managing interaction in global economy

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European Management Journal Vol. 18, No. 4, pp. 398410, 2000 2000 Elsevier Science Ltd. All rights reservedPergamon

Printed in Great Britain

0263-2373/00 $20.00PII: S0263-2373(00)00029-3

MultimodalTransportation, Logistics,and the Environment:Managing Interactions in a

Global EconomyDENNIS RONDINELLI,Kenan-Flagler Business School, University of North Carolina

MICHAEL BERRY, Kenan Institute of Private Enterprise, University of North Carolina

As transportation and logistics systems continue to

integrate, their impacts on the physical environ-ment (air, water, and land resources) will becomemore complex. Economic globalization, agile manu-facturing, speed-to-market delivery, and supplychain management are creating greater demand forintermodal transportation services and multimodaltransportation infrastructure. Coping with theenvironmental impacts will require the transpor-tation industry and its customers and stakeholdersto move from strategies based on regulatory com-pliance to those emphasizing proactive environ-mental management. Proactive management ofenvironmental issues requires corporations toidentify: (1) the interactions among transportationactivities that have negative environmental impacts,(2) the types of environmental impacts emanatingfrom transportation operations and facilities, and(3) alternative means of controlling and preventingenvironmental pollution and natural resourcedegradation. 2000 Elsevier Science Ltd. Allrights reserved

Keywords: Multi-modal transportation, Environ-mental pollution, Environmental management,Transportation systems

Intermodal transportation services and multimodaltransportation infrastructure will play central roles inthe logistics systems of corporations competing inglobal markets in the 21st century. Four trends arefundamentally changing the business strategies of

European Management JournalVol 18 No 4 August 2000398

multinational corporations: continued economic glo-

balization as the driving force in trade and invest-ment, the growing demand for speed-to-market pro-duct delivery, the adoption of agile manufacturingand business practices, and the need to manage sup-ply chains more efficiently. Agile corporations withinternational supply chains depend on intermodaltransportation services to meet customers demandsfor rapid production and delivery.

Intermodality is a process of transporting freight bymeans of a system of interconnected networks,involving various combinations of modes of trans-portation, in which all the component parts are seam-

lessly linked and efficiently coordinated (Boske,1998, p. 1). It offers manufacturers a full range oftransportation modes and routing options, allowingthem to coordinate supply, production, storage, fin-ance, and distribution functions to achieve efficientrelationships.

As transportation systems expand and become moreintegrated, their impacts on the physical environment(air, water, and land resources) will become morecomplex. Regulatory compliance, while necessary,may not be sufficient to manage effectively the poten-tially negative environmental impacts of multimodaltransportation. In the future, proactive environmen-tal management will be essential for the transpor-tation industry and for organizations managingmultimodal transportation hubs that integrate sev-eral types of freight carriers, logistics services, and


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MULTIMODAL TRANSPORTATION, LOGISTICS, AND THE ENVIRONMENT

manufacturing or processing activities at a single site.Governments in cities and metropolitan areas inwhich these facilities are located and corporationswith international supply chains that depend onintermodal transportation to achieve and sustain

competitive advantage will also have to pay closerattention to the environmental consequences ofemerging logistics systems. Developing beyond-com-pliance, proactive environmental management sys-tems requires a clear understanding of the potentialenvironmental impacts of commercial transpor-tation services.

This article provides a framework for understandinginteractions among transportation activities and theenvironment. It explores the forces driving thegrowth of intermodal transportation services andmultimodal transportation infrastructure, identifies

the major environmental impacts of transportationoperations and facilities, examines alternative meansof controlling and preventing environmental haz-ards, and outlines the types of information neededfor developing proactive environmental manage-ment systems.

The Emergence of MultimodalTransportation Systems

Transportation services and facilities have grown

rapidly in the United States and Europe in the wakeof increasing demand by multinational corporationsand their suppliers and distributors for seamlesslogistics services. Economic globalization requiresfirms to produce and deliver goods faster to cus-tomers around the world. In order to do so, corpora-tions must manage their supply chains and integratetheir logistics systems more effectively.

Growth of Transportation SystemComponents

The freight shipments of all four major transportationmodes air, water, rail, and road have increasedover the past decade, and forecasts indicate con-tinued growth in the future. In Europe, freight trafficreached about 800 billion ton-km in 1996 and isexpected to grow by 23 per cent a year (Burckhardtet al., 1998). Land-based freight forwarding (whichaccounts for 80 per cent of all cargo transportation)generated $150 billion in revenue in 1996. In theUnited States commercial freight distribution yielded$342 billion in revenues during the same year. TheUS Department of Commerce (USDOC, 1998) pre-dicts that rail cargo shipments will grow from 1.4billion tons in 1992 to 1.9 billion tons in 2002. US aircarriers transported nearly 18.5 billion revenue ton-miles (RTMs) of cargo in 1996, an increase of 4 per

European Management JournalVol 18 No 4 August 2000 399

cent over the previous year. Growth in air transportservices (passengers and cargo) is expected to aver-age at least 4 per cent annually over the next decade.

