In the Imperial group, fuel efficiency is managed primarily at a business unit level. Examples of fuel reduction and conservation initiatives undertaken in the relevant business units are described later in this section.
The logistics businesses maintain a focus on fuel efficiency, whether by optimising logistics routes, driving or navigating vehicles in a fuel-efficient manner or by investing in vehicles which are energy efficient.
In South Africa, the proposed introduction of a carbon tax is an issue on which the business engages with policy makers at a group level, as the impact of the proposed legislation is potentially broader than fuel cost. Currently, an emissions tax is levied on the sale of new passenger cars.
New passenger cars are taxed on CO2 emissions above 120g/km at a fixed rate of R90 per g/km. There is a possibility this will increase in future with implementation of the South African carbon tax.
The resultant increase in car prices has the potential to impact profitability in Imperial’s vehicles businesses as increased car prices will most likely dampen vehicle sales, at least in the short term.
The proposed legislation may also result in an increase in electricity tariffs, which would lead to increases in operational costs across the group’s South African operations.
Submissions on the proposed legislation were made during the initial consultation phase with business in 2011 and have been subsequently updated, with the group’s concerns being covered by more detailed legal submissions.
The essence of the group’s submissions on the proposed legislation covers the following aspects:
In the Logistics businesses, fuel makes up a large portion of the running cost of our vehicles. Any reduction initiatives will therefore have a direct positive effect on both emissions and costs.
In Logistics Africa, all prime mover truck tractors have been tested on major routes in South Africa and an in-depth test was conducted over the last 12 months to compare fuel consumption figures, as well as numerous other performance aspects.
Through this process we have been able to determine the best performing vehicles. The top three will be our choice of vehicles to be purchased in the new financial year. To achieve consistency in fuel consumption will be a challenge. However, to overcome this we purchase high-specification vehicles with intelligent auto-shift gearboxes controlled electronically. These assist drivers in optimising consumption.
Reducing fuel consumption brings with it positive business benefits, but the division also focuses on the reduction of carbon emissions, as these are directly linked to fuel consumption. In South Africa, however, we face a limitation in this regard, as the most emissions-efficient vehicles we can run are Euro 3 vehicles. Higher vehicle specifications cannot be operated in South Africa as fuel of the correct specification is not available in all areas of the country. Where we can obtain fuel of the correct specification and Ad Blue (diesel exhaust fluid which is necessary for the correct functioning of these engines), we operate Euro 5 vehicles on a test basis in conjunction with clients.
Fuel efficiency targets are set at the level of operating companies in the division, where individual performance targets have been put in place, based on the types of trucks in use, the distances travelled and the nature of the business.
Imperial signed the Energy Efficiency Pledge with the Department of Energy, Business Unity SA and the National Business Initiative (NBI) during 2012.
This pledge represents a proactive step in
the division’s sustainability journey, and is a
clear indication of its commitment to
integrating sustainability practices into its
core business. Several projects have been
undertaken in line with this pledge, such as
the audit by the National Cleaner Production
Centre (NCPC) at
Other group businesses are also undertaking fuel efficiency and reduction initiatives. In the Car Rental business the fleet procurement strategy has been to ensure that vehicles selected meet the Euro NCAP 5 rating criteria. The category mix representation has also been changed, with a lower percentage of large vehicles and an increased proportion of more fuel-efficient vehicles. Internal policies to reduce and improve logistics relating to the relocation of fleet have reduced wastage in terms of non-productive kilometres driven.
We track the results of these changes by measuring the carbon emissions per kilometre driven by our clients. This has fallen by 4% in absolute terms during the year despite a 17% increase in kilometres driven, exceeding the 3% target for reductions which we set ourselves.
Imperial’s Logistics Africa division believes that ‘green’ initiatives should clear three hurdles. They must be financially, environmentally and socially acceptable. Transformation to a green supply chain is a threefold process, which requires:
This approach has enabled the division to continuously pick up trends, understand drivers of change and engage with business partners to green clients’ supply chains, as well as its own business.
