FedEx rolls out $2 billion plan focused on having carbon-neutral operations by 2040

Memphis-based global freight transportation and logistics services provider FedEx announced this week it is making a $2 billion investment in order to have carbon-neutral operations by 2040, which it said will be focused on by initial investments in vehicle electrification, sustainable energy, and carbon sequestration.

The company outlined various steps it plans to take to achieve its goal of carbon-neutral operations by 2040, including:

• having its entire FedEx parcel pickup and delivery (PUD) fleet be comprised of zero-emission electric vehicles by 2040 through phased programs to replace existing vehicles;
• working with customers to provide end-to-end sustainability for their supply chains through carbon-neutral shipping offerings and also sustainable packaging solutions;
• continuing to invest in alternative fuels to reduce aircraft and vehicle emissions;
• fuel conservation and aircraft modernization by leveraging its FedEx Fuel Sense efforts focused on reducing aircraft fuel consumption, which have saved a combined 1.43 billion gallons of fuel and avoided more than 13.5 million tons of CO2 emissions going back to 2012; and
• making its more than 5,000 global facilities more sustainable through continued investments in efficient facilities, renewable energy, and other energy management programs

FedEx also said that it will invest $100 million to Yale University to launch the Yale Center for Natural Carbon Capture, which will focus on supporting applied research into natural carbon sequestration solutions, whose first duty will be to help offset greenhouse gas emissions equivalent to current airline emissions.

“We have a responsibility to take bold action in addressing climate challenges,” said Frederick W. Smith, Chairman and CEO, FedEx Corp., in a statement. “This goal builds on our longstanding commitment to sustainability throughout our operations, while at the same time investing in long-term, transformational solutions for FedEx and our entire industry.” 

FedEx officials said that this commitment leverages the company’s longstanding focus on sustainability, noting that since 2009 its collective efforts have resulted in roughly a 40% decrease in CO2 emissions company-wide, as package volume has risen 99% for the same timeframe.

A FedEx spokesperson told LM that that a major driver for this endeavor is that the company knows that the future of its busines is tied to the future of the environment.

“As a global company with more than 200,000 motorized vehicles, 680 aircraft and 5,000-plus operating facilities, transforming to carbon neutral global operations is a significant endeavor with far-reaching impacts for the planet,” the spokesperson said.

What’s more, the spokesperson added that for years, FedEx has used a Reduce, Replace, Revolutionize approach to guide its environmental efforts across the enterprise.

“We work to minimize or eliminate impacts from our business operations and activities, we apply the right solutions in the right applications, and we seek out and implement the solutions of tomorrow, today,” the spokesperson said. “This means we hope to revolutionize the industry by supporting the development of natural carbon capture solutions for the aviation industry and other long-haul transport. For more about our efforts and reporting visit sustainability.fedex.com.” 

When asked what the main benefits of this announcement are for FedEx’s shipper customers, the spokesperson explained that FedEx will work with shippers to offer end-to-end sustainability for their supply chains through carbon-neutral shipping offerings and sustainable packaging solutions, with further details being shared later this year.

“Not only will these advancements bring us closer to our carbon neutral ambition, they will enable our customers to reduce their carbon footprints—sending a ripple effect across global commerce,” the spokesperson said. “The most efficient supply chains are the most sustainable. We know that investing in sustainability is not only an investment in a better future for all—it’s an investment in innovation that will continue to drive the success of FedEx and its customers.”

Rob Martinez, Founder and co-CEO of San Diego-based parcel consultancy Shipware LLC, told LM that this move by FedEx makes sense, in that airlines and trucking companies are historically amongst the worst polluters across the transportation sector. 

“In recent years, both FedEx and UPS have meaningfully stepped up their efforts to reduce its carbon footprint through energy efficient sorting facilities, alternative energy use, newer, more fuel efficient vehicles and aircraft, reduction of miles through optimized driver routing, and even by accepting customer subsidies for carbon reduction initiatives,” he said. “Moreover, dimension-based pricing has forced shippers to pack shipments with minimal empty space and packing fill, allowing the carriers to fit more boxes on trucks and planes.”

And he also noted that this latest initiative by FedEx ups the ante significantly. 

“I applaud its efforts to make its entire parcel pickup and delivery fleet carbon neutral by 2040,” he said. “Already one of the most admired brands in the world, the latest FedEx announcement demonstrates its industry leadership and sound sustainability stewardship. It’s not only climate activists who should jump for joy, but also FedEx shareholders. Fuel efficiency equals huge profits.” 

Looking ahead, Martinez noted it will be interesting to see how far into the future FedEx continues to charge its customers the fuel surcharge, raising the question of at what point does it repeal the customer detested surcharge—when 50%, or more, of its vehicles have been converted to an electric fleet? 

Check-out the article on Supply Chain 24/7: FedEx Commits to Carbon-Neutral Delivery Operations by 2040