Globally, seaborne trade grew to its highest levels in

1998, reaching more than 5 billion tons, and theworld merchant fleet grew to 788 million deadweighttons (UNCTAD, 1999). Airfreight has doubled in vol-ume since the early 1980s. Airfreight shipmentsreached 119 billion FTK (freight ton kilometers) in1998 worldwide, with the United States and Canadaclaiming 33 per cent of the world total, the Asia-Pacific Region 31.5 per cent, Europe 27.3 per cent,and the Middle East, Latin America and Africa a littlemore than 8 per cent (Schwartz, 1999a). The airlineindustry expects global airfreight to triple in volumebetween the years 2000 and 2015 as carriers achieveworldwide delivery targets of less than 48 hours from

airport to airport (Wilson, 1998).

Driving Forces

Four major trends are driving demand for intermodallogistics: (1) economic globalization, (2) speed-to-market product delivery, (3) agile manufacturing andbusiness practices, and (4) integrated supply chainmanagement. Since the early 1980s, internationaltrade and investment have grown rapidly. The WorldTrade Organization (1998) reports that international

merchandise export values reached $5.2 trillion andimport values exceeded $5.4 trillion in 1998, havinggrown on average by nearly 7 per cent a yearbetween 1990 and 1998. Exports of commercial ser-vices grew on average by nearly 8 per cent a yearover the same period reaching about $1.3 billion eachin exports and imports. The value of transportationservices in world exports rose to $320 billion in 1997,accounting for nearly 24 per cent of all exports incommercial services. The worlds foreign directinvestment stock (the investment underlying inter-national production) has grown on average by about6 per cent a year since 1991 to reached $4 trillion in

1998. The total assets of foreign affiliates of multi-national corporations exceeded $13 trillion and theirsales reached more than $4 trillion in 1998.

Economic globalization is internationalizing marketsfor nearly all goods and services, requiring firms toadapt agile business practices (Gilmour, 1998). Multi-national corporations have pioneered new manufac-turing practices, including demand-driven sales plan-ning, supplier partnering, lean manufacturing, just-in-time inventory and delivery management, andspeed-to-market distribution to manage their supplychains more efficiently. Speed-to-market deliveryrequires manufacturers to adopt concurrent engin-eering in which all aspects of a products design anddevelopment are coordinated and integrated. Largemultinational corporations such as Whirlpool, Cater-piller, Boeing, General Motors, IBM, Motorola, Toy-


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ota, Procter & Gamble, Harley-Davidson, Nestle, andBritish Petroleum are revolutionizing their logisticssystems. Logistics planners in competitive corpora-tions seek to reduce replenishment cycle times andinventory carrying costs, provide immediate logistics

support in new international markets, and outsourcenon-core or low value-added functions. Logisticsmanagers try to lower transportation costs by utiliz-ing several modes for seamless distribution, consoli-dating service providers, and leveraging shipmentvolumes (McClenehen, 1997). The formation of cor-porate strategic alliances and global manufacturingnetworks are among the most important responses toglobal competition and among the strongest forcesdriving the expansion of intermodal transportationservices. International corporations must increasinglyconnect components of their production and distri-bution systems in many locations around the world.

New technologies are also driving the expansion ofintermodal logistics services. Intermodal market-link-ing systems optimize transport chains, electronic anddigital information systems monitor the flow ofgoods among transportation channels, and largeenterprise-resource-planning (ERP) systems such asSAP, and advanced-planning-and-scheduling sys-tems (APS) allow logistics planners to integrate trans-portation requirements in supply chain management.Transportation hubs are using integrated intermodalpackaging infrastructure to speed the transfer anddelivery of goods among different forms of transport,

automatic vehicle guidance systems to convey andload cargoes more efficiently, and multimodal trans-shipment terminals to link one form of transportationwith others. These technological changes accompanyinnovations in containerization, integration of inlandand ocean shipping, high-speed water transport, thedevelopment of larger long-haul air cargo planes, useof double-track rail freight cars and higher speedlocomotive engines, and improved designs andengines for trucks.

Multimodal TransportationInfrastructure

Globalization, agile manufacturing, and speed-to-market delivery requirements are also driving thedemand for new types of multimodal transportationinfrastructure (Muller, 1998). Intermodal transpor-tation services are an integral part of supply chainmanagement in companies requiring coordinated,continuous, flexible, and reliable transportation, andare generating demand for new ports, airports, andrail and trucking terminals that integrate transpor-tation and logistics services in order to facilitate agilebusiness practices. Intermodal transportation beganin the United States and Europe with the use of con-tainers that could be transferred between ships andrailcars, thereby minimizing cargo loading and


unloading time, linking water and land routes, andspeeding the delivery of raw materials and inter-mediate and finished goods. Containerization wasultimately extended to freight transfers among ships,railcars, trucks, and airlines, thereby linking all four

major modes of cargo transport. Some industry ana-lysts predict that intermodal traffic will grow in theUnited States from 8 million loads a year in the mid-1990s to as much as 15 million loads annually by 2010(Melbin and Bowman, 1996).

Multimodal facilities help firms achieve what Greisand Kasarda (1997) call economies of conjunctionderived from the capacity to conduct multiple eventsor transactions at the same time or place. Airportswith large volumes of freight in Atlanta, Dallas-Fort Worth, New York, Los Angeles, and Chicago are developing multimodal transportation facilities

that attract private investment in warehouses, distri-bution services, and complementary transportationinfrastructure such as trucking terminals and raillinks, while seeking improved surface access tonearby maritime ports.

