Mark Solomon joined DC VELOCITY as senior editor in August 2008, and was promoted to his current position on January 1, 2015. He has spent more than 30 years in the transportation, logistics and supply chain management fields as a journalist and public relations professional. From 1989 to 1994, he worked in Washington as a reporter for the Journal of Commerce, covering the aviation and trucking industries, the Department of Transportation, Congress and the U.S. Supreme Court. Prior to that, he worked for Traffic World for seven years in a similar role. From 1994 to 2008, Mr. Solomon ran Media-Based Solutions, a public relations firm based in Atlanta. He graduated in 1978 with a B.A. in journalism from The American University in Washington, D.C.
No one buys Rooms To Go's products for the stuff they're shipped in. The cardboard, plastic wrapping, hardwood and plywood, and foam padding are mere afterthoughts, literally tossed aside by customers eager to try out their new furnishings.
But the privately held Seffner, Fla.-based retailer, which generates $1.75 billion in annual revenue selling mid-priced furniture, accessories, and home theater equipment, has a different take on trash. Through a recycling program launched in the early 1990s, one man's garbage has become Rooms To Go's gold, helped along by robust aftermarket demand for the packaging materials returned to the company's five U.S. distribution centers.
As for how much gold, Rooms To Go's recycling business produced $3 million in gross revenue in 2007. That's roughly triple what the program generated in 2005—an increase the company attributes to both its overall growth and the rapid run-up in scrap material prices. John Zapata, who conceived the recycling initiative soon after the company's founding in 1991 and is today senior vice president of distribution, estimates 2008's recycling revenue will be roughly equal to 2007's.
Not only has the program been profitable, it's also having a significant environmental impact. By year's end, Zapata projects the company will recycle more than 26,200 tons of solid waste, up from more than 21,400 tons in 2007. Of the 2008 total, 96 percent of all cardboard and foam is expected to be recycled, along with 87 percent of all plastic and wood.
Since the program began, 96,000 tons of solid waste—the equivalent of a 25-mile-long train pulling more than 2,200 boxcars—has been recycled rather than dumped in landfills. That figure includes 7,000 tons of plastic and foam, neither of which is biodegradable. The recovered scrap material is sold to a variety of buyers. The regional sites are responsible for determining their own aftermarket, with the consent of corporate headquarters.
Although the recycling program operates solidly in the black, the company did have to allocate funds for startup and maintenance expenses. Zapata estimates Rooms To Go has spent $3 million on the initiative—roughly equal to one year's revenue from the recycling operations—since its launch. That includes a $1 million investment in 2005 to upgrade and modernize recycling operations at the company's Lakeland, Fla., and Atlanta distribution centers, which has already been repaid, he says. Most of the remainder has been allocated to shredders, chippers, and balers, equipment that paid for itself in roughly half the time originally projected and that has also long since been paid off, Zapata adds.
The ongoing recycling expense mostly consists of routine maintenance on equipment and systems that is performed at relatively nominal cost. This means virtually every dollar in recycling revenue flows to Rooms To Go's bottom line, Zapata says. He adds that the program has also saved the company thousands of dollars in shipping and administrative costs, and has helped protect the environment, an achievement the company's founders—furniture retailing pioneers Jeffrey and Morty Seaman—"are most proud of."
Starting small
The recycling program was launched in 1991, after Zapata, who was one of the company's first employees, realized that the returned materials represented the kind of clean waste that could be profitably recovered for reuse. Because Rooms To Go is primarily a retailer and performs little manufacturing, its facilities were largely free of the tar, grease, and other gunk often found on factory floors. "We couldn't afford to have greasy stuff on any of the furniture, so the material that was shipped out was always shipped out clean," Zapata says. "When the materials came back, we knew we had clean refuse that could be recycled and that had value."
Today, about 60 percent of the company's waste stream comes from trucks returning to the DCs from home deliveries, retail sites, and other distribution centers. The remaining 40 percent is generated through internal processes (like repackaging) within the DCs themselves. Rooms To Go's DCs are high-throughput operations: Collectively, the facilities stage 8,000 to 10,000 individual pieces per day.