Logistics Africa has demonstrated that through a focus on best practice across the supply chain, it can deliver operational and economic benefits, while simultaneously limiting carbon footprint and waste, and reducing environmental impact. Through making the right procurement decisions, working closely with business partners and employees and the intelligent application of supply chain modelling, excessive and inessential transportation is eliminated.
The company has embarked on a number of greening initiatives supported by a strong business case, as detailed overleaf.
THE ESTABLISHMENT OF LOGISTICS INTEGRATION CENTRES (LICs) WHICH REDUCE COSTS AND CARBON FOOTPRINT WHILE IMPROVING EFFICIENCY
Improved tools for optimised planning and cost management, which offer the ability to measure efficiencies and track benefits are just some of the rewards being reaped by the retail group Woolworths since transforming its supply chain, with assistance from two Logistics Africa companies – Resolve, which houses the division’s professional services and consulting capabilities, and Imperial Distribution Services.
The transformation process began when Woolworths identified the need to vertically integrate its supply chain beyond the traditional operations of warehousing and distribution to achieve improved service levels, competitive advantage and supply chain sustainability. As a starting point, the client, with assistance from Resolve and Imperial Distribution Services, quantified the current logistics costs embedded in purchases from suppliers. The result of the modelling culminated in the development of a business case for Woolworths to optimise distribution services by offering transport services to their suppliers.
It was agreed that an LIC should be established to house the required planning and reporting capabilities, to support performance improvement and to provide a high level of visibility of operations. The LIC would become a key enabler for Woolworths to offer a competitive service to suppliers.
Through the reporting capabilities of the LIC, it has been possible to improve the operational efficiency of transport year on year.
THE DEVELOPMENT OF A NEW BUSINESS MODEL THAT SAVES MONEY, IMPROVES EFFICIENCY AND BENEFITS THE ENVIRONMENT
Dramatic changes within the South African
fast moving consumer goods (FMCG) sector
and retail environments are demanding new
supply chain strategies from companies
aiming to remain competitive. For Resolve’s
clients, the solution was a new business
model – previously unseen and untested in
The solution adopted was the integrated management, planning and execution of all distribution activities from a central control room for all Resolve’s clients, across all sites. It has resulted in an average increase of 7% in efficiency for Resolve’s clients (measured by the number of drops per vehicle). This increase in efficiency translates into a total fleet reduction of 15 vehicles and an annualised distribution cost saving of approximately R12 million.
Operational and environmental benefits have also been achieved. Companies are increasingly putting environmental considerations high on the business agenda, and Resolve’s new business model is enabling its clients to reduce their carbon footprint. Planning and execution management tools ensure that the fleet is travelling optimal distances, thereby avoiding unnecessary kilometres and extra carbon emissions. The results extrapolated from key operations show distance savings of 4,5% (net of fleet savings), resulting in a reduction in emissions in excess of 400 tonnes of CO2 per annum.
COLGATE PALMOLIVE BENEFITS FROM THE NEW, STATE-OF-THE-ART WAREHOUSING AND LOGISTICS FACILITY LAUNCHED BY IMPERIAL RETAIL LOGISTICS
Imperial Retail Logistics, a group company of Imperial Logistics, launched a new, state-of-the-art warehousing and logistics facility during 2013, with green design aspects and advanced logistics functionality. The facility boasts features such as ultra-flat flooring with high load bearing capacity. The building has cross-docking facilities, offering high flexibility in materials handling. Cross-docking facilities enable the implementation of ‘flow-through’ and ‘stock-and-distribute’ strategies for products, significantly enhancing flow efficiencies. A contract for warehousing and distribution services has been awarded to Imperial Retail Logistics by Colgate Palmolive, which will be one of the first companies to benefit from this new facility.