Maritime ports are taking the strongest initiative indeveloping multimodal transportation infrastructure.In Canada, Vancouvers Deltaport combines ocean-going shipping facilities with a 64-acre containeryard, intermodal rail and trucking yards, and accesslines to two off-site transcontinental rail yards(Middleton, 1998). Large high-speed gantry cranes

lift loads weighing up to 55 tons and deposit themdirectly onto railcars and trucks without cargo touch-ing the ground. Freight can be delivered by rail ortruck to other air or water ports in Canada and toairports and rail terminals in Chicago. Similarly, thePort of New York and New Jersey is expanding itsinfrastructure to link maritime shipping facilitieswith ExpressRail and trucking terminals, connectingthem to regional airports by highway (Harringtonand Knee, 1998). By the year 2001, the Alameda Cor-ridor Project in California will link the Port of LongBeach to Los Angeles maritime ports, airports, andrail yards by a modern highway system and rail

route, creating an integrated regional multimodaltransportation system. San Francisco is constructinga Joint Intermodal Terminal that houses a new railyard and trucking facilities to speed intermodaltransfers from its seaport facilities. The Port of Oak-land, one of the five leading seaport container facili-ties in the United States, also owns and operates theOakland International Airport, and leases facilitiesfor railroad and trucking operations.

Intermodal services and multimodal transportationhubs are also emerging rapidly in Europe. The Euro-pean Union is seeking to integrate the transportationsystems of member countries by identifying morethan 400 billion ECU of investments in transportationimprovements. These include the construction ofhigh-speed rail infrastructure as well as roadimprovements to connect rail lines with other land,


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air, and water transportation systems (Roll and Ver-beke, 1998). The ports of Rotterdam, Antwerp, Ham-burg, Bremerhaven, and Le Havre are quickly becom-ing multimodal hubs that combine deep-sea line haulfacilities with rail, inland waterway, and road trans-

port systems linkages. The Port of Rotterdam in TheNetherlands is expanding its distriparks com-bined intermodal transportation and logistics ser-vices centers to connect maritime shipping facili-ties with truck, barge, and rail systems. Thesetransshipment centers cluster firms providing infor-mation and communications technology, storage,repacking, labeling, assembling, and container load-ing services, and are linked by highways to nearbyrail, air, and inland water transportation infrastruc-ture.

Frances Port of Le Havre is expanding its shipping

and cargo shuttle services and connecting them withrail terminals. Europort Vatry in Frances Cham-pagne Region has an all-cargo airport equipped forwide body jets that will interface with a road trans-port center connecting Europes major eastwest andnorthsouth highways, a rail freight terminal, and alogistics complex and service center concentrated onthe same site (Schwartz, 1999b). The Port of Ham-burg, which has the largest rail container-handlingcenter in Europe, is linking its shipping ports to Ger-manys growing system of inland water and surfacetransportation terminals. The Port of Antwerp isdeveloping facilities to link its deep-sea shipping

facilities with barge canal services to Liege, Brussels,the Ruhr area of Germany, and through the Rhine Maine Danube canal systems to the Black Sea. Theport connects to 12 international railway terminals inAntwerp, trucking facilities, and the Europeanmotorway system that extends trucking services intoGermany, Northern France, Brussels, Paris, andAmsterdam. Airfreight forwarding services transfercargo from Antwerps shipping ports to its own andto Brussels airport by road and rail.

The Environmental Impacts ofMultimodal Transportation

The increasing importance of multimodal infrastruc-ture and intermodal services will intensify theenvironmental impacts of transportation activities inthe future. Identifying major transportation activitieswith impacts on natural resources is an essential firststep in effective environmental management. Threesets of activities associated with transportation vehicle operations, equipment maintenance, andfacilities operations can have negative impacts onthe environment. In addition, transportation infra-structure construction and expansion often generatepollutants or endanger natural resources. Majortransport activities with environmental impacts aredepicted in Figure 1.


As multimodal transportation and intermodal logis-tics services expand, potential environmental threatsincrease. The US Environmental Protection Agency(USEPA, 1998) reports that the transportation indus-try in the United States releases more than

800,000 tons of air pollutants annually from station-ary sources alone. These sources are responsible fornearly 129 tons of carbon monoxide (CO),551,000 tons of nitrogen oxide (NO2), 2500 tons ofparticulate matter of 10 microns or less (PM10),5500 tons of total particulate matter (PT), 8400 tonsof sulfur dioxide (SO2), and 105,000 tons of volatileorganic compound (VOC). In addition, transpor-tation activities generate soil, ground water, and sur-face water contaminants. The major sources are pet-roleum product disposal, sulfuric acid from batteryleaks and disposal, organic hazardous air pollution(HAP) emissions, water and soil pollution from

waste solvents, cleaning and de-icing fluids, fuelspillage, degreasers, coolant releases, and solid andliquid wastes from terminal operations. Figure 2summarizes the major environmental impacts fromtransportation activities.

Air Transportation

Cargo and passenger air transport generates a varietyof potentially harmful environmental impacts. Air-craft operations create noise pollution, engine emis-

sions, and waste disposal problems. Air terminaloperations, especially cargo loading and offloading,aircraft operations, equipment maintenance, fueling,de-icing, and cleaning can all contribute to environ-mental pollution. Kerosene combustion in aircraftengines emits carbon dioxide (CO2) and water vapor,accounting for more than 3 per cent of global carbondioxide emissions (Noble, 1999a). Scientists at theinternational ozone conference in Buenos Aires esti-mated in 1998 that air pollution from aircraft isincreasing at three times the previously predictedrates. This will add greenhouse gases over the next20 years that could entirely negate the 5.2 per cent

reductions that developed countries agreed to at theKyoto Conference in 1997.

