Logistics

Ford's physical logistics operations provide the safe and efficient transport of parts from our supply base to our manufacturing plants (our "inbound" freight network) and of finished vehicles from the end of our assembly lines to our dealerships (our "outbound" freight network). Although logistics account for a relatively small percentage of total vehicle life-cycle emissions, we are working hard to maximize the efficiency of these operations to reduce both costs and environmental impacts. This work is managed by Ford's Material Planning and Logistics organization (MP&L), which is the department responsible for the design and operation of our global transportation networks and for engineering high-quality and efficient packaging to protect parts in transit.

CO₂ Footprinting

A key step in reducing logistics-related carbon dioxide emissions is understanding our current level of emissions, and being able to compare emissions of the various alternative transport routings. This data is increasingly required to support in-house reporting requirements, such as for our vehicle life-cycle emissions studies, and to support external reporting needs.

In 2008, MP&L established a global team specifically to address the climate change impacts of transportation logistics and in particular to generate metrics for CO₂ emissions. Since 2006, our European operations (in conjunction with our European Lead Logistics Partner DHL International) have been producing basic CO₂ metrics for our inbound network for both road and rail on a journey-by-journey basis, using CO₂ emissions factors available at the time. We are now expanding this work. During 2008 and 2009, Ford and DHL supported a Masters Project at Cologne University in order to investigate the best approach to calculate more-detailed freight-related CO₂ emissions. The original calculation method has now been greatly expanded to take into account the nature of different shipments and to include the latest-available emissions factors from the most widely recognized sources. In North America, we have developed a parallel process to generate CO₂ emissions data for our North American inbound freight network, and we have been reporting this data internally since January 2009.

As a further development, Ford's Transatlantic Lead Logistics Partner, UTi Worldwide, has developed a process for quantifying emissions from transatlantic ocean container freight, and is now calculating this data for Ford. Using this data, we began reporting on all inbound transport modes – rail, road and sea – in 2010. In 2010 we will start to generate metrics for outbound freight CO₂ emission reductions.

One of the key advantages of having transport emissions data available is that it can be used to study the impacts of different sourcing patterns. MP&L is actively supporting initiatives by the Purchasing department to develop mapping models for the entire supply chain for Ford's various vehicle lines, including both the transportation and manufacturing footprints in different source locations.

There is currently no fully agreed-upon international standard for CO₂ measurements for freight transport. We are working with many key organizations to help develop standards that are both comprehensive and practical to apply. For example, we are working with the World Resources Institute on road-testing their new "Scope 3" reporting standards, and we are actively participating in the UK Department for Transport's Low Carbon Transport Supply Chain Steering Group.

Parts and Vehicle Transport

In the majority of cases, we collect parts from our suppliers rather than have the suppliers deliver parts to our assembly plants themselves. This allows us to optimize all deliveries and thus minimize the total amount of transport required. Our inbound network is fully integrated with regional distribution centers, so that material for different plants can be collected together and then cross-loaded onto trailers routed to different final destinations. Since 2008, we have integrated transatlantic freight into the domestic networks operated by Ford of Europe and Ford North America. This integration has resulted in a reduction in the number of vehicles collecting materials from shared suppliers. For example, when suppliers are located close together, "milkround" routes are established where a single truck may visit a number of collection points. The net effect of these strategies is to minimize the number and length of journeys required, which in turn significantly reduces the environmental impact of our transportation. We work in conjunction with our Lead Logistics Providers to regularly review shipping quantities and collection frequencies, with the aim of continuously optimizing the networks. For example, in 2009 our North American Material Logistics Network collected material from 2,204 different origins or suppliers and shipped them to 37 destinations or plants, and used four origin distribution centers – called "cross docks" – to optimize delivery efficiency.

In addition, to increase overall transport efficiency, we have implemented contracts that encourage our freight carriers to carry third-party freight on return journeys rather than returning home empty.

We are maximizing the use of rail, river and short sea transport for the transport of inbound parts and materials and outbound vehicles to reduce fuel costs, emissions and road congestion. The environmental impact of rail freight is significantly less than that of road freight. It has been estimated that switching from road to rail can save 40 percent of CO₂ emissions.

For some time we have made use where possible of traditional rail services. For example, we move material by rail between our Cologne logistics hub in Germany and our Transit plant at Kocaeli in Turkey, and we move engines by rail from our Bridgend plant in Wales to our Valencia plant in Spain.

It can be difficult to expand the use of rail freight because rail terminals are not always sited near the facilities from which and to which we need to make materials and parts deliveries. To overcome this difficulty, we use "SWAP bodies" – standard freight rail containers that can be lifted on to specialist road trailers. For example, we use this system for parts shipments from suppliers in Italy to our facilities in Genk, Germany. Using this approach, road-based truck trailers are lifted onto railway wagons at Verona and pulled by train to Genk. We use a similar process to transport materials to Genk from suppliers in Scandinavia.

