent of vehicle life-cycle emissions. However, logistics is a key business function that requires more than getting things from point A to point B. Logistics managers are key partners in ensuring that our factories have the parts and materials needed for efficient operation without maintaining excess inventory. They also try to minimize costs, fuel use and the environmental impacts of packaging, all while protecting the quality of shipped items.

We are working to reduce the carbon footprint and landfill waste associated with the packaging used to ship parts from suppliers to Ford assembly facilities. In 2008, we are developing a baseline carbon footprint for each assembly plant by vehicle line. From 2009 to 2014 we will be developing and implementing targets for reducing the carbon generated from our packaging, with the goal of developing carbon-neutral packaging strategies.

We are also working to reduce the amount of packaging that ends up in landfills, consistent with Ford's Optimum Packaging Policy, which went into effect in 2001. Our overriding objective is to support the Company objective of minimizing waste to landfills by continuing to ensure that packaging materials are recyclable. With proper methods inside our facilities, we can significantly reduce or eliminate the amount of packaging waste that ends up in landfills.

We are also working to reduce the environmental impacts of transporting parts and finished vehicles, including the inbound transportation of material from our suppliers to our distribution centers and manufacturing plants, the return of empty containers, and the outbound transportation of finished vehicles to our dealerships. We have a global logistics team working to reduce the environmental impact of these activities. The team is using a comprehensive problem-solving approach. Through this process we will measure current carbon emissions from our transportation activities and identify and prioritize improvement actions based on a triple-bottom-line evaluation of environmental, social and cost factors. These improvement actions will be based on a thorough analysis of the relationships between the key process inputs (origin to destination distance, transportation mode and conveyance density, number of conveyances, carrier fuel economy and emissions, etc.) and outputs (emissions, network miles, cost, etc.). We expect this strategy to result in a significant contribution to our corporate sustainability goals.

In Europe, we are also reducing the environmental impacts of transporting our vehicles by increasing our use of water- and rail-based shipping methods. Altogether, Ford of Europe's facilities ship approximately two-thirds of their vehicles by water or rail. Similarly, some two-thirds of the kilometers a new Ford vehicle travels between the assembly plant and customer are accounted for by water or by rail. This leads to savings of hundreds of truck runs each day, reducing total truck journeys by millions of kilometers per year. In addition to the considerable relief of traffic on public roads, these shipping methods reduce fuel consumption, exhaust emissions and CO2 emissions.

For information on the larger role of materials transportation and logistics in our product life-cycle, please see Our Value Chain and Its Impacts.