Moreover, operating aircraft emit hydrocarbons, CO,and nitrogen oxide (NOx) from incomplete combus-tion during takeoff, descent, idling, and taxiing.Vehicle maintenance and refurbishing operations cancontaminate soil, groundwater, and surface waterfrom the storage, transfer and disposal of petroleumproducts during lubrication and fluid changes, fromsulfuric acid in battery repair and replacement, andfrom paint storage and disposal. Maintenance andrefurbishing of aircraft and other equipment can haveserious environmental impacts, primarily organicHAP emissions from chemical milling maskant appli-cation, parts cleaning, and metal finishing usingchemical solutions, cyanide, and heavy metal baths.The application of coating generates organic HAP


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Figure 1 Components of Transportation Logistics System with Environmental Impacts

Figure 2 Major Potential Environmental Impacts of Transportation Activities



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emissions, and painting emits VOCs. Fuel leaks alsoresult in potential air, water, and soil pollution. Gly-col-based materials used in aircraft de-icing can runoff into surface waters or infiltrate groundwater,depleting oxygen and introducing toxins that

adversely affect life forms in water. Airport cargoand passenger operations generate large quantities ofsolid waste in the forms of paper, wooden pallets,aluminum, plastic, and glass containers, and con-sume large amounts of energy from lighting, heating,cooling, and computer use.

Rail Transportation

Environmental damage can result from improperfueling and cargo handling at rail terminals and from

equipment maintenance activities such as railcarrefurbishing, locomotive maintenance, and parts andequipment cleaning (USEPA, 1997). Railroad oper-ations fueling (air pollution from vapors andwater and soil contamination from spillage), hazard-ous material transport (leakage or spillage) and oiland coolant releases (surface and ground water andsoil contamination) contribute to smog and naturalresource degradation in cities. Wastes from railcarrefurbishing and maintenance operations usingdegreasers, solvents, acids, paint thinners, paints,and epoxies can pollute water and soils and emitVOCs. Locomotive maintenance produces sludge,

waste solvents, and cleaners that can cause air pol-lution and, if ignited, serious threats to humanhealth. Ineffective disposal of all of these materialscan cause groundwater and soil contamination. Railterminals must also carefully dispose of solid wastesto prevent soil and water contamination.

Truck Transportation

Trucking operations (hauling, freight loading andunloading, and fueling) can pollute air and water, as

can parking, docking, fueling, equipment mainte-nance, and vehicle cleaning activities at truck ter-minals. Motor oil, brake and transmission fluids,coolants, solvents, and lubricants emit CFCs andVOCs at truck terminals and maintenance facilities,and their improper disposal contaminates soil andwater. VOC emissions also come from the detergents,caustic solutions, and solvents used in washingvehicles, and from residuals from shipments andtank cleaning. Waste and used equipment (batteries,tires, and other parts) disposal problems at terminalsalso create environmental degradation and pollution.Trucking operations generate hydrocarbons, CO,NOx, sulfur compounds, and particulate matter thatpollute air. In addition, the trucking industry hascome under increasing criticism in Europe for heavyuse of non-renewable fossil fuels, creating smog,transporting hazardous cargoes, by using ozone-


depleting refrigerants, and ineffectively disposing ofsolid and liquid wastes and used vehicles.

Maritime Transportation

The activities of maritime vessels that can be environ-mentally harmful include ship waste disposal, bilgepumping, tank cleaning, ballasting, power gener-ation, and fueling. Ship operations emit nitrogenoxides, sulfur dioxide, particulate matter, and haz-ardous pollutants into the air. Marine port facilitiesgenerate air, water, and soil pollutants from cargohandling, and from vessel maintenance, fueling, andonshore tanks and storage facilities. Oil and greasespills, and the use of paints, solvents, fuels and sedi-ments in vessel maintenance and repair can pollute

surface water and air. Ineffective processing and dis-posal of oils, grease, petroleum hydrocarbons, sufac-tants or solvents used in vehicle washing and degre-asing degrade surface water (AAPA, 1998).

Port facilities construction and renovation contributeto surface and ground water contamination and airpollution from asbestos, lead-based paint, dust, sedi-ments, PCBs and petroleum hydrocarbons. Construc-tion or expansion of port facilities can threatenmarshlands, wetlands, and water channels. Improperdisposal of demolition and construction debris alsocreates serious environmental problems around con-

struction sites. Intrusion into natural areas by portexpansion and maintenance can pose serious threatsto wildlife and sensitive species and habitats. Ship-ping channel maintenance and deepening can causeboth environmental pollution and natural resourcedegradation, raising important issues about the dis-posal of dredging materials.