In 2009 we pioneered a number of new "inter-modal" routes that use a combination of road and rail transport in order to achieve the environmental friendliness of rail for long distances, and the flexibility of road transport at either end of the journey. One example of this combined road/rail route approach is our transport system from northern Spain and southern France to our Saarlouis facility in Germany. Using this system, standard truck trailers from suppliers in Spain are driven directly onto rail wagons at a special terminus at Perpignan, France, near the Spanish border, then carried by train more than 1,000 km to Luxembourg, from where they are taken by road to Saarlouis. This approach is not only more environmentally friendly, it also reduces road congestion: the train-based freight from Perpignan to Luxembourg has the potential to keep 40 truck trailers a day off the French roads.We also focus on using water-based transport in Europe as much as possible for outbound vehicle deliveries. Following this approach, inland road-based transport within Spain has been reduced by 29 percent by expanding from three sea ports of entry to six. Moreover, we have increased our use of river transport: we use barges from our Cologne facility to a number of ports to the north and south. In 2009 we introduced a barge route between Romania and Bavaria, and we now use the Black Sea for imports into Russia.

Actions by Ford of Europe to reduce the carbon footprint of its vehicle transportation logistics operation were recognized by a prestigious Supply Chain Distinction Award in 2009. The judges honored Ford of Europe for its unparalleled performance in environmental supply chain planning and execution. This includes compliance with environmental regulations, minimizing waste from the supply chain process and the overall adoption of "green" practices across the chain.

In North America, rail is used for efficient long-distance transport of commodities such as metal stampings and powertrains. A single 86 inch high cube railcar can carry cargo equivalent to three to four 53-foot truck trailers. At the beginning of 2010, Ford's rail and intermodal rail shipments represented almost 40 percent of the network distance traveled, while accounting for less than 15 percent of the network carbon footprint.

Our Finished Vehicle logistics team in North America has focused its recent carbon footprint reduction efforts on reducing the number of miles traveled per vehicle within the network, thereby lowering the amount of fuel consumed to deliver them. Today, vehicles travel an average of 8 percent fewer miles to their destination than they did at the end of 2009, and the network is an efficient 70 percent rail miles/30 percent road miles. This mix provides an effective blend of cost, speed to market and carbon emissions management, given North American geography. Although short sea and river barge transportation is not a significant green option in North America, the modernization of the transportation fleet with a view toward fuel efficiency is an objective of shippers and carriers alike. Our North American logistics operations are also focused on improving load density, or the number of vehicles carried per conveyance, as a means to lower the number of conveyances employed, and thereby reduce the amount of fuel consumed.

We are working to reduce transport-related emissions by reducing the emissions of freight trucks themselves. In North America we have partnered with the Georgia Institute of Technology to research a number of aspects of emissions reduction. For example, we are developing best-practice guidance for our carriers to identify equipment modifications that will reduce fuel usage. We share potential best practices and the results of internal testing at regular communications meetings with our carriers, and we survey carriers annually on their implementation of fuel-efficient practices. In addition, we have been working on practical applications for alternative fuel and engine technologies in our logistics activities, and have carried out a number of trials using our in-house transport fleets. Our Rawsonville Plant has signed up to the Environmental Protection Agency's "SmartWay" program, and is monitoring improvements to its truck fleet's fuel usage. Our North American operations also work to decrease the number of transport runs required by making improvements in packaging density and trailer cube utilization.

Ford of Europe's in-house transport operations have been implementing a number of initiatives to reduce the emissions of their trucks. These include training in fuel-efficient driving and increasing the use of biofuels. We are using a lower emission propane (liquefied petroleum gas) van for all London-based delivery work. Also, we use a fuel additive on major inbound routes to reduce harmful nitrous oxide emissions. Our European transport operations have tested the use of driving speed limiters to improve fuel economy and the use of deflectors on new trailers to improve vehicles' aerodynamics. These and other efforts have allowed us to comply with Euro V emission rulings and reduce our emissions-related road tax costs.

Packaging

Ford MP&L's Packaging Engineering department focuses on designing, procuring and optimizing packaging on a part-by-part basis to best suit the components being moved and the transport required.

Packaging directly impacts a number of environmental elements throughout its life-cycle, including materials usage, freight and waste disposal. Over years of testing, tracking and performance improvement, we have confirmed that the best strategy to eliminate material waste and optimize freight efficiency is to use durable and returnable packaging for all but the longest supply chains.

We have developed a standard range of packaging that not only protects parts and makes them easy to handle at the assembly line, but also allows maximum storage density during transportation, thereby minimizing transport requirements. We review the packaging of production trial parts to assess opportunities to increase packing density prior to the full-volume launch of a product.

One of the benefits of standardizing packaging is that it makes packaging interchangeable between suppliers and programs. In Europe, we have contracts with third-party specialist packaging providers to control the issue, collection and pooling of standard packaging for our suppliers. This pooling greatly reduces transport requirements, as the packaging can be shipped to where it is next required rather than always having to return it to the supplier who last used it.

Currently, our European operations use 90 percent reusable containers, and we are seeking to increase that amount. For example, we are working to develop more direct routing for parts to our St Petersburg plant so that it is viable to use returnable packaging.

Our Asia Pacific and Africa team is investigating the use of returnable packaging for hazardous material shipments, to ensure that they meet transportation requirements and will reduce waste.

We are now working globally to share best practices between regions and to drive consistency in packaging for future global vehicle programs. Ford's latest packaging guidelines, published in April 2009, require that supplier-provided packaging supports corporate sustainability goals by seeking a neutral or positive environmental footprint through zero waste to landfill and use of 100 percent recycled, renewable or recyclable materials.