MIT CTL RESEARCH PAPER
CASE STUDIES IN CARBONEFFICIENT LOGISTICS
Boise: Leveraging Rail Direct
Service
BY DR. EDGAR E. BLANCO
RESEARCH DIRECTOR
MIT CENTER FOR
TRANSPORTATION & LOGISTICS
WINTER 2013
Sponsored by
Environmental Defense Fund
Boise:
Leveraging Rail Direct Service
Case Study Highlights
Boise Inc. has launched two initiatives to improve their logistics operations and
environmental performance. The Carload Direct Initiative is shifting product transport to
rail, and the Three-Tier Pallet Initiative is increasing railcar utilization. Both initiatives have
resulted in a combined 62–72% reduction in the company’s CO2 emissions, as well as cost
savings on those shipments.
Reducing CO2 Emissions Through Carload Direct. Traditionally, manufacturers use trucks,
or a mix of trucks and rail, to transport their products to customers. As trucks produce
greater emissions than trains, a logical way to reduce emissions is to minimize the use of
trucks and maximize the use of rail. Boise coordinated with their customers to promote rail
transport so that the product could be sent directly from the manufacturing plant to the
customer’s warehouse. The transition from using a mix of truck and rail to exclusively rail
eliminated more than 2,600 tons of C02, the equivalent of saving over 264,000 gallons of
fuel consumed by road vehicles.
Optimizing Railcar Utilization with Three-Tier Pallets. Prior to this project, railcars were
loaded two pallets high, leaving a space from the top of the second pallet to the roof of the
railcar, thus underutilizing the full capacity of the railcar. Boise redesigned their pallets and
loading structure by creating a half-pallet, which allowed them to rethink pallet stacking
and maximize shipping capacities for their loads. These redesigns maximized carloads by
reducing the number of shipments required to deliver product. Using just 930 railcars in
2011 reduced the company’s C02 emissions by 190 tons, which is equal to the C02
emissions from 21,637 gallons of fuel consumed by road vehicles.
CASE STUDIES IN CARBON-EFFICIENT LOGISTICS: BOISE | 2
About Boise Inc.
Boise Inc. (NYSE: BZ) manufactures a wide variety of packaging and paper products, with
2012 sales totaling $2.56 billion. Boise's range of packaging products includes linerboard
and corrugating medium, corrugated containers and sheets, and protective packaging
products. Boise's paper products include imaging papers for the office and home, printing
and converting papers, and papers used in packaging, such as label and release papers. The
company is the third-largest uncoated freesheet manufacturer in North America with a
focus on cut-size office papers. They also are a leading producer of high-quality recycled
papers and offer a complete suite of premium cut-size imaging papers, including highbright and colored papers.
Operating primarily in the United States, Boise recently expanded operations into Europe,
Mexico, and Canada. They have established long-term relationships with many customers,
including OfficeMax, a leader in business-to-business office product solutions and retail
office products in the United States.
The following map illustrates the manufacturing and distribution locations of Boise
operations.1
Figure 1. Boise Inc. manufacturing and distribution locations
Boise Sustainability and Environmental Practice
Boise is dedicated to sustainability. In fact, Boise employees developed the company’s
Stewardship Principle – “We manage our businesses to sustain environmental resources
for future generations.” 2 To this end, the company constantly evaluates and redesigns its
processes to determine areas for reducing waste while maintaining profitability. Boise
helped to design the American Forest and Paper Association’s Better Practices Better
1
2
Boise, 2011.
http://www.boiseinc.com/sustainability.html#tabId=tab4. Accessed November 2012.
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Planet 2020, the paper industry’s sustainability road map. 3 The Boise management team
strongly supports environmental protection – it is listed in the company’s corporate code
of ethics – and has launched projects related to air and water quality, fiber and energy
resources, and waste materials to minimize pollution.
Carload Direct – Maximizing Rail to Minimize Emissions
The Carload Direct Initiative was launched by Boise to increase the use of rail from Boise
manufacturing facilities to its customers. Prior to this initiative, OfficeMax shipments could
be shipped via full truckload to facilities that were rail accessible. Through a collaborative
process between Boise and OfficeMax, more than 200 carloads were shipped via rail to
OfficeMax distribution centers in 2011.