Multimodal Transportation Complexes

As new multimodal transportation hubs are con-

structed and as existing ports, airports, rail terminals,and trucking and distribution complexes expand toprovide intermodal transportation services, thepotential environmental impacts associated with eachtype of transportation can be multiplied and com-pounded. The expansion of multimodal freight trans-portation facilities in Chicago, for example, isattracting new businesses and construction of newindustrial plants, warehouses, and light manufactur-ing in surrounding areas. Development in andaround these transportation hubs changes land uses,increases density, and generates more intensive localand cross-town traffic, all of which can create newenvironmental problems (Rast, 1998). Expansion ofmultimodal facilities in Atlanta, Fort Worth, LosAngeles, and Miami provided opportunities fornearby clustering of spin-off activities in the com-puter, food packaging, container, apparel, and boat-


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ing industries, from which the total environmentalimpacts were never systematically assessed. Expan-sion of the Oakland International Airport to enhanceits cargo facilities and link its operations to port andsurface transportation hubs has multiple environ-

mental impacts, including noise pollution, wetlandsdestruction, air pollution from increased traffic con-gestion, emissions of suspended particulate matter,nitrogen oxides, and reactive organic gases.

The Global TransPark (GTP), now under constructionon a 15,300 acre site in eastern North Carolina, willbe an international air cargo-industrial complex cent-ered by two long-range runways, just-in-time manu-facturing and distribution facilities, and taxiwaysenabling air cargo planes to nose-dock or side-dockwith the manufacturing and distribution facilities(Kasarda and Rondinelli, 1998). The complex will link

several transportation systems, including interstatehighways, regional airports, rail lines, and NorthCarolina coastal ports. The GTP will have significantenvironmental impacts not only on the TransPark sitebut also on surrounding cities, towns, and rural com-munities. The growth spurred by GTP will requirevast amounts of groundwater and new sources ofdrinking water for the surrounding areas that nowdepend on wells. More than 4800 acres of wetlandsmust be created to replace those lost at the site. Morethan 39,000 ft of canals must be plugged and 664,000trees will have to be planted to mitigate the loss of871 acres of wetlands that will be filled in during con-

struction.

The GTPs environmental impacts on surroundingareas will include permanent conversion of lands inagricultural use to industrial purposes; increasedconsumption of potable water from groundwater andsurface supplies resulting in increased pressures; andlarge volumes of wastewater discharge. The GTP willbring changes in storm-water discharge character-istics from both industrial and residential areas. Thefacilities will reduce marginally wet woodland areasand other wetlands within the GTP complex, increaserequirements for physical infrastructure and public

services associated with growing populations, andaccelerate urbanization to bring broad-scale, gradualchanges to existing communities.

Business Risks of EnvironmentalHazards

Failure to manage the environmental impacts of theiroperations raises serious potential risks for firmsinvolved in intermodal logistics and multimodaltransportation (Berry and Rondinelli, 1998). Threatsof increased regulatory control by national govern-ments and international organizations pose the mostimmediate risks. In the United States, land areas con-taminated by toxic spills or leaks fall under Super-


fund legislation requiring expensive cleanups. Inboth the United States and Europe industries that donot manage their own environmental impacts willsee stronger demands by localities and environmen-tal groups for more stringent government regulation.

The European Unions Transport Commission, forexample, is considering higher taxes on kerosene inorder to encourage fuel conservation and emissionsreduction in the airlines industry, and plans to adjustthe already heavy road tax system to penalize dirtytrucks and give incentives to those that are environ-mentally cleaner (Noble, 1999a). As regulationstighten both firms that ship goods and those thatcarry them may face new legal liabilities for environ-mental damage and health and safety violations incriminal and civil suits.

A second set of risks is financial. Pollution preventionand elimination of waste from operations can savelogistics services firms and multimodal transpor-tation facilities significant amounts of money. Firmsthat ignore negative environmental impacts not onlyincur opportunity costs, but also potentially higherabsolute costs for pollution control technologies inthe future and the loss of competitive pricing advan-tages.

Damages to corporate image from environmentalpollution or natural resource degradation can cause

serious competitive problems and strong backlashesfrom stakeholders. Environmental interest groupsthat uncover serious hazards or the potential for pol-lution and degradation can permanently harm a com-panys reputation. Public demands for corporateresponsibility are growing in the wake of expandinginternational trade agreements. Shareholders andcorporate directors are becoming increasingly intoler-ant of environmentally dangerous conditions. Cus-tomers who may share the liability and higher costsfrom environmental damages are likely to seek logis-tic services and transportation providers that havestrong environmental reputations.

Transportation and logistics firms that do not man-age their environmental impacts proactively also facecompetitive risks. Increasingly, international tradeagreements and treaties include requirements forcomplying with international environmental stan-dards such as ISO 14000, the British Standard 7750or the European Committees Standard Eco-Manage-ment and Audit Scheme (EMAS). In both the UnitedStates and Europe, new transportation facilities faceincreasingly stringent and complex EnvironmentalImpact Assessments and the expectation that logisticsfirms have environmental management systems thatmeet international standards. Firms that fail to com-ply with regulatory controls and international stan-dards risk losing competitive advantage in inter-national markets.


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Managing Environmental Impacts ofMultimodal Transportation

Managers can mitigate the negative environmentalimpacts of their operations by diligently identifyingcurrent environmental problems and monitoringpotential new ones. Stringent regulatory complianceis a good start, but it is unlikely to be sufficient unlesstransportation and logistics services companies adoptproactive environmental management systems thatgo beyond legal compliance. Proactive companies tryto prevent pollution and eliminate sources ofenvironmental degradation. To do so, managers haveto identify and assess environmental impacts care-fully and develop innovative and creative means ofpreventing pollution before it occurs through effec-tive environmental management systems (EMSs).

