More Use of Technology Cuts Energy Bills as Customers Demand ‘Green’ Initiatives

By Mindy Long, Special to Transport Topics

This story appears in the Dec. 7 print edition of Transport Topics.

As customers seek ways to cut expenses and reduce their carbon footprint through the supply chain, warehouse operators are taking their own steps to trim energy use, optimize loads and automate processes.

For example, warehouses are in-stalling solar panels and modernizing lighting. They also are relying on new technology to identify the most efficient ship points and truck routes.

Andy Smith, president of Kenco Logistic Services, said the company is receiving more “green” inquiries from customers than in the past, and “I think we will [receive] more in 2010 and 2011.”

“Major publicly traded companies are coming up with sustainability plans, and that is factoring into all of their processes,” Smith added.

He said that customers’ proposals often include a request for information on recycling programs and Kenco’s use of auxiliary power units, among other questions.

Kenco, Chattanooga, Tenn., owns and operates more than 5 million square feet of public warehouse space.

Joel Anderson, president of the International Warehouse Logistics Association, Des Plaines, Ill., said that besides customers’ requests, high energy and operating costs also are pushing warehouses to become greener.

“Part of it is social, part of it is regulatory and part of it is driven by [the desire to reduce] operational costs,” he said.

Anderson said he expects the U.S. Environmental Protection Agency to extend its SmartWay Transport Partnership to warehouses within five to 10 years as a way to encourage the further development of “green” warehouses.

Because warehouses tend to use large amounts of electricity for lighting, charging batteries and powering refrigeration units, reducing electricity use is often the first place companies look for cost savings.

Kraft Foods Inc., Northfield, Ill., said it is saving energy by taking its operations underground. Its 400,000-square-foot belowground warehouse and distribution center in Springfield, Mo., uses 65% less electricity than comparable aboveground warehouses.

In May 2008, Kraft’s 800,000-square-foot leased facility in Morris, Ill., was the largest building in the world to receive the Leadership in Energy and Environmental Design Gold certification from the U.S. Green Building Council.

“The facility has reduced light energy usage by 60% and reduced heating and air conditioning power consumption by 40%,” said Michael Forrar, associate director of logistics development for Kraft Foods Inc.

The building uses an energy-efficient ventilation system and fluorescent lighting with multilevel lighting controls.

Kraft ranks No. 39 on the Transport Topics list of the largest private carriers in the United States and Canada.

Ron Massman, chairman and CEO of Dependable Companies and president of Dependable Logistics Services, said Dependable upgraded to energy-efficient light fixtures at one warehouse and saved enough on energy costs to pay for the new lights within 2½ years.

In addition to saving energy, some facilities are looking to generate electricity with solar panels. In October, California Gov. Arnold Schwarzenegger (R) signed legislation allowing warehouses to be paid for producing excess electricity for the grid.

However, Stephanie Williams, founder of the Transportation and Renewable Energy Dialogue, a governmental relations firm in Sacramento, Calif., said the payback for solar power is such that not every operator should make the investment.

Based on an efficiency and carbon reduction study she conducted for the International Warehousing and Logistics Association in the fall, she said, “If you don’t own the building, you shouldn’t do it. The soonest return on investment was six years. The longest was 15 years.”

Hall’s Warehouse Corp. has installed solar panels on three of its buildings in South Plainfield, N.J.

“We are going 24/7 nonstop and use 700,000 kilowatt-hours a month,” said Patrick Sahradnik, purchasing administrator and resource energy manager for Hall’s.

Before installing the panels, Hall’s often was hit with extra tariffs during peak periods.

“In the summer you go from 11 cents a kilowatt to 14 cents a kilowatt. With the amount of kilowatts we use, that adds up,” Sahradnik said.

He said he expects the panels will pay for themselves in 10 years and should last at least 15 to 20 years.

Producing power isn’t limited to the warehouse itself. The Raymond Corp., Greene, N.Y., has developed a way to generate energy with its 9000 Series Swing-Reach lift trucks.

“When lowering the forks with a load,” said Susan Comfort, Raymond product manager, “the motor generates energy that is fed back into the battery, maximizing battery efficiency and providing a more consistent lifting and lowering speed.

That change means the forklift has as much power at the end of a battery charge as at the beginning.

High labor costs and the hopes of increased efficiencies are leading more warehouse operators to seek out automated equipment and software.