Given the nature of our business, continuously maximising our energy and fuel efficiency – and reducing any associated emissions – are some of our most important goals at Imperial. Every part of our diverse company, all over the world and right down to the smallest business unit, is expected to identify and implement energy efficiency measures wherever possible.
Our Logistics International division – headquartered in Duisburg, Germany – offers a broad range of logistics services to industries such as automobiles, chemicals and steel. Shipping and cargo are two of the lynchpins of the division. Businesses in the Logistics International division implemented a number of energy efficiency measures during the year. A few examples are captured in this case study.
PANOPA BUSINESS UNITS INTRODUCE ISO ENVIRONMENTAL MANAGEMENT SYSTEMS
Within the Logistics International division, the Panopa group focuses on the niche market of contract logistics. For Panopa’s businesses, proactive protection of the environment has meant a particular emphasis on:
Incorporating environmental management into all parts of the business systematically is a priority. In line with this, two business units in the Panopa subsidiary Gillhuber received the DIN EN ISO 14001 certificate during the year under review – a significant achievement. This process provides a comprehensive framework for effective environmental management by reducing waste, improving resource efficiency and – as a consequence – managing costs. Other sites in the Panopa group also had their existing DIN EN ISO 14001 status re-certified and extended during the year.
LEHNKERING'S FLEET BEGINS THE CHANGEOVER TO "EURO 6" STATE-OF-THE-ART TRUCKS
As a logistics and production services provider for the chemical industry, and as part of the Logistics International division, the Lehnkering group owns and operates a fleet of approximately 290 trucks, transporting materials such as liquid bulk chemicals, liquid food and liquid gas. Ensuring that this fleet is as environmentally friendly as possible means that Lehnkering is continuously investigating the latest equipment and most innovative technology available. As part of this commitment, Lehnkering has already begun modernising its fleet by upgrading to the state-of-the art Euro 6 trucks which are both more carbon-friendly and more fuel efficient.
Euro 6 refers to a European Union (EU) regulation that addresses truck emissions specifically, and Euro 6 trucks utilise the latest engine technology so that they emit significantly less carbon dioxide than the previous generation of Euro 5 trucks.
Trucks meeting Euro 6 regulation also use up
to 5% less fuel compared to the Euro 5 trucks,
translating into a reduction of
The goal is to have replaced 244 trucks with the new Euro 6 trucks by 2018 – translating into a reduction of 1 159 tonnes of CO2.
ASSUMED CO2 REDUCTION PER YEAR THROUGH MODERNISATION WITH EURO 6 TRUCKS*
IMPERIAL SHIPPING MAKES USE OF 'ECO-DRIVING' TO IMPROVE FUEL EFFICIENCY
Eco-driving is a term used to describe the energy efficient use of vehicles, by driving in a way which minimises fuel consumption and the emission of carbon dioxide.
For the Imperial Shipping Group, which focuses primarily on inland shipping, the opportunities for eco-navigating exist on the waterways of Europe, rather than on the road. By carefully monitoring a vessel’s fuel consumption from the bridge of the ship, the optimal navigating speed can be determined, i.e. the speed at which the best ratio between fuel consumption and transport performance is achieved. On-board monitoring processes rely on precise and very detailed information, for example the rate of fuel consumption, the fuel temperature and the flow volume. Using this information, the crew can adjust the speed of the ship, and choose which path in the river offers least resistance, to maximise the vessel’s fuel efficiency.
Using specialised equipment, called volumeters, which allow navigators to measure consumption with a high degree of precision, the engines on most of Imperial Shipping’s vessels give constant feedback on Specific Fuel Oil Consumption (SFOC). Even the smallest changes of speed and fuel usage can make a difference. The volumeters capture the exact measurements of fuel flow and report them in real time to a display monitor located in the bridge of the ship. The crew is then able to respond to this real-time data display.
Most of Imperial Shipping’s fleet is already equipped with this on-board monitoring equipment and the rest of its existing fleet will be retrofitted with these ‘fuel watches’ in the 2015 financial year.
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