Airport authorities in Turin, Milan, Munich, andDublin have undertaken trial projects funded by theEuropean Union to determine the benefits and cost-effectiveness of developing environmental manage-ment systems that conform with EMAS standards orthan can be certified under ISO 14001 standards. Luf-thansa Technik AG, a subsidiary of Lufthansa Air-lines registered two aircraft service centers underEMAS and became the first company in the airlineindustry to receive EMAS certificates (Victory, 1998).Schenker-BTL (1999), one of Europes largest air,land, and sea transportation and logistics companies,certified EMSs for three of its facilities in Sweden,Denmark and Finland under ISO 14001 and aimsto certify all of its operations in Europe by 2002.

Figure 3 Elements of an Environmental Management and Information System for Transportation


With a proactive EMS intermodal logistics firms andmultimodal transportation facilities can achieve sig-nificant environmental performance improvementsthrough a combination of stringent regulatory com-pliance, technological innovation in transportation

equipment and processes, and the application of cle-aner operations and maintenance procedures. Com-panies that recycle and reuse wastes, substitute cle-aner materials in transportation and distributionactivities, and adopt new pollution prevention tech-nologies and processes can improve environmentalperformance and reduce business risks. Figure 3depicts the essential elements of an environmentalmanagement system for transportation logistics.

Environmental Policy and Framework

The well-defined structures and functions of thetransportation industry provide a template forenvironmental analysis and policy formation and forcollecting information on the environmental attri-butes of each transportation activity, as illustrated inFigures 1 and 2. Managers should prioritize theseattributes by their significance and extent of environ-mental impacts. Perhaps the greatest challenges formanagers in creating a proactive EMS for transpor-tation, however, are updating information on rapidlychanging legal requirements and collecting accurate,reliable and consistent data on the environmentalimpacts of operations and facilities.

A sound environmental management system must,


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of course, provide current information on local, State,provincial, and national laws on air, water, and soilpollution, hazardous materials disposal, and naturalresources protection. As multimodal transportationsystems expand to facilitate international logistics,

transportation managers must also have currentinformation on changes in international standardssuch as ISO 14000, bilateral and multilateral tradeagreements containing environmental restrictions orguidelines, and international environmental agree-ments regarding, for example, the reduction of CFCsor greenhouse gases.

Managing regulatory compliance is an increasinglycomplex but essential function for firms involved intransportation logistics. Transportation services andfacilities in the United States are closely regulated bythe US Environmental Protection Agency and by

state and local governments from which they mustobtain permits for many of their operations. Trans-portation facilities and operations are subject, forexample, to provisions of the Resource Conservationand Recovery Act (RCRA), the ComprehensiveEnvironmental Response Act, the HazardousMaterials Transportation Act, the Compensation andLiability Act (CERCLA), the Superfund Amendmentsand Reauthorization Act (SARA), the Clean WaterAct, the Safe Drinking Water Act, the Toxic Sub-stances Control Act, and the Clean Air Act. Environ-mental requirements are also embedded in the regu-lations of the Federal Aviation Administration

(FAA), the Department of Transportation (DOT), theOccupational Safety and Health Administration(OSHA), and other agencies. National Ambient AirQuality Standards for ozone and particulate matterissued by the USEPA in 1997 is creating strongerpressures to reduce emissions from transportationsources. The regulation lowers allowable fine particu-lates to less than 2.5 microns and places increasingpressures on State and local governments to restrictparticulate emissions from surface vehicles.

Proactive environmental management systems

require accurate and reliable data that allow corpora-tions to control existing environmental pollutionwhile, at the same time, find ways of preventing oreliminating potentially negative environmentalimpacts of transportation activities. British Airways(1999), for example, has developed a data collectionsystem that allows it to track environmental perform-ance. It collects data on (1) noise pollution from air-craft landings and takeoffs, engine ground running,and auxiliary and ground power units; (2) emissionsto the atmosphere; (3) fuel efficiency; (4) energy use;(5) waste generation and disposal from inflight andground operations; (6) runoff and possible contami-nation from de-icing, vehicle washing, and sewage;(7) water consumption; and (8) environmentalimpacts of fuel burning and congestion from flightarrival and departure holding delays. The data collec-tion system helps British Airways to set environmen-


tal objectives and targets for performance improve-ment.

Environmental Objectives and TargetsTransportation and logistics firms need to developinformation systems that help managers select objec-tives and targets for improving environmental per-formance and eliminating sources of environmentalhazard. Increasingly, not only by government regu-latory agencies but also shareholders, public interestgroups, customers, employees, and other stake-holders measure environmental performance. In aproactive EMS, clearly defined objectives and targetsguide operational controls so that all aspects of trans-portation operations and facilities contribute to

achieving environmental policies. For example, thePort of Long Beach Authority (1999) goes beyondcompliance to develop objectives for aggressive pol-lution prevention, storm-water and water qualitymonitoring and improvement, soil and groundwaterinvestigation to reduce or eliminate threats of con-tamination, brownfields restoration, sedimentevaluation and soil remediation. It sets targets forcontrolling air particulate emissions associated withbulk cargo operations and reduction of vessel emis-sions. In addition, the Port Authority conducts alter-native fuels demonstration projects, participates inrestoration of coastal wetlands, and monitors biologi-

cal resources within its harbor area.

