The environmental key performance indicators (KPI) identified and adopted are regularly monitored to enable greater coverage and in-depth analysis of distribution flow impacts.
The results from monitoring are used to set continuously challenging improvement targets.
CO2 emissions recorded in 2013 relating to Group logistics processes managed directly by Mass-Market and Premium Brand logistics in the NAFTA region equaled approximately 900,000 tons: 52% from upstream and 48% from downstream transport for vehicle distribution. This represents an increase of about 19.8% compared with the previous year(1).
The 2013 increase in production levels and volume mix in the NAFTA region led to significant challenges in freight and vehicle movement. In some cases, production schedules and availability of materials necessitated less than fully-cubed loads, resulting in more miles per vehicle shipped being traveled by the upstream transport fleet.
Improved sales growth in the international markets, which requires shipment to coastal ports, as well as increased sales in the southern and western states, saw more vehicles traveling longer distances.
Aggressive measures were essential in keeping the resulting carbon emissions to a minimum. Overall, carbon emissions per kilometer traveled for upstream freight increased by 1.6% despite the 17.4% increase in kilometers driven, while downstream carbon emissions per kilometer traveled decreased by 7.5% compared with the 30.3% increase in transport kilometers, primarily due to an increase in rail transport.
With respect to the EMEA region, CO2 emissions decreased 9.5% in 2013 compared with 2012.
CO2 emissions in logistics processes(2)
Mass-Market and Premium Brands in EMEA (thousands of tons of CO2)
(1) Last year’s report indicated 308,000 metric tons of CO2 emissions from upstream freight. This figure should be 387,904 resulting in a total of 749,473 metric tons.
(2) The calculation of CO2 emissions was based on the criteria illustrated in The Greenhouse Gas Protocol - revised edition for road transport, and the IFEU Heidelberg environmental method for sea and rail transport. The figure relates to 100% of downstream transport and 71% of the volume of upstream transport in Europe. The figure for emissions from the transportation of spare parts relates to 31% of upstream traffic by weight; downstream transport for spare parts is not monitored as it is not currently managed directly by the Group.
(3) Data restated to be consistent with 2013 scope.
Increase in low-emission transport
In the NAFTA region, efforts continued to reduce our carbon footprint for downstream Group-managed transport, resulting in new official partnerships. Following the partnership between Canada and the US Environmental Protection Agency in 2012, a similar initiative was established in 2013 with the Mexican Secretariat of Communications and Transportation Agency (SCT) and the Mexican Environmental Agency (SEMARNAT). The primary objective of Transporte Limpio (literally "Clean Transport"), a voluntary national program, is to reduce CO2 emissions from cargo transport vehicles while increasing fuel economy and implementing more environmentally friendly practices.
During 2013, we avoided more than 19,000 tons of CO2 by using rail transportation instead of other, more polluting modes.
With respect to downstream transport in Europe, the Group's internal fleet of trucks carries about 16% of the total vehicle distribution by road. Of this fleet, 80% is already Euro V-compliant. Continued investment in more efficient trucks is expected for 2014.
Regarding Group-managed upstream transport in Europe, access to plants is already prohibited for vehicles with emission levels that do not meet the Euro III standard.
Contractual clauses continued to be progressively introduced in 2013, requiring that at least 50% of supplier fleets consist of vehicles compliant with Euro IV or stricter standards. We are also continuing to monitor emission standards on the vehicles used by a large part of material and component suppliers not managed directly by the Group. This makes it possible to extend the same standards required for Group-managed transportation to those fleets as well.
Use of intermodal solutions
In order to reduce traffic congestion and CO2 emissions, the Group explores alternative solutions to road transport through a variety of options such as rail and sea. Depending on geography, infrastructure and production volumes, the upstream and downstream material transport may require a significant percentage of road transport. Efforts were made in 2013 to continue the extension of intermodal solutions which had already been introduced. In addition, the Group continued to evaluate potential new rail routes both for material transport and vehicle distribution.
In 2013, Fiat Group upstream rail transport share of CO2 emission in the EMEA region increased from 5.8% to 8.0% compared with 2011, while road transport impact decreased from 93.5% to 90.6% (1). Sea transport accounted for less than 1% out of the total emission.
