By Nadia Khan
As 'eco-friendly' pressure mounts, ME fleet managers are challenged to keep pace with global counterparts.
Let's be fair, fleet managers in the Middle East do have a lot on their plates. Coping with the increasingly professional standards now being expected in the region, together with accelerated trade growth putting extra demands on their services, one might be forgiven for expecting environmental concerns to slide to the bottom on their to-do lists. However, with growing international pressure on countries to reduce their greenhouse gas emissions by 2012, fleet managers are coming under increasing stress to take this issue very seriously indeed.
The facts about the impact of road transport on the environment are enough to make any company with a large fleet of vehicles feel uneasy. According to sources, over the past 50 years, the world's vehicle population has grown fifteen-fold, now exceeding 700 million units. With road transport being one of the fastest growing sources of CO2, the main greenhouse gas, the contribution of vehicle fleets to global warming can only be comparative.
It’s becoming increasingly vital to integrate the environmental dimension in our daily life - Majid Al Mansouri.
In many western countries such as the United Kingdom, measures to make transport managers directly accountable for the environmental impact of their fleet are becoming increasingly enshrined in legislation and enforcement, and some regions within the Middle East are fast following suit.
The United Arab Emirates is a shining example. Habiba Al Marashi, chairperson of the Emirates Environment Group (EEG), a Dubai-based NGO, maintains that the region's national government is indeed actively taking steps to lessen vehicle emissions. "The government is encouraging efficient vehicles and the use of less polluting fuel," she maintains. "The problem is still the carbon emissions from vehicles, construction and the manufacturing sectors."
Likewise, neighbouring Abu Dhabi has been working towards introducing ‘green diesel' in all vehicles and industries, and slowly phasing out the use of high sulphur diesel as fuel.
"Environmental issues have always been a priority in Abu Dhabi," maintains Majid Al Mansouri, secretary general of the Environment Agency - Abu Dhabi (EAD). "Interest in controlling diesel emissions has increased in response to mounting evidence that diesel exhaust has a highly adverse impact on health. It's becoming increasingly vital to integrate the environmental dimension in our daily life to strike the balance between the economic prosperity, social development and environmental protection."
The management of fleet emissions from the most polluting transportation segments including taxis, training vehicles and government owned fleets are at the top of this list. "Abu Dhabi has designed a policy and action plan to convert 20% of these fleets into using compressed natural gas (CNG) as an alternative fuel by the year 2012," he states.
With government backing, Al Mansouri is hopeful that other companies in the region will start to pay more attention to environmental factors, although admittedly involuntarily at first. "It is only through us that the industry is being guided about accounting for their pollution sources, emissions and effluents," he admits. "We hope that, with time, environmental awareness reaches a level where all act to protect and improve the environment based on their own beliefs and inclination."
Al Marashi similarly echoes these sentiments. Whilst she believes that companies in the region are slowly becoming more aware of environmental issues related with their business, she acknowledges that there is still the need to translate these concerns into concrete actions.
"EEG is promoting corporate social responsibility in the region encouraging companies to address the environmental, social and economic bottom line of their business activities," she explains. "Corporate Social Responsibility (CSR) integrates different standards and practices of the company like environmental, health and safety policies, cleaner production strategies, and participatory management systems under one coherent strategy."
Some of the global companies in the region, such as international express and logistics company DHL, are already leading the way in achieving this goal by promoting their own environmentally friendly fleets. Under the slogan, ‘we travel naturally', DHL has begun implementing the use of compressed natural gas (CNG) powered vans in Bangladesh, Germany and Switzerland.
More locally, DHL has been the first company to introduce CNG powered vans to its express delivery fleet in the UAE, as part of the efforts in the country towards alternative fuel vehicles.
"With gasoline and diesel powered vehicles contributing to 80% of environment pollution in the UAE, companies which manage large fleet of vehicles not only in the UAE but also around the globe have a responsibility to look at measures to lessen air pollution," states Geoff Walsh, operations manager for DHL UAE.
He points to solutions such as the use of more environment-friendly energy sources like solar power, fuel-cell, biogas and CNG, the preferred environmentally-friendly choice for DHL itself.
"Given its availability, natural gas has become the environmentally friendly transportation technology of choice globally and a number of factors make express delivery fleet vehicles the prime target for this increasingly sought-after energy source," Walsh elaborates.
The company has faced some setbacks due to the lack of natural gas filling stations in the region, but remains confident that by working closely with the government, this obstacle can be overcome. "With more roads and bridges being introduced into the country's transportation network, we believe the government must and will take steps to increase the supply of natural gas. As natural gas continues to develop as an alternative fuel of choice, we will endeavour to ensure natural gas vehicles account for at least 50% of DHL's express delivery fleet in the UAE by 2009," Walsh says confidently.