After careful analysis of its operations, UPSdeveloped ambitious objectives for waste disposalimprovements by recycling materials, substitutingmore durable packaging for less durable types, andadopting reusable packaging. UPS has reduced plas-tic bag waste by 1000 tons a year by using reusablenylon-mesh bags in its package sorting operations. Ituses recycled computer paper, paperboard forexpress mail, and recycled paper for delivery notices,saving more than 30,000 trees a year. Since 1995 UPShas diverted more than 34 per cent of its total

wastes whiteboard, cardboard, mixed paper, glass,pallets, plastic, metal and aluminum from locallandfills.

Environmental Management Programsand Processes

Firms that adopt programs for cleaner operations andmaintenance can reduce significantly the environ-mental hazards from transportation activities. Truck-ing firms are learning, for example, that they canreduce much of the pollution from truck operationsthrough careful attention to good operating pro-cesses, proper engine maintenance and driving tech-niques, and the purchase of new trucks with cleaner


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engines. CSX Corporation (1998), the owner of Con-rail, developed policies, procedures, directives, andtraining programs that reduced fuel spillage at its railterminals from 646,000 lb in 1992 to less than40,000 lb in 1997. An Environmental Operations

Group with more than 20 environmental specialistswho also oversee environmental audits of more than70 items at the companys rail terminals, managesthe system.

Comprehensive management programs and pro-cesses allow organizations to experiment with cre-ative means of solving environmental problems. SASAirlines, operating from an ecologically sensitiveregion in Scandinavia, was one of the first Europeanair carriers to recognize the necessity of reducing pol-lution and developed innovative ways of improvingfuel efficiency by 50 per cent between 1968 and 1998.Trucking terminals and fleet companies can mitigate

environmental damage by using single multi-pur-pose solvents or water-based or water soluble cle-aners instead of chemical solvents, and by extendingthe life of solvent baths. Installation of environmen-tally-friendly truck washing facilities at Allied Sys-tems Norfolk Terminal, for example, removed andcaptured in a fully contained unit oil and grease andused water and biodegradable soaps in place ofchemicals. Some firms choose on-site solvent recov-ery techniques using decanting, filtration or distil-lation. Oil recycling, mechanical parts cleaning, anduse of water-based paints with no solvents canreduce pollution in vehicle maintenance and cleaning

operations. By adopting new paint processes in itspaint and body shops, United Parcel Service (1998)was able to decrease paint usage by 4050 per centand solvent and paint cleanup waste by 95 per cent.Applying new technology in its parts washers toextend solvent life allowed it to decrease solvent dis-posal by 78 per cent.

Careful analyses of operations processes are leadingseveral large transportation service firms to improveenvironmental performance by recycling and reusingwaste materials for example, recycling freon, scrapmetal, waste antifreeze, and scrap tires and batteries.

Separation of waste streams into hazardous and non-hazardous materials and into different types ofwastes can increase the efficiency of treatment, recyc-ling and reuse. Ryder Systems (1997), a leading truckleasing and integrated logistics services firm, adoptedon-site management techniques for reusing coolantsand anti-freeze and for converting waste to energy.The company uses off-site vendors to recycle refriger-ants, scrap metal, old tires, batteries and drums, andto remanufacture salvageable vehicle parts. FederalExpress recycling and materials reclamation pro-gram diverted 6.3 million lb of materials from land-fills and saved the company over $9 million in 1998

alone. The company reclaimed or reused materialssuch as cargo nets, trailer load bars, container doors,pallets, tarps, and document boxes.

Dredging a crucial function at seaports to maintain


existing channel depths and to expand them for con-struction of new shipping berths creates seriousproblems in disposing of dredged materials. Througha program focused on meeting both disposal andnatural resource protection objectives, the Port of

Houston is using 52 million yd3

of dredged materialto create 4250 acres of new marshland and bird habi-tats.

Emergency preparedness is the key to environmentalcrisis management, which begins with the develop-ment of emergency scenarios and procedures for pre-venting or responding to incidents causing seriousenvironmental hazards. An effective environmentalmanagement program must be well-structured andclearly understood by employees and managersthroughout a transportation system. Companies mustarticulate roles and responsibilities and provide

resources provided at all levels of operation in orderto implement programs effectively. Training is oftenthe primary mechanism for expanding awarenessand problem-solving competence. For example, theEuropean transportation and logistics giantSchenker-BTL provides basic training in environmen-tal issues for all of its new employees and isextending more advanced training in topics such asenvironment and the market, environmental legis-lation, and environmental management systems to allof its management groups.

Environmental Monitoring, Auditing,and Reporting

A functional EMS relies on the development andmaintenance of environmental reports and docu-ments. EMS documentation helps managers demon-strate performance improvement, which relies onaccurate accounting information, operations records,and continuous monitoring and measurement of theenvironmental impacts of all transportation activities.Records should identify incidences and patterns ofnon-conformance and indicate how management cantake corrective and preventive action. Managersshould supplement internal information systemswith independent EMS audits to verify performancedata and do periodic reviews to identify potentialimprovement measures and adjustments needed inthe EMS.

Information drives effective internal and externalcommunications on environmental issues withemployees, regulators, and stakeholders. Increas-ingly, corporations involved in providing logisticsservices and in operating transportation facilities areimproving their environmental monitoring,reporting, and management systems. The operatorsof Swissair (1997), for example, monitor, manage andreport on progress in improving air quality, reducingnoise pollution, saving energy, and treating water.


