Our optimized global logistics network meets customer needs with a single, integrated pickup and delivery system. Through the network’s use of innovative technologies and our intermodal shifting strategy, we are able to reduce inefficiencies and their associated environmental impacts, such as greenhouse gas emissions. Through improvements to this optimized network, we are making the smart logistics network a reality.
Making the Smart Logistics Network a Reality
How UPS is Building the Smart Logistics Network
Advanced technologies — some deployed today and others on the near horizon — are critical to turning this challenge into an opportunity to take our global network to new levels of sustained efficiency.
The Smart Logistics Network
Our new Network Planning Tool (NPT) applies advanced analytics, artificial intelligence, and operations research to refine the network, improve utilization of assets, and provide new levels of efficiency. This technology helps us optimize the package flow, from customers’ loading docks, through our network of hubs and sorts, and to their final destinations. Package flow optimization and hub optimization are rolled into one tool that tells us the most efficient way to run our network each day, even when volumes spike and destinations change. NPT will be fully implemented in U.S. operations by 2020.
A key area of improvement that these types of tools identify is the possibility of delivering more packages per stop. The growth of e-commerce and matching increase in residential deliveries has decreased the average number of packages we drop off for every mile we drive. Some of the ways we are adapting are with:
- Exploring ways to increase “synthetic package density,” using enhanced data analytics, we are able to identify packages destined for the same address or surrounding areas, allowing drivers to make one trip instead of two.
- Providing advance delivery notifications with UPS My Choice and Follow My Delivery so customers receive their package on the first attempt, and
- Consolidating package drop offs at UPS Access Point locations to give consumers a flexible way to receive packages.
All of these efforts provide more convenience for customers and help reduce our environmental impact.
Intelligent Route Planning
An important part of reducing our footprint is optimizing delivery routes, as the most sustainable mile is the one we never drive. On-Road Integrated Optimization and Navigation (ORION), our groundbreaking route-optimization software, provides a smarter way to determine the best route for a single delivery vehicle. Arguably the world’s largest operations research project, ORION uses package-level detail, customized online map data, fleet telematics, and advanced algorithms to determine the most efficient delivery route each day. We have learned that successful implementation requires a combination of ORION technology and our drivers’ using their best judgment and knowledge of optimal route solutions.
In 2016, we completed deployment of ORION to 100 percent of U.S. routes targeted for implementation. We’re pleased to have realized greater efficiencies than originally expected in 2017 during the first full year of use. We achieved the planned annual reductions of 100 million fewer miles and 100,000 metric tonnes in CO2 emissions, and realized an additional $10 million reduction in operating expenses over the expected $400 million savings.
Internationally, we are piloting current ORION technology in Germany, the United Kingdom, and Canada, with plans to add new locations in 2018. The next generation of ORION and dispatch technology solutions will help us further reduce miles driven, fuel use, and CO2 emissions. By 2019, we plan to test a version that will provide navigation, route guidance and real-time optimization for changing conditions, such as service updates or customer needs, and will automate and optimize dispatching of on-call pickups.
As these technology-driven investments are fully deployed, they will help us achieve our goal of reducing absolute GHG emissions across our global ground operations by 12 percent by 2025. Greater insight about what’s moving through our network is helping UPS find better ways to deliver each package, more efficiently than ever.
When our customers choose a delivery time, we choose the most efficient transportation modes to meet it. That may mean using a truck instead of a plane, or a train instead of a truck. Since these various modes of transportation in our sector have different energy intensities (energy required per unit of volume transported), UPS uses an intermodal shifting strategy. It allows us to fluidly shift transport modes in real time to reduce energy intensity whenever possible.
In 2017, we avoided more than 3.7 million metric tonnes of carbon emissions by shifting delivery volume to the most efficient method. This includes from aircraft to truck, and shifting from truck to rail.
Beyond our transportation network, the operation of more than 2,500 UPS facilities around the world offers opportunities to reduce energy consumption and GHG emissions. We are committed to these reductions with a goal to source 25% of all facility electricity from renewable sources.
As we work to build the smart logistics network of the future, this commitment will become even more important. We have more than 70 new package centers and hub projects underway, which will increase our efficiency and capacity and use technology to advance the connectedness of our network. Our new regional sorting hub in Atlanta, Georgia, for example, is a 1.2-millionsquare-foot facility that can carry more than 100,000 packages per hour over 15 miles of conveyors using advanced processing equipment. While such capabilities increase the efficiency of our network, they also are likely to increase energy usage.
Mindful of this increasing energy intensity, we have pledged to have 25 percent of our total facility electricity come from renewable sources by 2025. In 2017, we announced plans to invest $18 million in solar energy at our facilities, which will result in a nearly fivefold increase in the amount of power generated from solar at UPS facilities today. This will expand UPS’s owned solar-power-generating capacity by almost 10 megawatts, the equivalent of providing electricity to approximately 1,200 homes annually, reducing carbon emissions by approximately 8,200 metric tonnes per year.
We continually evaluate new technologies and best practices to reduce energy consumption in new and existing facilities. Our campaign to upgrade light fixtures to LED technology is one example. We identified 100 of our highest energy-usage facilities in the U.S. and began upgrading light fixtures in these facilities to LED lights in 2014. We further advanced this program in 2015 by identifying an additional 100 facilities and beginning the process to upgrade these light fixtures. We expect to save more than 32 million kilowatt-hours per year when all upgrades are complete.
UPS is committed to evaluating all new construction projects for green-building rating system implementation. The Building Research Establishment Environmental Assessment Methodology (BREEAM), and the Leadership in Energy and Environmental Design (LEED) are the two rating systems most widely in use today across the globe. UPS currently has five facilities that have received LEED certification from the U.S. Green Building Council:
- Platinum Certification for UPS Supply Chain Solutions headquarters in Alpharetta, Georgia
- Gold Certification for Corporate headquarters in Atlanta, Georgia
- Silver Certification for a UPS Supply Chain Solutions healthcare facility in Louisville, Kentucky
- Silver Certification for a supply chain warehouse in Londonderry, New Hampshire
- Certification for a small package facility in Queens, New York
We also have a facility in Southampton, U.K. that has been BREEAM-certified excellent.
In addition, UPS currently has five facilities that have received Energy Star® certification from the U.S. Environmental Protection Agency (EPA). These include our Corporate headquarters and Global Business Services facility in Atlanta, Georgia; our Supply Chain Solutions headquarters in Alpharetta, Georgia; and our Global Operations center and Air Group building in Louisville, Kentucky.
UPSers Working to Make Facilities More Sustainable
UPS Sustainability Ambassador John Hill is a 33-year UPSer who serves as the facility manager for the UPS Supply Chain Solutions facility in Alpharetta, Georgia. In his role, John works with a team of local employee volunteers to drive sustainability efforts within their facility. Together, they started an organic garden that supplies produce for the on-site café, upgraded lighting to motion-sensitive alternatives that reduce energy usage, and helped UPS achieve its first LEED Platinum certification across 2,500 buildings. John’s advice to others is to “be a catalyst — together, there is so much we can do to help people, the environment, and the company.”