Edgar E. Blanco, a research scientist at the MIT Center for Transportation and Logistics, is working with Chiquita Brands International Inc. to help gauge the carbon footprint of the supply chain that transports bananas by truck and ship from Central America to the United States. The case study will lead to a Web-based tool that will help other companies calculate and potentially reduce the energy consumption of products moved, like Chiquita bananas, by land, water, and/or air.
Blanco’s strategic tool, due out by summer 2008, will be freely available on the Internet. It will provide a standardized way for a variety of industries to look at the environmental impact of each component of their supply chains.
“We’re developing the methodology for how to calculate a product’s carbon footprint,” said Tony Craig, an Engineering Systems Division (ESD) graduate student working with Blanco. “This information can be used by businesses to improve performance, but also by consumers to make better decisions and regulators to design public policy.” Craig is working with Blanco to flesh out the methodology and with companies to apply the methodology to their products.
It’s not a simple undertaking. Blanco, originally a logistics expert, is finding dozens of elusive variables leading to “hidden oil”—fossil fuels consumed in the manufacture of packaging, in the use of land and buildings, in transport, and more. Blanco says the need exists across the board for a consistent carbon footprint methodology. “We are hearing from companies, ‘We do not know how to do this. Help us!'” he said.
Ana Lucia Alonzo, director of advanced planning and in-market network optimization for Chiquita, said working with MIT has been “a great benefit for us. Chiquita has made a strong commitment to corporate responsibility with environmentally sustainable solutions. Our objective is to implement initiatives that will lead to a carbon neutral supply chain.”
Blanco said any company pursuing this goal will find it challenging. For instance, shipping freight by train is generally more energy-efficient than trucking. But because trains run on fixed schedules and do not go point-to-point, a company may have to build a warehouse to hold items awaiting rail shipment, resulting in a negative overall impact on carbon emissions. “The problems out there are of the highest complexity,” Blanco said. “People focus on one element only, and that’s an incomplete view of the supply chain.” It is necessary to include factors such as transportation planning and warehousing in the mix because “decision makers were missing more than half of the problem,” he said.
The new tool attempts to take all of those factors into account. The user enters information drawing on sources ranging from factory electricity bills to shipping records to material inventories. Then the tool—making use of published data about carbon production—takes the information about how much energy was consumed at the product’s factory, how much cardboard or plastic wrap was used in its packaging, how many miles it was shipped by rail, air, or truck, and so on and calculates the carbon required to deliver one unit of the product to the customer.
In addition to looking at their supply chains, some companies also are beginning to address consumers’ growing desire to know whether products are produced in an energy-friendly manner. The UK is experimenting with carbon labels through Carbon Trust, a government-funded company helping businesses and the public sector cut carbon emissions.
Consumers in the US may one day see products labeled—as food is labeled with nutrients and washing machines are labeled with annual operating costs—to reveal how much carbon was released into the atmosphere by their manufacture and movement from factory to store.
To explore how such a label might come about, ESD graduate student Kwan Chong Tan, a member of Blanco’s research team, is looking to the now-ubiquitous nutrition label. Mandatory nutrition labeling came about in the US as the government felt that the potential reduction in health costs would make its implementation worthwhile, Tan said. “One major goal of labeling policy is to raise awareness, rather than directly affecting consumer behavior. Labels such as nutrition and eco-labels are often still secondary factors when consumers make decisions, with price, quality, and value still being the primary ones,” he said.
“When you think about the current framework, you hear about carbon tracking on a national level or a corporate level. But this problem crosses international boundaries,” Blanco said. Products from China may not adhere to energy-efficiency guidelines while those from Brazil may have originated where management of local energy is more efficient. “How is that going to be reflected on the label?” Blanco asked.
“The complexity, variability, and youthfulness of the whole concept makes it unlikely to become fully mainstream in the near future,” Tan said. “Getting an accurate and agreed-upon methodology of assigning carbon emissions to products will have to be the first step. Strong industry and government support would then be key to ensuring the success of a carbon label.”
Calculating the carbon footprint of a banana is not, in some ways, as hard as doing the same for a computer or a cell phone with hundreds of parts, each with its own SKU and manufacturing history. Yet Blanco is finding the undertaking far from cut-and-dried.
You might think the story begins when the fruit leaves the farm. But bananas come from farms of varying sizes, using growing methods from organic to traditional. Farmers themselves may not know how much fertilizer they use and how it is manufactured, or the fuel consumption and emissions impact of their tractors and other equipment.
From a plantation in Central America, green bananas avoid premature ripening by traveling in refrigerated containers to ports such as Puerto Limon in Costa Rica. There they are transferred on wooden pallets to ships that transport them to a US port such as Wilmington, DE.
From there, around half the time, retail chains like Wal-Mart send their own trucks to pick up the fruit. For the rest of the shipments, Chiquita moves the green bananas to distribution centers. After a brief stop in a cold room, the fruit is placed in ripening rooms where workers reactivate the ripening process. Stores request that the bananas arrive at a certain color on a nine-point scale ranging from green to deep yellow. Different colors require different amounts of energy consumption.
The bananas are shipped to retail outlets. Even then, the story is not over. We use energy to get to the store to buy the bananas. One person might drive an SUV to a behemoth chain store, while another walks to the corner market.
Packaging is a big percentage of a product’s carbon footprint, even for bananas, which come in their own environmentally friendly package—a peel. Nevertheless, bananas are swathed in plastic and cardboard during shipping, and they receive extra packaging depending on their final destinations. A handful of bananas slated for a Starbuck’s, for instance, requires individual plastic bags and uses more packaging than a Shaw’s shipment.
Blanco has to choose and limit these seemingly endless variables. “To standardize communication among companies, we need clear definitions of the different metrics,” he said.
This research was sponsored by Chiquita Brands International Inc.