Using rail not only is more cost-effective than shipping full truck loads for Boise, but also
emits less CO2; Moving 1 ton 4 of cargo 1 kilometer on rail generates 10 times less CO2
compared to a full truck movement. However, there are operational barriers to increasing
the use of rail. Typically, rail transit times are longer than truck movements and may
require drayage (e.g., short truck movements) between facilities and rail lines. Since Boise
and select OfficeMax distribution centers are rail accessible, drayage was not required.
Another important barrier is order size. A Boise carload direct shipment will include over 70
tons of products, while a truckload shipment will have an average of 20 tons. Unless there
is enough volume, waiting for orders to fill a carload direct shipment will increase transit
times and may impact the inventory investment of the customer. Given the large product
volumes, OfficeMax orders were adequately pooled to fit a carload direct shipment
without compromising customer service. In 2011, 5% of the volume shipped to OfficeMax
was ultimately carload direct.
Calculating C02 Emission Reduction
To calculate the reduction of C02 emissions associated with the Carload Direct Initiative, we
computed the CO2 emissions of the carload direct shipments via rail. Then we compared
these values with the emissions generated if those shipments had been shipped via truck.
Boise provided data for 250 shipments across four lanes corresponding to 2011 carload
direct US lanes to OfficeMax. Each lane started at a Boise plant and led to an OfficeMax
distribution center, both of which had direct rail access. The data on each shipment
included the date, mileage traveled between the origin and destination cities, and the
shipped tons.
http://www.boiseinc.com/index.html. Accessed November 2012.
In this document, we will use the word “ton” as commonly used in the United States: one ton is equal to
2,000 pounds. This is internationally referred to as a “short-ton” to differentiate it from a “tonne” or
“metric-ton,” which is equivalent to 2,204 pounds.
3
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For each carload direct shipment, we used the following formula to estimate the CO2
emissions:
CO2 Emissions Carload Direct = Weight * Rail Distance * Rail Emission Factor
The Rail Emission Factor
represents the amount of CO2
generated by moving a ton of
cargo one mile using rail
transportation. We used 25.2
grams of CO2 per ton-mile as
the rail emission factor. 5 For
example, the CO2 emissions for
a carload direct shipment of 76
tons, traveling 604 rail miles
will be 1,156 kg 6 of CO2.
To estimate the equivalent
truckload emissions for each
carload direct shipment, we
first need to calculate the
number of truckloads required
for each rail shipment. Based
on historic data provided by
Boise, an average customer
truckload shipment contains
20 tons of products.
Understanding Emission Factors
In the case study calculations, we used two “emission factors” to
estimate the total CO2 emissions: one for rail (25.2 grams of CO2
per ton-mile) and one for truckloads (1,717.12 grams of CO2 per
mile). These emission factors capture the amount of CO2 that is
generated as the engine of the locomotive and the truck engine
uses its fuel (diesel or gasoline) to move the cargo from its
origin and its destination.
For truckload shipments, the emission factor was computed
using an average fuel efficiency of 5.9 mpg and CO2 content of
10,131 grams of CO2 generated per gallon of diesel as estimated
by the EPA (2008). If more detailed information is known about
the type of fuel and fuel efficiency of the trucks, a more accurate
ton-mile estimate can be obtained. The EPA SmartWay Program
publishes self-reported CO2-per-mile data for more than 2,500
different fleets.
Since train fuel usage varies depending on the number of
locomotive engines, number of railcars, and traffic, it is more
common to use an aggregate number for the rail network. This
number is based on data provided by the rail operators across
the whole network (fuel, electricity, distance, and cargo weight).
Combining all those factors results in an aggregate number per
ton-mile for rail transportation.
Continuing with our example above, if the carload direct shipment is 76 tons, it is the
equivalent to four truckload shipments (rounding up 76/20 = 3.8). We can now estimate
the CO2 emissions for each of the truckloads using the following formula:
CO2 Emissions Truck Load = Road Distance * Truckload Emission Factor
The Truckload Emission Factor represents the average CO2 generated by moving a full truck
for one mile. We used 1,717.12 grams of CO2 per mile as the truckload emission factor.7
The distance for every truckload corresponds to an over-the-road distance. For the case
study, this was estimated using Google Maps. 8 For example, for each of the truckloads
Source: GHG Protocol, CO2 Emission Factors by Weight Distance, August 2012. Since this is an
international standard, CO2 emissions are commonly reported in metric units (i.e., grams, kilograms, and
tonnes).