The recycling program has come a long way since its inception. The company's early recycling efforts consisted of a nearly 40person army of employees collecting 800 tons of cardboard—equivalent at the time to 60 percent of Rooms To Go's cardboard waste—and stuffing the pieces willy-nilly in 40-foot open-top construction containers and into compactors. No other materials were being recycled during the early 1990s.
The company was also unloading trash and returned furniture at the same time, a process that would sometimes result in furniture damage. "It could be something as simple as allowing a piece of cardboard to rub against an inbound dresser or sofa," Zapata says. "If the cardboard had a staple in it, damage to the dresser or sofa could occur."
Rather than implementing a comprehensive initiative that covered the four main recyclable commodities— cardboard, plastic, foam, and wood— at once, Zapata decided to tackle the project one commodity at a time. The cardboard recycling program was launched in 1992, followed by plastic in 1996, foam in 1998, and wood in 1999. Zapata says the key to the program's overall success was a "practical approach" taken by his managers in "working out some of the particulars over time as opposed to trying to get every element captured at the outset."
A "leap of faith"
As part of the initiative, Zapata and his managers re-engineered the company's DCs and work processes to compartmentalize the flow of the returned materials. Starting with the cavernous 1.7 millionsquare- foot distribution center in Lakeland, they developed procedures for separating the incoming refuse from the furniture arriving on the same trucks. In the past, the company had sometimes experienced problems with goods' being mislabeled because tags from empty boxes would be mistakenly entered into the system in place of tags for the items passing next to them. By separating the two streams, Zapata hoped to eliminate those problems.
Zapata initially thought that adding the separation step would lead to increased costs. As it turned out, however, the company realized savings from more accurate labeling of incoming merchandise and a clearer alignment of employee duties, which ended up reducing staffing requirements.
Zapata then reorganized the dock door area to even out and streamline the material flow from truck unloading to the sortation areas. Two conveyors centered between an eight-door, 100-foot dock now shuttle the material from the dock to specially designated sorting areas. After sorting, the materials are transferred to shredding, chipping, or baling stations for further processing.
What happens next depends on the type of commodity. For example, cardboard is sorted at the incoming doors and then placed on dedicated conveyors. Most cardboard requires no further handling and can be brought directly to balers. The finished bales are then weighed and placed in a container in the same general work area, where they await pickup.
The plastic and foam materials are conveyed to the sort area, where they are separated and sorted by hand, then placed on special conveyors. The plastic is routed to a baler, while the foam is conveyed to a chipper. Items not sorted out ride the conveyor belt into the trash truck and are then taken to landfills.
Companies buying the materials are mostly responsible for arranging and paying for the pickups; Rooms To Go is charged with taking any nonrecycled materials to landfills.
Zapata says his biggest challenge was to convince upper management to budget for three balers, each of which cost approximately $300,000. Buying the high-cost equipment required a leap of faith, he admits. Zapata told his bosses that it would take 27 months to recoup the cost of each baler. "As it turned out, the reality was actually 14 months," he says.
To house the operation, Zapata has had to allocate 5,000 to 50,000 square feet in each distribution center. This has generally not been a problem due to the overall size of the company's warehouses.
A side benefit of reorganizing and streamlining the material flow has been a reduction in labor requirements, which has freed up employees for other tasks. Today, 21 employees work on the recyclables program, down from 39 when the program began, Zapata says.
In the past few years, Rooms To Go has fine-tuned its procedures for identifying and extracting recyclable materials from its waste pile, according to Zapata. As a result, the company has been able to keep its recycling revenues constant even though its total "waste stream" has actually declined since 2006.
Overall, Zapata reports that the company is pleased by the recycling program's results. "All of the unexpected things that have happened have been positive," he says. "I never could have predicted the success of all this."
Above the crowd
In a world where everyone's eager to go green, why haven't more of Rooms To Go's competitors copied its programs? One difference, according to Zapata, is that Rooms To Go will ship directly to its customers, while its rivals ship first to their stores and then on to the end user. Because those competitors have an extra layer between the customer and the DC where the packing materials are returned, their operations incur more cost and are less efficient, according to Zapata. "They may generate as much recycled material, but they won't be as profitable as [we are]," he says.
Zapata believes that reluctance to make the significant initial capital investment required for equipment—especially in a tough economy—is also an obstacle. "I don't think many companies looking at recycling focus very carefully on the ROI. What they see are costs," he says.
