A revamping of its logistics operations has enabled Kraft Foods to trim more than 50 million miles off its global transportation and distribution network.

Increasing its focus on rail, as opposed to road transport has seen the company drive huge improvements in its UK operations, while Kraft has also managed to save a million miles by using ships, rather than trucks, to shift wheat to its flour mill in Toledo, Ohio.

It is, according to Steve Yucknut, Kraft’s vice president of sustainability, a switch of approach that is paying dividend.

“We think about miles, piles and idles when moving our product,” he said in a statement. “We’re finding ways to drive fewer miles, reduce inventory piles and eliminate idling trucks.”

The company’s new strategy is, however, about more than soundbites.

The use of ships, rather than trucks in Toledo has saved the company approximately 2,000 tons of carbon dioxide emissions.

It’s a similar story in Brazil, where the company has slashed CO2 emissions by upto 300 tons by sending products to distribution centres by boat.

In the UK, Kraft’s reliance on the rail network has seen it avoid more than 40,000 miles of truck shipments. In Austria, the firm has used refrigerated rail to trim its truck mileage by 150,000 miles.

Central to company’s success has been the introduction of Project MOST (or Management of Optimised Sustainable Transportation), which enables Kraft to analyse its entire logistics network.

The system has, the company said, enabled it to cut back on empty miles, and the movement of trailers travelling back empty on return routes.

“Even before the increases in the price of oil, and the growing focus on sustainability, we knew we could improve the movement of trucks carrying products to our customers,” said Mike Cole, director-North America Transportation, Kraft Foods, after the company launched its Oracle-based platform.

“The challenge is to identify the recurring patterns of truck movements when you have almost a million shipments a year, spread across a network covering over 25,000 potential origin and destination combinations, on any given day.”

Shipping costs could rise considerably if new EU plans are rubber-stamped at global climate talks later this week.

The new plans – which could force the shipping industry to cut its carbon dioxide emissions by 20% below 2005 levels over the next ten years – could cost the industry up to €6bn a year.

EU diplomats have claimed that any cuts could be linked to a tax on fuel, with any new scheme potentially generating billions of dollars to help poor countries deal with the potential impact of climate change – currently a key stumbling block as the world moves towards the Copenhagen summit at the end of 2009.

At present emissions from both the shipping and aviation industry – which could itself come under pressure to cut emissions by 10% in comparison to 2005 levels – are not covered by the Kyoto treaty.

The move is unlikely to be welcomed by some of Europe’s major nations. An industry association report published last week by Britain, Belgium, Norway and Sweden argued that shipping would be better suited to a cap and trade system, as opposed to a tax-based.  

However, there is little disputing the impact of shipping on sustainability targets.

Research published in 2007 using figures from BP by researchers at the Institute for Physics and Atmosphere in Wessling, Germany, found that annual emissions from shipping made up almost 5% of the global total. 

A further study by the International Maritime Organisation estimated that emissions from global shipping fleets could increase dramatically as demand for larger ships continued to grow. It warned that without action emissions from ships could increase by a staggering 72% by 2020.

British Airways’ procurement chief has insisted that sustainability is still an over-riding concern for the company, despite the devastating impact of the global economic slowdown on the aviation industry.

In an exclusive interview with Sustainable Sourcing, BA’s head of procurement, Tim Richardson, said that sustainable procurement was, and is, a primary motivation in an industry that, probably more than any other, has come under fire for its contribution to global warming.

Last week, BA chief executive, Willie Walsh, pledged that the aviation industry would cut emissions to 50% below 2005 levels by 2050. Speaking on behalf of the International Air Transport Association (IATA), Walsh also said that the industry would work to reduce emissions of CO2 by 1.5% per year over the next decade and would submit plans for joining a global carbon-trading scheme to the UN by November of next year.

And while Richardson admitted that it would be erroneous to say that BA’s carbon footprint was on its way down, rather than up, he did claim that the company’s procurement operation was closely aligned with the rest of the business to meet the aims outlined by Walsh.

“It would be wrong to say that the aviation industry’s carbon footprint is falling, or is likely to fall dramatically in the near future,” he said. “That said, we’re looking in detail as to how we can reduce emissions and examining areas such as the weight of the materials that make up the aircraft, which can have a significant impact.”

From the trolleys used to transport meals in the aircraft, to the cups used to serve drinks, BA and its fellow airlines are taking a novel approach to solving a potentially weighty problem.

There’s also little doubt that the procurement of a new generation of aircraft is likely to provide a significant boost for aviation’s green ambitions, despite accusations that the industry’s most recent announcement amounts to nothing more than another healthy dose of green washing. 

“The most ideal thing from an environmental perspective would be a large reduction in the number of flights taken across the world,” said Richardson. “But that’s not going to happen, so the industry has to do all it can with the resources we have.

“The new aircraft, such as the Airbus 380 and the Dreamliner are significantly more environmentally friendly than the ones they’re replacing.”

British Airways placed an order for 36 new aircraft in September 2007 – the company’s biggest order since 1998 – as part of an overhaul of its fleet. The new planes would be “greener, quieter and more fuel efficient”, BA said.

Richardson, himself, has a seat alongside Walsh on the company’s Corporate Responsibility board, which demonstrates how central BA’s procurement and supply chain organisation is to delivering the kind of commitments outlined by IATA.

“It’s shows how seriously sustainability is taken at BA – and that’s not going to change, now matter how tough industry conditions get,” he said.

The introduction of heavy taxation on CO2 emissions is forcing companies across Europe to reassess their current fleet policies, a leading CPO has told Sustainable Sourcing.

According to figures released by the European auto manufacturers’ association, Acea, in April, the number of European countries using CO2-related taxation rose to 16 in 2008, and others are likely to follow suit.

Germany has recently announced plans to move to a new tax system from Jan 2010, after a drawn out period of negotiation between the country’s two main political parties. And, according to Graham Gleed, CPO at Societe Generale de Surveillance, it’s this move that could signal a change of approach.

“There’s real money involved here,” he tells Sustainable Sourcing. “Taxation bands on cars in Europe are tending to progress towards the relationship with CO2. Every country is doing it a different way but you can be sure that if you’re creating less CO2 you’re going to pay less – not just for the car but also for ancillary charges.”

For a company with a fleet of 6,000 cars, it’s an area that Gleed is examining closely as the firm moves into the second half of the year.

“It’s a big issue for us,” he says. “We’re currently looking at the possibility of changing the fleet policy within the context of a more sustainable approach. We’re look at down-sizing engines across our fleet.”