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Similarly, the Schiphol Airport Authority (1998) inAmsterdam issues an annual environmental reportthat provides performance data on noise pollution,air quality, energy use, soil contamination, and wastematerials disposal. The report also describes progress

on reducing de-icing agents in rainwater runoff,improving the purification of wastewater, and miti-gating the environmental impacts of office oper-ations.

ASG (1999), a major European road, multimodaltransportation and logistics firm uses a creative setof metrics for monitoring and auditing its environ-mental performance. It measures overall economicefficiency (net turnover/ton of fossil carbon dioxide),carbon dioxide intensity, overall risk exposure(number of environmental-related incidents), overallenvironmental efficiency of transport (fossil CO2

/ton-km), regional environmental impact (NOx

SOx/ton-km), and the number of incoming environ-ment-related complaints. In addition, it uses its met-rics for measuring staff and customer satisfactionthrough a questionnaire seeking their perceptions ofASG as an industry leader in environmental issues.

Management Review and ProgramAdjustment

Companies involved in providing transportation andlogistics services can reduce or eliminate the negativeenvironmental impacts of their activities byreviewing and adjusting their environmental man-agement programs regularly. Corporations that areseeking to manage the environmental aspects of theirtransportation activities should take into account theenvironmental impacts of other participants, includ-ing transportation equipment makers. Innovations inengine technology for aircraft, locomotives, andtrucks can reduce air pollutants and other forms ofemissions. The German government is supportingexperiments between MTU Munchen and BMWRolls-Royce on new aircraft engine technology thatcan lower combustion emissions (Noble, 1999b). Lowcombustion chambers can substantially lower theemissions of NOx, CO, and unburned hydrocarbons.The development of new aircraft types, alternativefuels, and engines with increased fuel efficiency canall mitigate the environmental impacts of aircraftoperations.

Companies seeking technological improvements inall aspects of the transportation value chain can sub-stantially reduce negative environmental impactsthroughout transportation systems. All firms havesome influence over the environmental impacts oftheir suppliers through inbound logistics processesand supplier evaluations (Walton et al., 1998). Andsome companies can help their customers to under-stand the environmental implications of their logis-


tics activities. The European multimodal transportcompany, Schenker-BTL, has created an EmissionReport that can calculate for each customer the out-put of transport-related emissions based on vehiclesused, loads, and loading degrees. It calculates and

can provide online reports from its Internet websiteof the emission in kilograms of carbon dioxide, nitricacid, hydrocarbons, sulfur dioxide, and particulatematter for each consignment. The Emission Reportcovers 44 countries and 4215 locations and can calcu-late at the speed of 3000 consignments per minute.

Managers can also mitigate the negative environmen-tal impacts of intermodal transportation logistics byusing EDI and Internet tracking of freight, global pos-itioning satellite systems, and other means of coordi-nating and tracking cargo movements that increaseefficiency. Electronic and digital logistics manage-

ment can reduce delivery time, optimize transpor-tation and distribution routes, and provide greaterflexibility in the use of transportation modes, therebyreducing environmental hazards (Krapf, 1997). Man-agement reviews and program adjustments shouldlead to changes in policies and frameworks guidingenvironmental practices by closing the loop of con-tinuous improvement depicted in Figure 3.

Conclusions

As the demand for intermodal logistics services andmultimodal transportation facilities grows and asseamless transportation becomes more central to inte-grated logistics and efficient supply chain manage-ment in the 21st century, pressures will increase tomanage the environmental impacts of transportationsystems proactively. Proactive environmental man-agement seeks to prevent pollution and eliminatesources of environmental degradation. A proactiveEMS offers comprehensive policies and frameworksfor continuous planning, action, and improvement.

Multimodal transportation infrastructure adds valuein logistics as an integrated system managed holist-ically. The impacts of transportation on air, water,land, and natural resources can thus be more readilyidentified, assessed, and mitigated by proactiveenvironmental management systems than byattempts to regulate single environmental media.Regulatory compliance and beyond-compliance man-agement, however, both require strong commitmentsfrom the transportation industry, local and nationalgovernment agencies, transport service users, andother major stakeholders. In order to achieve signifi-cant improvements in environmental conditions, allparticipants in multimodal transportation networksmust identify the potential environmental impacts oftheir activities, monitor their environmental perform-ance, and control or prevent environmental damagethrough proactive environmental practices.


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DENNIS A. RONDI- MICHAEL A. BERRY,NELLI, Center for Global Center for Global BusinessBusiness Research, Kenan Research, Kenan Institute of Institute of Private Private Enterprise, Kenan-

Enterprise, Kenan-Flagler Flagler Business School,Business School, University University of North Carol-of North Carolina, Chapel ina, Chapel Hill, NC 27599-Hill, NC 27599-3440, USA. 3440, USA. E-mail:E-mail: dennis rondinelli@ michael [email protected]

Michael A. Berry isDr Rondinelli is the Glaxo Research Professor at the

Distinguished International Professor of Management Center for Global Business Research, University ofand Director of the Center for Global Business Research North Carolina. Previously, he was Deputy Director ofat the University of North Carolina. His research the US Environmental Protection Agencys Nationalfocuses on changing business conditions in emerging Center for Environmental Assessment at Research Tri-market countries, privatization and corporate restruc- angle Park where he supervised work on air quality

turing, corporate environmental management, and the criteria, health assessments of potentially hazardousinternational competitiveness of firms in metropolitan materials, and evaluations of indoor air pollutionareas. issues.


managing interaction in global economy

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