But a deliberate, carefully constructed recycling plan, along with a "take the long view"' mindset on equipment expenditures, can carry almost any company with recyclable materials a very long way, according to Zapata. "Anyone with even half of our distribution capabilities can execute this successfully," he says.
Most of the apparel sold in North America is manufactured in Asia, meaning the finished goods travel long distances to reach end markets, with all the associated greenhouse gas emissions. On top of that, apparel manufacturing itself requires a significant amount of energy, water, and raw materials like cotton. Overall, the production of apparel is responsible for about 2% of the world’s total greenhouse gas emissions, according to a report titled
Taking Stock of Progress Against the Roadmap to Net Zeroby the Apparel Impact Institute. Founded in 2017, the Apparel Impact Institute is an organization dedicated to identifying, funding, and then scaling solutions aimed at reducing the carbon emissions and other environmental impacts of the apparel and textile industries.
The author of this annual study is researcher and consultant Michael Sadowski. He wrote the first report in 2021 as well as the latest edition, which was released earlier this year. Sadowski, who is also executive director of the environmental nonprofit
The Circulate Initiative, recently joined DC Velocity Group Editorial Director David Maloney on an episode of the “Logistics Matters” podcast to discuss the key findings of the research, what companies are doing to reduce emissions, and the progress they’ve made since the first report was issued.
A: While companies in the apparel industry can set their own sustainability targets, we realized there was a need to give them a blueprint for actually reducing emissions. And so, we produced the first report back in 2021, where we laid out the emissions from the sector, based on the best estimates [we could make using] data from various sources. It gives companies and the sector a blueprint for what we collectively need to do to drive toward the ambitious reduction [target] of staying within a 1.5 degrees Celsius pathway. That was the first report, and then we committed to refresh the analysis on an annual basis. The second report was published last year, and the third report came out in May of this year.
Q: What were some of the key findings of your research?
A: We found that about half of the emissions in the sector come from Tier Two, which is essentially textile production. That includes the knitting, weaving, dyeing, and finishing of fabric, which together account for over half of the total emissions. That was a really important finding, and it allows us to focus our attention on the interventions that can drive those emissions down.
Raw material production accounts for another quarter of emissions. That includes cotton farming, extracting gas and oil from the ground to make synthetics, and things like that. So we now have a really keen understanding of the source of our industry’s emissions.
Q: Your report mentions that the apparel industry is responsible for about 2% of global emissions. Is that an accurate statistic?
A: That’s our best estimate of the total emissions [generated by] the apparel sector. Some other reports on the industry have apparel at up to 8% of global emissions. And there is a commonly misquoted number in the media that it’s 10%. From my perspective, I think the best estimate is somewhere under 2%.
We know that globally, humankind needs to reduce emissions by roughly half by 2030 and reach net zero by 2050 to hit international goals. [Reaching that target will require the involvement of] every facet of the global economy and every aspect of the apparel sector—transportation, material production, manufacturing, cotton farming. Through our work and that of others, I think the apparel sector understands what has to happen. We have highlighted examples of how companies are taking action to reduce emissions in the roadmap reports.
Q: What are some of those actions the industry can take to reduce emissions?
A: I think one of the positive developments since we wrote the first report is that we’re seeing companies really focus on the most impactful areas. We see companies diving deep on thermal energy, for example. With respect to Tier Two, we [focus] a lot of attention on things like ocean freight versus air. There’s a rule of thumb I’ve heard that indicates air freight is about 10 times the cost [of ocean] and also produces 10 times more greenhouse gas emissions.
There is money available to invest in sustainability efforts. It’s really exciting to see the funding that’s coming through for AI [artificial intelligence] and to see that individual companies, such as H&M and Lululemon, are investing in real solutions in their supply chains. I think a lot of concrete actions are being taken.
And yet we know that reducing emissions by half on an absolute basis by 2030 is a monumental undertaking. So I don’t want to be overly optimistic, because I think we have a lot of work to do. But I do think we’ve got some amazing progress happening.
Q: You mentioned several companies that are starting to address their emissions. Is that a result of their being more aware of the emissions they generate? Have you seen progress made since the first report came out in 2021?
