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 cases, Baxter directly operates its product distribution system. For example, Baxter leases 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 of product transport, including related greenhouse gas (GHG) emissions:

• 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.

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.

Given Baxter's current product mix and global reach, intermodal transport offers the largest opportunity for the company to save costs and reduce GHG emissions related to product transport. Baxter has increased the percentage of U.S. shipments using intermodal transport from 9.6% in 2005 to 12.8% in 2010. This reduced GHG emissions by 14,000 metric tons CO₂e in 2010 compared to 2005.

Baxter also conducts route-by-route analysis in Europe to assess possible shifts to intermodal transport. Changing from truck to other modes of transport in the region reduced GHG emissions by 9,832 metric tons CO₂e in 2010, compared to what emissions would have been otherwise. These initiatives now cover 65% of total replenishment flows in Europe.

(Top)

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 2010, this saved 101 metric tons of CO₂e emissions. 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 volume by 10%. Currently, approximately 50% of Baxter’s dedicated fleet in the United Kingdom use this model.

(Top)

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;
• Capping fleet speeds at 62 miles per hour to optimize fuel usage;
• Incorporating a second-generation onboard computer system with revised fleet delivery software to enhance efficiency;
• Piloting two electric/diesel hybrid trucks in the California fleet to assess economic impact and potential emissions reductions (Baxter may relocate the vehicles to other markets to better capture the possible benefits); and
• Replacing approximately 20% of the existing fleet with newer, more efficient vehicles annually.

These initiatives, along with the continued upgrade of the Renal fleet to lower emission diesel engines, reduced total U.S. Renal fleet emissions by approximately 1.1% in 2010 compared to 2009. Baxter also increased the number of deliveries per driver from 141 to 148 monthly in 2010.

(Top)

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, programs to recycle pallets within and across Baxter facilities improved pallet utilization and reuse by more than 110,000 pallets in 2010, saving nearly $800,000.

In the United Kingdom, Baxter's Northampton distribution center uses "loadhogs" - a reusable plastic cap that fits over a pallet - as an alternative to shrink-wrap when shipping boxes of dialysis solutions to home patients.

(Top)

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.

Several of Baxter’s products require temperature control. To transport these products in the United States, Baxter has typically packed them in coolers with gel packs and shipped them by air. In August 2010, Baxter partnered with FedEx on a "cold chain" initiative. Using the FedEx network with refrigerated containers to transport select Baxter products, the company eliminated 350 air shipments in 2010 and expects to eliminate approximately 2,700 air shipments in 2011. In addition, Baxter saved 3,100 coolers and 11,000 gel packs in 2010 while ensuring the product remains at the necessary temperature. Moving forward, Baxter expects to save 30,000 coolers and 102,000 gel packs in 2011.

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 potential for transport synchronization. The pilot will begin with destinations in Eastern Europe.

Since July 2008, all product deliveries from Baxter's Northampton, United Kingdom, distribution center have been carbon-neutral. This has been achieved through investment in carbon offset projects, mainly renewables in developing countries. In 2010, Baxter offset 2,485 metric tons related to this initiative.

(Top)

Measuring Performance

In 2010, Baxter improved alignment of data collection processes used by regional teams to measure fuel usage and calculate GHG emissions related to product transport. The company implemented regular reports to Baxter's Sustainability Steering Committee on regional activities to describe the company's efforts in this area and encourage global participation. The company plans to have one global product transport emissions measurement system in place in 2012.

Annual GHG Emissions Reductions from Intermodal Transport in the United States
	2006	2007	2008	2009	2010
Intermodal Loads	7,892	9,317	10,311	10,414	11,694
Calculated Fuel Savings (liters)*	9,111,685	9,981,006	10,850,690	11,826,347	13,279,940
Metric Tons of CO2e Saved	24,602	26,949	29,297	31,931	35,856

*	Total calculated fuel savings is the difference between calculated fuel use of intermodal versus truck per load on same route.