UPS to FedEx: We're Greener Than You

Like sports rivalries, corporate rivalries are fun. Think about the TV ad campaigns inspired by the competition between Microsoft and Apple. FORTUNE once put the Roger Enrico, who was then the CEO of PepsiCo, inside a Coke bottle on the cover of the magazine, and the Pepsi people didn't forgive us for years.

These days, to my delight (and, I hope, yours), big companies are battling over which one is more sustainable. I'm sure Michael Dell wasn't happy to read that Hewlett Packard landed atop Newsweek's new sustainability rankings of the S&P 500 companies, even though Dell was right behind at No. 2. Coca-Cola and PepsiCo monitor each other's environmental initiatives nearly as closely as they vie for shelf space at Wal-Mart, which, not coincidentally, keeps an eye on the greening of all of its suppliers.

Now United Parcel Service and FedEx, longtime and intense rivals, are going at it.

Last week, as soon as I sat down with UPSers Scott Wicker, who runs the plant engineering group and oversees sustainability, and Lynnette McIntire, director of global reputation management, to talk about UPS's new sustainability report, they made a point of telling me that UPS is doing a more thorough job of measuring its carbon footprint than FexEd and that UPS runs a more efficient, and therefore less polluting, fleet of aircraft than its rival.

Describing UPS's carbon-footprint rivalry with FedEx, McIntire says: "We never used to talk about the competition. We're over that now …This is a big deal for us for a lot of reasons."

It apparently matters to FedEx, too. The company supplied me with a quick response to UPS, which I've attached below. I've also agreed to sit down with FedEx's sustainability people to give them a full opportunity to tell their story.

More is at stake than bragging rights. Forward-thinking customers will want to do business with the more sustainable firm. The environmental back-and-forth also ties in to a bigger reputation battle between the two firms over labor issues being fought out in Congress. (See, for example, brownbailout.com, FedEx's anti-UPS website.)

What's healthy is that the companies are going to watch-dog one another's claims. That's also a useful reminder to look closely when companies make assertions about their environmental practices because it's hard to be, er, absolutely, positively sure what's meaningful and what's not.

Consider, for example, the fact that both UPS and FedEx have said they will reduce emissions from their airlines by 20 percent between 2005 and 2020. Both claims are factual but, as the chart (below, sorry it's a bit small) supplied by UPS shows, UPS has already reduced emissions by 28 percent, to a level well below those of FedEx. Its CO2 pounds per available ton miles was 1.54 in 2005, while FedEx's was 2.26. The result is that, even in 2020, FedEx won't be as efficient or as low-carbon as UPS was in 2005.

Of course, UPS wasn't thinking about its carbon footprint back in 1990 when it began buying more efficient aircraft engines and planes. "We did it to reduce our fuel burn," Wicker said, and to cut costs. But the company has been consistently retiring older, smaller, noisier, fuel-guzzling planes and buying newer, larger, quieter and more efficient ones. UPS's fleet "is the most efficient cargo airline in the industry," Wicker says.

Comparing UPS to FedEx emissions. Click for full-sized.
chart 1

More broadly, the UPSers -- that's what they call themselves -- note that their company measures its carbon footprint more accurately than does FedEx. UPS includes its buildings, trucks, trains and planes, as well as its use of electricity and the carbon burned by outside contractors. (That's Scope 1, Scope 2 and Scope 3, for carbon geeks who are reading along.) FedEx does not include the emissions of many of its drivers because they are independent contractors. "If you are going to make a decision on who to ship with based on who's most carbon efficient, you have to compare an apple to an apple," Wicker says.

But does anyone pick a delivery service based on carbon? Actually, yes. Some European companies are factoring sustainability into their shipping decisions. So is the U.S. government, and in particular EPA, which signed a contract with UPS after company officials told their story to EPA admin Lisa Jackson. By the way, the U.S. Post Office, another competitor, hasn't measured its carbon footprint yet.

When I mentioned that FedEx at least deserved credit for its pioneering work with the Environmental Defense Fund to develop the market for hybrid trucks, the UPSers responded that they've got more alternative fuel vehicles -- about 1,800 -- on the ground than FedEx. "We've tested compressed natural gas, liquid natural gas, propane, hybrid electric, all electric and then we have a new vehicle that EPA worked with Eaton to build that's called hybrid-hydraulic," Wicker said.

Interestingly, though, most of UPS's footprint -- about 53 percent -- comes from its planes. And while the company is becoming more efficient -- that is, emitting less carbon for each ton of cargo -- its carbon footprint is growing in absolute terms. That's bad for the climate, of course.

UPS can't see a way to reduce its emissions in absolute terms without turning away business, Wicker says. They already try to route packages to the most efficient mode of transport -- ships are better than trains, which are better than trucks, which are better than planes. But the company is counting on the development of biofuels for jets to achieve its 20 percent by 2020 carbon target.

"To do the things that we need to do to affect climate changes -- to really turn things around -- it's going to take technology," Wicker says.

As I said, I'm hoping to tell FedEx's story in a future column. Afterwards, I'll try to sift through the competing claims. In the meantime, here is the response that FedEx's people provided to me on short notice:

FedEx has been focused upon efficiency and environmental stewardship for years. In fact, absolute CO2 aviation emissions from FedEx over the past four years have declined by 17 percent and will do so domestically for years due to aircraft replacement and operational efficiency improvements underway now. In addition, emissions per available-ton-mile decreased by 8 percent from 1990 through 2005. The 20 percent reduction goal that FedEx established last year, that others have referenced and copied, has a 2005 baseline, so is in addition to the 8 percent reduction achieved by 2005.

It's also important to note that FedEx reduced emissions while reducing noise quickly through a retrofit hushkit program collaboratively developed and made available to other airlines. This allowed us to be a good neighbor and helped others purchasing the hushkits as well, rather than continue operating noisy aircraft.

Is environmental progress a battle or a common goal for the betterment of all?

FedEx absolutely competes for superior service and reliability in package shipping.  When it comes to the environment, we believe that a rising tide lifts all ships and want the tide to be environmental innovation.

As noted, another example is hybrid technology. FedEx's partnership with EDF was intended to spur change in the industry, and it's done just that, with close to 100 fleets, including UPS, adopting hybrid technology. We've continued in this nonproprietary fashion and earlier this summer worked with suppliers to develop a more cost-effective process through which truck owners can retrofit older standard vehicles into hybrids. We hope that more in the industry will adopt this approach. It wasn't our first-in-business usage of hybrid electric commercial trucks that was a competitive advantage. Rather, it was the drivers of those hybrid trucks, along with other team members, providing outstanding customer service each and every day that is the competitive advantage.

For what it's worth, Newsweek's Green Rankings put UPS at No. 85 and FedEx close behind at 93. More to come. Your comments are welcome, as always.

GreenBiz.com Senior Writer Marc Gunther maintains a blog at MarcGunther.com.