Regarding downstream logistics, sea transports share of CO2 emission increased from 32.8% to 39.3% compared with 2011, while road transport impact decreased from 59.9% to 55.7%. The remaining percentage is attributable to rail transport.
In the NAFTA region, the Group works in partnership with other automakers by co-loading vehicles and, in this way, increase railcar density. Due to the increase in intermodal transport solutions, 2013 registered savings of about 4,500 tons of CO2 and about €1.3 million.
Logistics transport by mode (2)
Mass-Market and Premium Brands in EMEA (% of CO2)
Logistics transport by mode
Mass-Market and Premium Brands in NAFTA (% of Km)
(1) Percentage data have been restated to include FGA Engines and Transmissions in the scope.
(2) Data includes upstream and downstream transport and excludes spare parts figures.
Optimization of transport capacity
Maximum utilization of transport capacity is another method used by the Group to reduce the environmental impact of logistics operations while simultaneously containing shipping costs.
The extension of the “milk run(1)” approach by Magneti Marelli in the EMEA region resulted in a reduction of 12,500 tons in CO2 emissions in 2013.
Through daily route optimization in upstream flows in the NAFTA region, 870,000 kilometers were saved, avoiding the emission of 850 tons of CO2. Collaboration with other automakers to consolidate collection routes resulted in a savings of an additional 1 million kilometers, avoiding the emission of 970 tons of CO2. The process led not only to improvements in financial performance but also a reduction in truck traffic.
The Mopar Service and Parts organizations have embraced the concepts of World Class Logistics (WCL) and have begun implementing actions similar to those at our manufacturing facilities in order to achieve a best-in-class supply chain. A Central Lead has been established within the organizations and Central Teams are in place to drive the WCL methodology and support the Mopar network.
The continuation of training and awareness programs on cube utilization has resulted in additional year-over-year improvement. In 2013, our supplier shipments required an estimated 300 fewer trailers and 320,000 fewer kilometers when adjusted for volume.
Additionally, we initiated a focused, small-scale pilot project with the Milwaukee Parts Distribution Center to determine the impact trailer decking has on delivery cost. Mopar identified a 25% potential reduction in trailers needed and distance traveled, due to the additional space that decking provides within each trailer. Expansion will begin in the first part of 2014.
In 2013, the Group continued efforts to reduce CO2 emissions by looking for additional opportunities to engage other automakers and non-automotive companies via the carriers to combine downstream freight and share the transportation costs among all parties. Additional focus was placed on opportunities within the Mopar network utilizing both upstream and downstream lanes to reduce capacity and save kilometers. These efforts allowed Mopar to supply 25% of the dealers on shared service routes.
(1) The “milk run” refers to a process whereby transport pickups are organized to optimize truck routes, ensure full truckloads and minimize the time required to make all supplier pickups in a specific geographic area.
Reduced use of packaging and protective materials
We also work to minimize packaging and protective materials and increase the use of reusable containers, while maintaining standards and meeting quality requirements. Where this is not possible, the Group ensures that standard recovery processes are applied.
Although the Group’s commitment is to reduce disposable cardboard packaging in European plants, its use increased in 2013 by 5.2% compared with the previous year (from 5.7 to 6.0 kg per vehicle). This was principally due to an increase in cardboard required by the new Grugliasco (Italy) plant where Maserati vehicles are produced. This plant was out of scope in 2013, but its cardboard usage was unexpectedly reported under the Mirafiori (Italy) plant figures. It was not possible to isolate the specific Grugliasco figures, leading to a perceived jump in overall usage. Despite this, compared with 2009 there was a 6.3% reduction (from 6.4 to 6.0 kg per vehicle).
We continued to reduce wood packaging for international shipments of materials from Italy. In 2013, shipments to our plant in Betim (Brazil) saw a 9.7% reduction in the use of disposable wood packaging compared with 2012 (from 7.2 in 2012 to 6.5 kg/m3 shipped), and a 47.6% reduction compared with 2011. These results are due to the progressive introduction of returnable metal crates or specially equipped containers replacing disposable wood packaging. In 2013, monitoring of wood packaging systems was extended to Group plants in Turkey and Poland.
We also initiated projects to reduce packaging material in the NAFTA region. Where wood or corrugated material is necessary for the export of material to international manufacturing locations, the company partners with service providers that are certified by the Sustainable Forestry Initiative (SFI).