VOLVO Group Sustainability Report 2010

Transport and Logistics

‒ Leading logistics solutions

Volvo Logistics provides the entire Volvo Group and other customers with leading logistics solutions. All vehicles and transport services are insourced. Apart from being a logistics provider, Volvo Logistics also brings valuable knowledge and experience into the product development process. To minimize environmental impact, we focus on smart logistics, reduced emissions, renewable fuels, energy efficiency and knowledge-enhancement.

Ambitious targets for carbon dioxide reductions

Volvo Logistics has been challenged by Volvo Trucks to lower carbon dioxide emissions from land-based transports to and from the plants by 20 percent by 2010 compared with the 2006 level. A number of measures have been taken to decrease carbon dioxide emissions from transports.

Environmental surveys and audits of suppliers

Volvo Logistics requires suppliers of road transport solutions to demonstrate their preparedness with regard to engine emission requirements, fuel-efficient driver training and continuous improvements.

These requirements are followed up by an annual Supplier Survey and random sample audits. The data from the 2009 survey shows that 97 percent of the engines used in truck fleets in Europe are equipped for Euro III or subsequent emission requirements — an improvement of three percent compared with the previous year.

In 2009, 75 percent of road transport suppliers in Europe were certified in accordance with the environmental standard ISO 14001. Globally, the corresponding figure was 72 percent (major transport suppliers). From 2009, social and ethical requirements are included in supplier requirements specifications, in accordance with the Group’s requirments. Data for 2010 will be presented during the second quarter, 2011.

Calculating the environmental impact of transports to support transport solutions and decisions on routes

Volvo Logistics plans the logistics for material flows from suppliers to Volvo Group’s plants and the transport of new vehicles from the plants to the dealers.

The EnvCalc tool is used to calculate emissions to air for new or changed transport routes or for choice of carriers.

The EnvCalc calculation is based on the volume of goods, distance and mode of transport. The result is presented to the customer as Environmental Load Units (ELU) or broken down into the amounts of carbon dioxide, nitrogen oxide, sulphur oxide and particle matter emissions.

Volvo Logistics also offers customers a Logistics Emission Report for a specified transport scope, for example all inbound and outbound transports for a specific plant over one year.

Logistic Emission Reports were supplied to Volvo Parts warehouse in Ghent, Belgium and Eskilstuna and Flen in Sweden in 2010. These reports are used to calculate the environmental impact of our inbound transports.

Volvo Packaging System

The Group uses a returnable packaging system to transport goods from suppliers to our plants, as well as for use within the plants. This packaging can be stacked, taking up minimal space when freighted and in turn minimizing environmental impact. The system comprises over 100 types of packaging in different materials such as wood, plastics, card-board and metal.

Volvo Logistics has terminals around the world for collecting and cleaning packaging materials, which are then reused until they no longer meet quality standards. All packaging is ultimately scrapped, with most parts being recycled into new materials or energy. Recycling is conducted by Volvo Logistics and through an outsourced operation.

Environmental impact is a vital aspect in the product development of new packaging. Volvo Logistics developed a new Life Cycle Assessment tool in 2009 to compare the environmental impact of different packaging materials. This assessment represents a good complement to the current environmental impact analysis procedure.

Clean shipping and intermodal transports

Most of our transports, measured in tonne kilometers, are made by sea. The Clean Shipping Project was intensified in 2010. Since 2010, all of our contracted sea carriers have been required to report the environmental impact of each of their vessels.

The driving force of the Clean Shipping Project is a network of 26 of the largest export and import companies in Sweden. The main objective of this project is to catalyze a process towards effectively functioning techniques for clean shipping and to place stringent but reasonable health and environmental demands on ship transport.

We clearly communicate environmental requirements for shipping operators in respect of chemicals, water, fuel and waste control, carbon dioxide, nitrogen oxides, sulfur oxides and particle matter, which have been formulated in a clean shipping index.

Transport and Logistics

A mix of transports

Viking Rail is an operation based on mega trailers and mega trailer wagons linking Germany to Gothenburg, Sweden. It represents an excellent example of intermodal transports, combining two or more modes of transport. Intermodal transports are essential for a sustainable transport mix.

Viking Rail was launched in October 2008. Owing to the recession, the concept had to be redesigned in February 2009 to adapt to decreased volumes. The new operation was developed in cooperation with other rail freight actors that were moving freight from Germany to Sweden and has been in operation from the end of May 2009 until December 2010. In January 2011, we have reimplemented the original stand-alone solution for Volvo Group once again, i.e. a block train solution with 100 percent Volvo cargo northbound. We observe an average filling level of 95 percent, both north- and south-bound.

Viking Rail was awarded the Swedish Logistics Award for 2009 in the category Innovation of the Year – Rail Freight. This successful environmentally adapted concept has been selected as a case study by BestLog, an initiative of the European Commission to coordinate and disseminate state-of-the art competence in the field of logistics.

Longer trucks

Volvo Group is in favor of longer trucks in Europe. The maximum length for truck and trailer is 25.25 meters in Sweden, and 18.75 meters for the rest of Europe. Increasing the length in Europe would mean that two trucks could carry what is currently transported by three trucks. This would benefit the environment and reduce congestion on European highways.

Volvo Logistics uses the longest truck in the country aimed at reducing carbon dioxide emissions. A 32 meter long vehicle shuttles between our terminal in Arendal, Gothenburg and the Port of Gothenburg. This means that two 40 ft containers can be transported instead of one, a reduction of 20 gram carbon dioxide per tonne kilometer. Volvo Logistics is now looking into the possibility of connecting another wagon for a third container. This would mean a 48-50 meter vehicle.