6 1 kilogram (kg) = 1,000 grams (g) = 2.20462 pounds (lbs.).
7 Source: GHG Protocol, CO Emission Factors by Weight Distance, August 2012.
2
8 http://maps.google.com. Accessed July–August 2012.
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estimated above, the total road distance was 611 road miles, generating 1,049.2 kg of CO2
per truckload.
We can now estimate the amount of CO2 avoided by using the Carload Direct Initiative
between Boise and OfficeMax by applying the procedure outlined above for each of the
carload direct shipments. Figure 2 summarizes the final results of the carbon emission
calculation. Based on our analysis, by implementing carload direct, Boise reduced its
transportation emissions by over 70%, avoiding emissions of 2,690 tonnes. 9 This is
equivalent to saving over 264,000 gallons of fuel, or the annual GHG emissions from 460
passenger vehicles.10
Carload Direct
256 rail shipments
21,800 tons of cargo
400,000 rail miles
35.4 million ton-miles
890 tonnes of CO2
Truckload
1,206 truckloads
2.1 million full truckload miles
3,580 tonnes of CO2
Total CO2 Avoided: 2,690 Tonnes of CO2
Figure 2. Emission savings from carload direct shipments
The Carload Direct Initiative also is delivering transportation savings to Boise on those
shipments.
Three-Tier Pallets – Optimizing Carload to Increase Volume
Boise launched the Three-Tier Pallet Initiative to increase the volume of products in each
rail shipment. They realized that when leaving the Boise factory, pallets did not reach from
floor to ceiling, and a small space was not being utilized on the railcars. Since the space was
not large enough for a traditional pallet to be added, Boise tried placing a half-size pallet on
top of the existing pallets. After a few operational trials, they determined that the half-size
pallets were best positioned in the bottom layer of the stack in a “step-down”
configuration starting with the highest and heaviest at the far end of the railcar. Cardboard
sleeves were added around the top-layer units in order to further increase protection and
reduce the risk of damage. This configuration was labeled a “three-tier pallet” railcar and
had the potential to increase railcar utilization by 14% (see Figure 3).
1 tonne = 1,000 kg = 2,204.6 lbs.
EPA, 2012. http://www.epa.gov/cleanenergy/energy-resources/calculator.html. Accessed November
2012.
9
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Figure 3. Three-tier pallets in a Boise railcar shipment
Once the operational configuration was solved, Boise needed to work with its customers to
be able to obtain orders that would fit three-tier pallet shipments: To ship a half-pallet in a
railcar, there needed to be an order for a half-pallet of product. Customers needed to
create new SKUs and modify ordering and receiving systems to allow for the new halfpallet product configuration. It turned out that a half-pallet was a perfect solution for
seasonal or lower-demand specialty items. As these items did not move as quickly, they
often sat in Boise customer warehouses. The half-pallet allowed the customer greater
order flexibility, creating a win-win situation for both Boise and its customers.
The three-tier pallet configuration was finally added as an optional configuration for Boise
customers in 2011.
Three-Tier Pallet and C02 Savings
Boise provided data for 5,553 railway shipments within the United States in 2011. Out of
those, 928 included the three-tier pallet configuration. The shipment data included origin
and destination cities of the railcar, date, car type, the number of pallets in the shipment,
total weight, and the number and weight of three-tier pallets. Using this historic data, we
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were able to estimate that railcars with three-tier pallets added an average of 8.2% extra
product compared to regular railcar shipments (see Figure 4).
Regular railcars
Three-tier railcars
Extra utilization %
Average tons/car Averages tons/cars
50' high
75.9
83.2
9.6%
50' low
74.5
75.6
1.5%
60' high
89.1
95.1
6.7%
60' low
89.9
92.4
2.8%
Total
84.2
91.1
8.2%
Figure 4. Extra utilization from three-tier pallet use
Car type
As noted earlier, rail emissions are computed using the following formula:
CO2 Emissions Rail = Weight * Rail Distance * Rail Emission Factor
Notice that the weight of the product placed in a three-tier pallet will still travel the same
distance to the client location. Thus, if we use the rail emissions formula above, three-tier
configured railcars generate the same CO2 emissions as regularly configured railcars. Can
we conclude that the extra railcar utilization does not save any CO2 emissions?