A: Yes. When we published the first roadmap back in 2021, our statistics showed that only about 12 companies had met the criteria [for setting] science-based targets. In 2024, the number of apparel, textile, and footwear companies that have set targets or have commitments to set targets is close to 500. It’s an enormous increase. I think they see the urgency more than other sectors do.
We have companies that have been working at sustainability for quite a long time. I think the apparel sector has developed a keen understanding of the impacts of climate change. You can see the impacts of flooding, drought, heat, and other things happening in places like Bangladesh and Pakistan and India. If you’re a brand or a manufacturer and you have operations and supply chains in these places, I think you understand what the future will look like if we don’t significantly reduce emissions.
Q: There are different categories of emission levels, depending on the role within the supply chain. Scope 1 are “direct” emissions under the reporting company’s control. For apparel, this might be the production of raw materials or the manufacturing of the finished product. Scope 2 covers “indirect” emissions from purchased energy, such as electricity used in these processes. Scope 3 emissions are harder to track, as they include emissions from supply chain partners both upstream and downstream.
Now companies are finding there are legislative efforts around the world that could soon require them to track and report on all these emissions, including emissions produced by their partners’ supply chains. Does this mean that companies now need to be more aware of not only what greenhouse gas emissions they produce, but also what their partners produce?
A: That’s right. Just to put this into context, if you’re a brand like an Adidas or a Gap, you still have to consider the Scope 3 emissions. In particular, there are the so-called “purchased goods and services,” which refers to all of the embedded emissions in your products, from farming cotton to knitting yarn to making fabric. Those “purchased goods and services” generally account for well above 80% of the total emissions associated with a product. It’s by far the most significant portion of your emissions.
Leading companies have begun measuring and taking action on Scope 3 emissions because of regulatory developments in Europe and, to some extent now, in California. I do think this is just a further tailwind for the work that the industry is doing.
I also think it will definitely ratchet up the quality requirements of Scope 3 data, which is not yet where we’d all like it to be. Companies are working to improve that data, but I think the regulatory push will make the quality side increasingly important.
Q: Overall, do you think the work being done by the Apparel Impact Institute will help reduce greenhouse gas emissions within the industry?
A: When we started this back in 2020, we were at a place where companies were setting targets and knew their intended destination, but what they needed was a blueprint for how to get there. And so, the roadmap [provided] this blueprint and identified six key things that the sector needed to do—from using more sustainable materials to deploying renewable electricity in the supply chain.
Decarbonizing any sector, whether it’s transportation, chemicals, or automotive, requires investment. The Apparel Impact Institute is bringing collective investment, which is so critical. I’m really optimistic about what they’re doing. They have taken a data-driven, evidence-based approach, so they know where the emissions are and they know what the needed interventions are. And they’ve got the industry behind them in doing that.
The global air cargo market’s hot summer of double-digit demand growth continued in August with average spot rates showing their largest year-on-year jump with a 24% increase, according to the latest weekly analysis by Xeneta.
Xeneta cited two reasons to explain the increase. First, Global average air cargo spot rates reached $2.68 per kg in August due to continuing supply and demand imbalance. That came as August's global cargo supply grew at its slowest ratio in 2024 to-date at 2% year-on-year, while global cargo demand continued its double-digit growth, rising +11%.
The second reason for higher rates was an ocean-to-air shift in freight volumes due to Red Sea disruptions and e-commerce demand.
Those factors could soon be amplified as e-commerce shows continued strong growth approaching the hotly anticipated winter peak season. E-commerce and low-value goods exports from China in the first seven months of 2024 increased 30% year-on-year, including shipments to Europe and the US rising 38% and 30% growth respectively, Xeneta said.
“Typically, air cargo market performance in August tends to follow the July trend. But another month of double-digit demand growth and the strongest rate growths of the year means there was definitely no summer slack season in 2024,” Niall van de Wouw, Xeneta’s chief airfreight officer, said in a release.
“Rates we saw bottoming out in late July started picking up again in mid-August. This is too short a period to call a season. This has been a busy summer, and now we’re at the threshold of Q4, it will be interesting to see what will happen and if all the anticipation of a red-hot peak season materializes,” van de Wouw said.
The report cites data showing that there are approximately 1.7 million workers missing from the post-pandemic workforce and that 38% of small firms are unable to fill open positions. At the same time, the “skills gap” in the workforce is accelerating as automation and AI create significant shifts in how work is performed.
