Product Transport

Baxter transports large amounts of raw materials and more than 100 million cases of finished products each year throughout the company's global supply chain. In some instances, Baxter directly operates its product distribution system. For example, Baxter manages its own private, and third party fleets, to transport its frozen therapies and to home deliver Renal products, and it distributes some of its products in selected regions, such as Europe. In other cases, Baxter partners with third-party vendors and carriers.

Baxter uses several approaches to decrease the environmental impact, including associated greenhouse gas (GHG) emissions, of product transport:

• Intermodal Transport
• Capacity Utilization and Technology Innovation
• U.S. Renal Truck Fleet
• Pallet Programs
• Environmentally Responsible Partnerships
• Measuring Performance

Intermodal Transport

Different modes of transport - such as air, ocean, river barges, trucks and rail - have varying levels of environmental impact. This is largely because they use different amounts of fuel per ton of product shipped. Given Baxter's current product mix and global reach, intermodal transport, which combines multiple modes for a single shipment, offers the greatest opportunity for the company to save costs and reduce GHG emissions related to product transportation.

Baxter has increased its use of intermodal transport in Europe and the United States since 2002 to shift toward more energy-efficient modes. Shipping containers are moved from manufacturing plants by truck and then transferred to more efficient and cost-effective rail or barge transport for longer distances, and then shifted back to truck for final delivery. This increases fuel efficiency per ton of product transported, decreases costs and reduces emissions.

Annual GHG Emissions Reductions from Total Shipments Using Intermodal Transport in the United States*
	2009	2010	2011
Intermodal Loads	6,750	7,620	7,800
Calculated Fuel Savings (liters)**	6,671,900	7,325,610	7,354,830
Metric Tons of carbon dioxide equivalent (CO2e) Emissions Reduced	18,010	19,780	19,860

*

In 2011, Baxter revised its methodology to track intermodal shipments in the United States. As a result, the company updated the data in this table for 2009-2010.

**

Calculated fuel savings is the difference between the total calculated fuel use of intermodal shipments versus truck shipments on the same routes.

As part of the above effort, Baxter has increased the use of intermodal transport at to replenish its U.S distribution network from 24% in 2009 to 27% in 2011.

Baxter also conducts route-by-route analysis in Europe to assess and implement possible shifts to intermodal transport. Changing from truck to other modes of transport in the region reduced GHG emissions by approximately 10,000 metric tons CO₂e in 2011 based on changes implemented in 2010 and compared to what emissions would have been otherwise. These initiatives now cover 75% of replenishments in Europe, with 11,000 short sea loads reducing CO₂e emissions by 80% and 4,000 rail loads decreasing CO₂e emissions by 60% during the year.

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Capacity Utilization and Technology Innovation

Baxter also improves transport efficiencies by increasing capacity utilization. For example, use of double-deck trucks to replenish distribution centers across Europe has enabled Baxter to transport loads in two trucks that have historically required three. In 2011, this reduced CO₂e emissions by 101 metric tons. Baxter also works to ensure that trucks are at maximum load capacity, including through collaboration with business partners, reducing the number of trucks required.

In Northampton, United Kingdom, Baxter worked with third-party logistics providers to utilize a highly aerodynamic teardrop-shaped truck design, which features a full-length curved roof with rounded corners that improve air flow and reduce drag force. The design decreases CO₂e emissions by approximately 18% while increasing cubic storage volume by 10%. Currently, approximately 50% of Baxter’s dedicated fleet in the United Kingdom use this model.

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U.S. Renal Truck Fleet

As the largest part of Baxter's internally managed product transport system, the company's U.S. Renal truck fleet provides home delivery of peritoneal dialysis (PD) supplies to thousands of PD patients each day. During the last few years, improvements with environmental benefits have included the following:

• Requiring new trucks to use nose cones that improve aerodynamics and increase fuel efficiency;
• Installing onboard computers to monitor and reduce truck idle times, and incorporating a second-generation system with revised fleet delivery software to enhance efficiency;
• Capping fleet speeds at 62 miles per hour to optimize fuel usage; and
• Replacing approximately 20% of the existing fleet with newer, more efficient vehicles annually (for example, in 2011 Baxter replaced five existing vehicles with more fuel efficient trucks utilizing Selective Catalytic Reduction (SCR) technology, which neutralizes nitrogen oxides (NOx) in the exhaust stream and improves fuel efficiency by up to 5%).