This is indeed a limitation of the approach used for rail emission calculations: the rail
emission factor already takes into account the average network railcar utilization and does
not provide any parameters to capture any extra CO2 savings due to the Boise three-tier
pallet (see the “Understanding Emission Factors” side-bar on page 5 for a discussion about
emission factors). In other words, the ton-mile rail emission factor used in the formula
above does not capture marginal changes in railcar utilization levels. More information will
be needed about the marginal fuel consumption of the rail locomotive due to the three-tier
pallet configuration.
There are two approaches for estimating the CO2 savings. One approach is to assume that
Boise will need to ship those three-tier pallets in a different mode (e.g., in a truckload) in
order to provide the same level of service. This approach will follow the same lines of
analysis we used for the carload direct CO2 savings. However, this will not be a realistic
estimate since customers most likely will not be willing to pay more for a half-pallet being
shipped in a more expensive mode. This also will significantly overestimate the CO2
reductions since truck emissions are much higher than rail emissions.
A second approach is to assume that the marginal CO2 contribution of placing half-pallets
in an existing railcar is negligible. We can then estimate the savings of the three-tier pallet
by assuming that the weight of the three-tier pallets would have shipped in additional
CASE STUDIES IN CARBON-EFFICIENT LOGISTICS: BOISE | 8
railcars that will generate new CO2 emissions. Thus, to estimate the CO2 savings, we
subtracted the average weight of a “regular” car (i.e., those that did not carry three-tier
pallets) from cars that carried three-tier pallets, taking into account the different car types.
We then multiplied this extra weight with the rail distance and the rail emission factor
(25.2 grams of CO2 per ton-mile). This number will be used as a proxy estimate of CO2
savings due to higher railcar utilization.
Figure 5 summarizes the results of these calculations from the Three-Tier Pallet Initiative.
Boise saved approximately 190 tonnes of C02 (6.8%) by using three-tier pallets. This is equal
to the C02 emissions from 21,600 gallons of fuel, or the annual GHG emissions from 38
passenger vehicles.
Car type Three-tier pallet tons C02 savings (kg)
50' high
2,200
65,200
50' low
6
159
60' high
3,650
124,500
60' low
70
2,600
%
8.6%
1.6%
6.3%
2.9%
Total
5,926
192,459
6.8%
Figure 5. Estimated CO2 savings from using three-tier pallets
Together, the Carload Direct Initiative and the Three-Tier Pallet Initiative have yielded
carbon emission reductions of more than 2,800 tonnes of CO2.
Summary
Implementing carload direct and three-tier pallets is a perfect example of how
environmental initiatives can benefit both the supplier and the customer. Greening a
company can be good business and increase profitability. In this instance, there was a
significant reduction in emissions and cost savings, and the customer benefitted from a
more flexible supply chain. It is important to note that, by evaluating one aspect of their
shipping process, a domino effect took place. By implementing additional modifications,
Boise was able to increase supply and simultaneously decrease carbon emissions – a
perfect example of carbon-efficient logistics.
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Acknowledgments
This research would not have been possible without the funding and support of
Environmental Defense Fund (EDF). Special thanks to Jason Mathers, Senior Manager at
EDF, for his support, guidance, and encouragement despite the numerous delays. Most
importantly, I appreciate his commitment to allow the research to proceed independently
throughout the case study development process.
I would like to thank my research team and collaborators at the MIT Center
for Transportation & Logistics: Dr. Tony Craig, Dr. Cissy Yang, Peter
Oberhofer (visiting from WU Vienna), and Professor Jan Fransoo (visiting from
TUE Netherlands), who participated in the analysis and review of the case study at
various stages. I also would like to acknowledge the incredible help from Lena
Goodwin, whose writing and editorial support made this case study a reality. To all the
MIT Center for Transportation & Logistics staff, especially Tara Faulkner and Ken
Cottrill, who suffered the deadlines and pressures of getting this case study out the
door, I extend my deepest thanks.
Finally, I would like to express my gratitude to Brian Thompson and Ross Corthell from
Boise and Chris Brady and Steve Raetz from CH Robinson, who invested their time and
effort in providing all the contacts and information we needed and who had the
patience to answer our questions despite our long periods of silence.
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