That information comes from the “2024 Labor Day Report” released by Littler’s Workplace Policy Institute (WPI), the firm’s government relations and public policy arm.
“We continue to see a labor shortage and an urgent need to upskill the current workforce to adapt to the new world of work,” said Michael Lotito, Littler shareholder and co-chair of WPI. “As corporate executives and business leaders look to the future, they are focused on realizing the many benefits of AI to streamline operations and guide strategic decision-making, while cultivating a talent pipeline that can support this growth.”
But while the need is clear, solutions may be complicated by public policy changes such as the upcoming U.S. general election and the proliferation of employment-related legislation at the state and local levels amid Congressional gridlock.
“We are heading into a contentious election that has already proven to be unpredictable and is poised to create even more uncertainty for employers, no matter the outcome,” Shannon Meade, WPI’s executive director, said in a release. “At the same time, the growing patchwork of state and local requirements across the U.S. is exacerbating compliance challenges for companies. That, coupled with looming changes following several Supreme Court decisions that have the potential to upend rulemaking, gives C-suite executives much to contend with in planning their workforce-related strategies.”
Stax Engineering, the venture-backed startup that provides smokestack emissions reduction services for maritime ships, will service all vessels from Toyota Motor North America Inc. visiting the Toyota Berth at the Port of Long Beach, according to a new five-year deal announced today.
Beginning in 2025 to coincide with new California Air Resources Board (CARB) standards, STAX will become the first and only emissions control provider to service roll-on/roll-off (ro-ros) vessels in the state of California, the company said.
Stax has rapidly grown since its launch in the first quarter of this year, supported in part by a $40 million funding round from investors, announced in July. It now holds exclusive service agreements at California ports including Los Angeles, Long Beach, Hueneme, Benicia, Richmond, and Oakland. The firm has also partnered with individual companies like NYK Line, Hyundai GLOVIS, Equilon Enterprises LLC d/b/a Shell Oil Products US (Shell), and now Toyota.
Stax says it offers an alternative to shore power with land- and barge-based, mobile emissions capture and control technology for shipping terminal and fleet operators without the need for retrofits.
In the case of this latest deal, the Toyota Long Beach Vehicle Distribution Center imports about 200,000 vehicles each year on ro-ro vessels. Stax will keep those ships green with its flexible exhaust capture system, which attaches to all vessel classes without modification to remove 99% of emitted particulate matter (PM) and 95% of emitted oxides of nitrogen (NOx). Over the lifetime of this new agreement with Toyota, Stax estimated the service will account for approximately 3,700 hours and more than 47 tons of emissions controlled.
“We set out to provide an emissions capture and control solution that was reliable, easily accessible, and cost-effective. As we begin to service Toyota, we’re confident that we can meet the needs of the full breadth of the maritime industry, furthering our impact on the local air quality, public health, and environment,” Mike Walker, CEO of Stax, said in a release. “Continuing to establish strong partnerships will help build momentum for and trust in our technology as we expand beyond the state of California.”
That result showed that driver wages across the industry continue to increase post-pandemic, despite a challenging freight market for motor carriers. The data comes from ATA’s “Driver Compensation Study,” which asked 120 fleets, more than 150,000 employee drivers, and 14,000 independent contractors about their wage and benefit information.
Drilling into specific categories, linehaul less-than-truckload (LTL) drivers earned a median annual amount of $94,525 in 2023, while local LTL drivers earned a median of $80,680. The median annual compensation for drivers at private carriers has risen 12% since 2021, reaching $95,114 in 2023. And leased-on independent contractors for truckload carriers were paid an annual median amount of $186,016 in 2023.
The results also showed how the demographics of the industry are changing, as carriers offered smaller referral and fewer sign-on bonuses for new drivers in 2023 compared to 2021 but more frequently offered tenure bonuses to their current drivers and with a greater median value.
"While our last study, conducted in 2021, illustrated how drivers benefitted from the strongest freight environment in a generation, this latest report shows professional drivers' earnings are still rising—even in a weaker freight economy," ATA Chief Economist Bob Costello said in a release. "By offering greater tenure bonuses to their current driver force, many fleets appear to be shifting their workforce priorities from recruitment to retention."