Alongside the benefit of improving air quality, CNG powered vans are deemed to be both cleaner and quieter than conventional vehicles and more cost efficient in terms of operations, resulting in economic savings for the company. Other economically friendly environmental measures for fleet owners include common-sense efficiency methods such as route management and load consolidation.
"For companies running large fleets, especially in the delivery and collection business, route management is key," concurs Walsh. "By this we mean planning routes to be productive as in miles driven between stops and avoiding route crossovers. This would and does naturally reduce fuel consumption and in turn emissions."
Regularly reviewing vehicle size and engine capacity is another good idea. For example, Walsh points out that reducing the size of the vehicle if running at 50% capacity or consolidation of loads from different routes into one vehicle can benefit the company in terms of both saving costs and reducing its environmental footprint.
With going green adding up to economical benefits for businesses with large fleets, more companies are being encouraged to switch to the more environmentally sound option.
"From both a business and environmental perspective, UPS is committed to developing and testing innovative solutions and investing in technologies that minimise fuel consumption and reduce our impact on the environment," says John Tansey, country manager for global express delivery company, United Parcel Service (UPS) in the UAE.
However, with the company's fuel consumption costs accounting for only 5.6% of its operating revenue worldwide, he points out that economical benefits alone are not enough to drive forward the necessary changes needed to tackle fleet emissions.
In particular, Tansey identifies two major obstacles for the Middle East region. "The first relates to the cost in adhering to the standards and this coincides with a general perception that environmental improvement is more of an aesthetic initiative rather than a necessity," he maintains. "More attention needs to be paid towards protecting the environment as it outweighs sustaining economic growth or securing the future of the energy suppliers. In Europe for example, renewable energy is thought to be its best energy bet for the future, and the Middle East should follow in its footsteps."
Secondly, he argues that despite vast improvements in recent years, violations on over-loading, sub-standard vehicles still occur and should be handled with more stringent standards through enforced legislation placed on the companies that operate those vehicles.
The company's own tightened fleet management practice focuses on tackling carbon emissions, unnecessary vehicle usage, improper servicing and disposal of waste. With more than 94,500 vehicles, the express company recognises that it faces significant challenges to reduce its environmental impact.
"We take those challenges seriously and have identified specific goals for the company," elaborates Tansey. "At the same time, we are working to advance new industry technologies to reduce emissions and conserve energy. Most importantly, environmental concerns are a core part of UPS' daily activities and engineering processes."
And it's not all just empty talk. At the end of 2006, the company operated 19,647 low-emission vehicles worldwide. Furthermore, like DHL, UPS has also been working towards reduced dependence on fossil fuels by testing alternative fuel vehicles (CG gas) to ensure an environmentally friendly option, with a planned conversion of 10 - 15% in 2008. The company has also been taking efficiency measures such as route optimisation and load consolidation to significantly reduce the environmental impact of its fleet. "We look for improvement each year to reduce costs by getting more done for every kilometre travelled," says Tansey.
As leading international companies based in the Middle East, such as DHL and UPS, take up such active measures to tackle their environmental footprint, it is hoped that other local companies will also follow suit.
"The journey towards having a global and standardised model is a long way away, however it doesn't hurt to always learn from others and apply that to one's own objective," says Tansey. "Sound business practices and strategies can, and indeed must, lead to a stronger, healthier environment."
Industry experts, such as Manny Hontario, director of consultancy Oliver Wyman, agree. Hontario maintains that the issue of operating environmentally friendly fleets is still an emerging topic in the region, but one that is quickly gathering steam.
"We increasingly see that multinational companies are making global commitments to reduce their overall environmental footprint. Operating in an environmentally friendly manner is also a sign of tight operating discipline around issues that drive costs," he points out. "Attention to the relevant factors - such as maintenance, fuel consumption, and waste disposal - are signs that the management team is paying close attention to the quality of the operation."
Furthermore, future regulatory pressure as discussed earlier will also play its role in propelling the issue further. "We have seen in other markets that fleets are relatively easy targets for regulators to mandate compliance with emissions and waste disposal standards, for example," he adds.
At the end of the day, whether guided by the firm enforcing hand of government or economical common-sense, fleet-owning businesses cannot deny that, as social responsible companies, demonstrating a commitment to reducing the environmental impact of their vehicles is a must.
As Honatario emphatically points out, "it is obviously the right thing to do. Fleet operators are part of the community in which they operate, and have a responsibility for improving the quality of life - which includes improving the quality of the environment."