Environment:

Logistics

Our Logistics team is the foundation of our supply network and is responsible for moving several million products through 42 Distribution Centers (DCs) to our more than 2,700 stores, each and every day.

In order to meet the needs of our nearly 9 million daily customers. Kroger relies on a fleet of 3,200 tractors and 12,000 trailers. These trucks average 8,600 deliveries every day. In 2016, that meant driving the equivalent of 369 million miles across the U.S. Another way of looking at it, we drove around the earth more than 14,000 times!

Kroger owns 70% of our tractors and 40% of our trailers. The remaining demand is met by dedicated contract carriers.


Because groceries are so heavy, tracking miles per gallon is often not a clear picture of how a fleet is performing. Heavy trucks have to work harder, causing them to use more fuel. For our 2020 Goals, Kroger set a new Fleet Efficiency standard.

We are now tracking our Ton Miles Per Gallon (TMPG), effectively looking at how many miles we haul one ton of groceries on one gallon of fuel. Kroger Logistics is committed to improving our TMPG by 20% by 2020, using 2010 as a baseline. Compared to 2010 as a baseline, we improved our TMPG by 7.5% in 2016.


RENEWABLE Liquefied Natural Gas Tractors

In 2014, our Logistics Team was the first in the state of Oregon to deploy a fleet of heavy-duty trucks that run on Liquid Natural Gas (LNG). The 31 LNG trucks replaced 31 diesel trucks and started making store deliveries in the Portland metropolitan area at the end of 2014. The trucks make deliveries to roughly 50 Fred Meyer and QFC stores as far south as Corvallis, OR, and as far north as Longview, WA, averaging approximately 175 miles per day, six days a week, 52 weeks a year.

In December 2015, Kroger was able to secure renewable natural gas fuel. We expect to reduce greenhouse gas emissions by 73% over the diesel trucks we were driving in the Northwest. This will result in approximately 2,000 metric tons per year, which equates to taking 485 passenger cars off the road annually. The fleet is fueled at a new, private LNG fueling station located at Kroger's Clackamas Distribution Center.


SMARTWAY

Since 2008, Kroger has participated in the U.S. Environmental Protection Agency's SmartWay program. The program is a voluntary, public-private partnership that helps companies like Kroger improve their transportation supply chains by using a consistent set of EPA-tested tools to make informed transportation choices. The tools allow us to measure, benchmark and report our carbon emissions each year. Kroger not only utilizes the SmartWay tools for its owned and operated fleet, but in every aspect of our logistics operations—inbound and outbound, local to regional. In 2016, 85% of the miles our groceries traveled were driven on SmartWay certified tractors.


ZERO WASTE

Moving our Logistics facilities toward "zero waste" is one of Kroger's key sustainability priorities. In 2016, Logistics launched a program to achieve zero waste at all 42 distribution centers by 2020. Three primary components of Logistics' zero waste initiative will be focused on keeping cardboard, plastic and food out of the waste stream. Through the Feeding America Perishable Donations Partnership, Logistics increased food donations by over 3 million pounds in 2016 as compared to 2015.


WATER INITIATIVE

As with our Retail and Manufacturing facilities, Kroger's distribution centers collectively experienced a slight increase (about 5%) in water usage in 2016 when compared to 2015. This increase was largely driven by a handful of facilities that were coming online in the reporting year, or that experienced an unusually high increase in water usage this year. When we remove the impacts of these selected facilities in our comparison, water usage increased by less than 1% between 2015 and 2016, and we feel confident we can continue decreasing water usage in the long-term. And in fact, nearly 20 sites still had water savings due to efficiency and tracking measures. In 2009, Kroger implemented a program at our distribution center using Six Sigma principles to reduce water and chemical usage at our refrigerated sites. The program included the addition of real-time cloud-based reporting and control.

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