This year, Kenco said it began to see the full benefit of RouteSmith routing software it implemented in 2008 to determine the most efficient routes for its trucks and a warehouse client’s dedicated fleet. Also in 2008, Runzheimer International Ltd. of Waterford, Wis., acquired RouteSmith, a Denver firm that specialized in driver route optimization.

“We’re reducing cost and using less fuel and less labor by leveraging software,” Kenco’s Smith said.

Similarly, Kraft’s 20 largest North American distribution centers use Transportation Warehouse Optimization’s automatic vehicle load-builder software to maximize its truckloads. The result is 1,500 trucks removed from the road annually.

“It’s an innovative solution to take advantage of unused potential in our transportation and distribution system to optimize outbound truckloads, maximize weight and cube and put more products on fewer trucks,” Forrar said. Before using loading software, Kraft was filling up about 75% to 80% usable space in a trailer.

Similarly, Chicago Consulting uses proprietary optimizing software to design supply chains for clients.

“If you have a warehouse network that minimizes the miles you drive, that is not only a cost issue, it is a ‘green’ issue,” said Terry Harris, managing partner of Chicago Consulting, Chicago.

Harris added that leading companies conduct comprehensive network evaluations every three to five years.

Major changes do not occur very frequently, Harris told TT, but locations make minor changes, such as deciding from which warehouse to ship an order, many times a day.

Transportation Warehouse Optimization’s automatic ship-point assignment software draws on the stacks of data already collected in a warehouse to select optimal ship points.

“Modern technology has enabled us to look at every single order and determine where a product should ship from based on inventory, lead time and cost. We’ve taken technology that has been around forever, sped it up and created the ability to make a decision,” said Tom Moore, a principal at Transportation Warehouse Optimization, based in Franklin, Tenn.

Most orders today contain many items made in many locations.

“Making a shipping decision requires a whole bunch of calculations on delivered cost,” Moore said.

Penske Logistics, Reading, Pa., employs transportation management systems and warehouse management systems, or WMS, for assistance.

For clients in the automotive industry, Penske turns to WMS to schedule the pickup and delivery of parts according to the clients’ production schedules. The parts ship in racks that resemble post office boxes on wheels.

“Each of those slots relates to the sequence of how the parts will be used at the production line,” said Tom McKenna, senior vice president of engineering and technology for Penske Logistics.

When goods are ready to ship, many warehouses weigh freight before loading it to confirm the customer’s estimated weight and to determine placement in the truck.

“You don’t want heavy materials stacked high because it could create tipping potential as you go around a corner, or you could crush what is on the bottom,” said Don Halbert, global product manager for forklift scale manufacturer Avery Weigh-Tronix LLC, Fairmont, Minn.

Incorporating the scale into the forklift saves more time than a centrally located scale.

“They can capture the weight as soon as they lift the materials,” Halbert said. “You can wirelessly communicate that information to a mainframe collection point.”

Wireless communication increases the scale’s longevity because materials can’t damage cables, a problem that previously slowed the process.

FreightScan, Carlsbad, Calif., offers forklift-mounted dimensioning scanners and stationary scanners that use three-dimensional and two-dimensional systems to capture the dimensions and volume of cargo. The units help facilities to charge accurately for cargo and to plan loads.

“One of the most expensive things you can do is fill up a truck and then have one shipment left so you have to send out a new truck,” said company CEO André Johnson.

Like warehouses, forklifts are becoming more efficient as technology advances. With zero emissions and low noise output, electric lift trucks are becoming the norm for indoor use.

Massman recently ordered 12 electric units. “The newer units are much more efficient, in terms of speed and versatility,” he said.

At one time, skeptics thought electric forklifts might not be able to do everything internal combustion units could.

“The thought was that electric could never have the power you needed to clamp properly,” Smith said, “but we’ve been able to prove that we can use the electrical equipment.”

Melinda Beckett-Maines, spokeswoman for Toyota Material Handling U.S.A., Irvine, Calif., said electrics represent 67% of lift-truck sales today. Battery charging technologies have improved in

the past decade, and electric lift trucks have a longer life span and require less maintenance than internal combustion engine trucks, she said.

Mike Ogle, vice president of educational and technical services for the Material Handling Industry of America, Charlotte, N.C., said fuel cells will be the next advancement in lift trucks.

Toyota unveiled the first fully integrated hydrogen fuel-cell lift truck prototype in 2007.

“Although there is still the hurdle of costs associated with the fuel cells — and the fueling infrastructure necessary to support it — it’s not a matter of if we’ll see this technology commercially available in material handling equipment. It’s a matter of when,” Beckett-Maines said.