These initiatives reduced total U.S. Renal fleet emissions by approximately 1.1% and increased fuel economy by 1.1% in 2011 compared to 2010. Baxter also increased the monthly number of deliveries per driver from 141 in 2009 to 149 in 2011.

Baxter also added several new safety features to five of its trucks in 2011 that will help reduce work-related injuries among its drivers. These include cameras to assist drivers while reversing, front fender mirrors for better blind-spot visibility, ergonomically placed grab handles on door to help reduce back muscle strain, and lift-gate switches on both sides of the truck that allow drivers to operate safely away from traffic on either side of the vehicle. Additionally, all field management teams and drivers completed a safety training course in 2011. Read more about Baxter’s efforts in this area in the Health and Safety Performance and Safety Program Management and Initiatives sections of the report.

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Pallet Programs

Wooden pallets are used to consolidate cases of products for transport and to move products within Baxter facilities. Baxter works to use pallets more efficiently to save materials and cost. In Europe, for example, pallet programs within and across Baxter facilities, mainly in the United Kingdom and Spain, improved pallet utilization and enabled the company to reuse more than 80,000 pallets in 2011, saving nearly $600,000. In Europe, Baxter also plans to recover pallets from the customer facing distribution cycle in Poland and France.

In the United Kingdom, Baxter's Northampton distribution center uses "loadhogs" - reusable plastic caps that fit over pallets - as an alternative to shrink-wrap when shipping boxes of dialysis solutions to home patients. Baxter plans to test their use in additional facilities in Europe in 2012.

In the United States, Baxter will explore in 2012 the feasibility of using a light weight plastic pallet when shipping by air for certain international shipments. The new pallet weighs approximately 30 pounds less than the wooden pallets currently used and is reusable and recyclable.

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Environmentally Responsible Partnerships

Baxter is one of a select number of companies that participate in the U.S. Environmental Protection Agency (EPA) SmartWay® program as both a Carrier Partner and a Shipper Partner. SmartWay is a partnership between the EPA and industry to reduce air pollution and GHG emissions through cleaner, more fuel efficient product transport.

Baxter became a SmartWay Carrier Partner in 2009 with its own U.S. Renal truck fleet, and achieved the highest possible score of 1.25, recognizing the company’s "outstanding" commitment to utilizing commercially available fuel-saving options and actively evaluating emerging technologies that help reduce the environmental impact of its fleet.

Besides the company’s own Renal fleet, Baxter works with shipping carriers to deliver other products. In January 2011, Baxter was also accepted into the SmartWay Partnership as a Shipper. Since 2009, Baxter requires all of its carriers in the United States to be SmartWay members.

In 2011, Baxter partnered with FedEx to use its Healthcare Shared Network to transport products with specific temperature requirements in select locations in the United States. This service provides Baxter a time-definite, temperature controlled, less-than-truckload delivery service designed for the pharmaceutical and diagnostics industries, eliminating the need for special packing materials previously used to keep shipments at required temperatures. In 2011, Baxter used this service to ship more than 2,100 orders, saving Baxter approximately 35,000 coolers and 124,000 gel packs. These orders would have otherwise been shipped via air. Through this initiative, Baxter eliminated the need for 144 metric tons of packaging material in 2011. Baxter is exploring opportunities to include additional delivery locations in the United States.

In Europe, Baxter also encourages product transportation programs that reduce GHG emissions, and considers such initiatives when awarding contracts to carriers.

In 2011, Baxter and healthcare company UCB agreed to combine their shipments to optimize product transport efficiencies in Europe. The companies believe this will help both organizations increase the speed and frequency of medicine delivery to patients, while reducing carbon footprint by 30% and cost by 10% on average per shipment, depending on the destination and the potential for transport synchronization. The initial pilot program began with destinations in Eastern Europe.

In June 2011, Baxter and its partners UCB, Tri-Vizor and H.Essers received the Innovation Award at the fourth European Supply Chain Awards ceremony organized by the World Trade Group and Supply Chain Logistics. The award recognized Baxter and the other organizations for their innovative approach to freight transportation through this program.

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Measuring Performance

In 2010, Baxter redesigned its process for collecting global transportation information to measure fuel usage and calculate GHG emissions related to product transport. The company regularly reports to Baxter's Sustainability Steering Committee on regional activities to describe the company's efforts in this area and encourage global participation.

Baxter plans to utilize a UPS supply chain solutions model to develop a global emissions measurement system to track GHG emissions from Baxter’s product transport worldwide. Through this model, Baxter will capture product shipments made by truck, rail, air and ocean globally.