One million people in Mexico City
suffer from chronic breathing difficulties, many of which are fatal.
In Beijing, Jakarta, Manila and other urban areas of the Pacific
Basin, degraded air quality is responsible for the loss of 50,000
lives each year.
Atlanta, GAUPSs corporate hometownmust endure
a designated smog season, and the air there is among
the worst in the United States. But when you deliver 13.6 million
packages a day in more than 200 countries and territories across
the world, nearly every town is your hometown. We see the promise
and the peril of communities in virtually every nation of the world,
quite literally from the front doorsteps and the lobbies of the
homes and businesses we serve. We see the problems, and we want
to be part of the solution.
When you operate the worlds largest private transportation
network, with a fleet of more than 88,000 vehicles and 500 aircraft,
you recognize that you have an imprint on the environment and a
responsibility to it. UPS feels strongly about corporate citizenship
and social responsibility. But we also feel strongly that good business
practices and sound business strategies canand indeed mustlead
to a stronger, healthier environment.
Its a philosophy we refer to as enlightened commitment: doing
good for the environment by doing good for our business.
Its also a philosophy we believe has significant bottom-line
impacts. In fact, if executed properly, it can help build three
of the most important competitive advantages any company could ask
for: innovation as a core competency, increased efficiency and an
enhanced public reputation.
INNOVATION AND EFFICIENCY
A few words on each, starting with innovation and efficiency, because
I believe they go hand-in-hand.
At UPS, we tend to think of innovation not just as a breakthrough
product or service, but as a cultural attitude, one handed down
nearly 95 years ago by our founder, Jim Casey. Casey constantly
spoke of the need to be constructively dissatisfied.
He believed no matter how good we got at anything, there was always
room for improvement.
Casey was a stickler for streamlining operations and refining processes.
For instance, in the early days, he questioned sending a Macys
delivery truck and a Sears delivery truck to the same residence
on the same day. If UPS could consolidate the deliveries, the customer
would get better service and the stores would save money while conserving
Although it wasnt recognized as environmental awareness
back then, the result was the same, and UPS created a new business
model that forms its core business today. One driver assigned to
one vehicle and to one neighborhood to increase efficiency and reduce
fuel consumption. Not surprisingly, consolidation caught on in a
big way and has led to a revolutionary distribution model known
as the hub-and-spoke system.
UPSs quest for innovation has led to a number of significant
environmental initiatives over the years, from developing vehicle
routing technologies that allow us to cover maximum areas while
traveling fewer miles to creating our industrys first reusable
overnight envelope to being the first major North American airline
to comply with Stage 3 noise regulations.
Weve also been very aggressive in our efforts to minimize
vehicle emissions, beginning with our first experiment with electric-powered
delivery trucks in New York City back in the 1930s. Since then weve
introduced propane- and methanol-powered vehicles and liquefied
and compressed natural gas (CNG) vehicles. In fact, our CNG fleet
of nearly 1,000 trucks now operates in 18 urban areas in the U.S.
(see map on page 40) and abroad, and is the largest private CNG
fleet in North America. In addition, we operate large propane fleets
totaling 832 vehicles in Canada and Mexico City.
Three years ago, we began researching and testing hybrid-electric
technology. The goal, like previous efforts, was to use technology
to increase fuel economy, reduce emissions and lessen our imprint
on the environment. We recently announced that these three years
of research and design have culminated in the package delivery industrys
first road test of a hybrid electric vehicle (HEV). The test vehicle
is currently being used to pick up and deliver packages at 158 locations
on a 31-mile route in Huntsville, AL.
UPS isnt alone in this kind of thinking, which is prompting
more and more leading-edge companies to migrate toward clean-air
technologies for competitive advantage. For example, at one of its
factory complexes in Flint, MI, General Motors is using technology
to reduce carbon dioxide emissions by more than 60 percent. At that
site alone, the annual savings is $4 million.
In Australia, BP has trimmed its carbon dioxide emissions at one
refinery by nearly one-fifth since 1995 through efficiency and co-generation.
It hopes to reach a nearly 50 percent reduction in the next few
years. And Atlanta-based Georgia Pacific reduced overall fuel costs
by one-third at one plant by merely insulating steam lines. The
project is saving about 20 tons of fuel a day, reducing emissions
and improving efficiency.
ENHANCED PUBLIC REPUTATION
The final point, the corporate branding and reputation implications
of running an environmentally sound business, must not be underestimated.
Increasingly, the lines are blurring between consumer activism and
social activism. We see it every day, and the message is loud and
clear: You cant be a customer-centric organization without
being an environmentally-progressive organization.
Serving customers needs extends beyond the direct business
need. We ignore this trend at our own risk. And its not just
consumers who demand activism and accountability. There is a growing
movement among investors for greater disclosure of social and environmental
responsibility along with financial performance.
Already, were seeing a growing movement toward the creation
of green supply chains. Companies like Nike, Saturn,
the Gap and United Technologies, among others, are taking the lead
in doing business with environmentally progressive suppliers.
UPS is working to be part of the green supply chain.
Companies such as Interface and Patagonia specifically cite our
transportation and environmental efficiencies as reasons for doing
business with us. Multimillion-dollar contracts like these certainly
affect our bottom line.
At the end of the day, our brand, like thousands of others, comes
down to trust. Aside from trusting us with their most critical deliveries
and supply chain needs, customersin Mexico City, Beijing,
Jakarta, Manila and our hometown of Atlantamust trust us to
do the right things for the environment and the communities in which
Mike Eskew is the new chairman and CEO of United
Parcel Service, effective January 2002.