Environment:

Logistics

Our logistics team is the foundation of our supply network and is responsible for moving several million products through 36 Distribution Centers (DCs) to our more than 2,700 stores, each and every day.

In order to meet the needs of our 8.5 million daily customers. Kroger relies on a fleet of 3,200 tractors and 12,000 trailers. These trucks average 8,000 deliveries every day. In 2015, that meant driving the equivalent of 346 million miles across the U.S. Another way of looking at it, we drove around the earth nearly 14,000 times!

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

We traditionally measured our success in transportation efficiency by cases shipped per gallon used. We made a goal of improving our fleet efficiency by 40% in 2015 over our 2008 baseline. We're proud to say that we not only met, but exceeded our goal and achieved a 51% improvement in cases shipped per gallon!


In 2015, we increased our truck capacity, defined as cube per load, by 0.86% compared to 2014. Our goal for 2015 was to improve our truck capacity by 15% compared to our 2008 baseline. We improved 13%, just shy of our goal. Although we didn't quite meet our objective, we are extremely proud of our accomplishments. Getting more groceries on the same size trailer year over year is no small feat.

Also in 2015, we increased our miles per gallon by 0.52%. Every year, Kroger continues to replace 10–15% of its older tractors and trailers with new, more fuel efficient tractors and trailers. Through these various strategies, we have improved mpg by 6.50% since 2008.

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. In turn, Kroger is setting a new Fleet Efficiency standard as we enter a new goal phase.

Moving forward, we will be 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. We will also be changing our baseline year from 2008 to 2010 to more closely align with other areas of The Kroger Company.


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 2015, 86% of the miles our groceries traveled were driven on SmartWay certified tractors.


ZERO WASTE

Moving our logistic facilities toward "zero waste" is one of Kroger's key sustainability priorities. In 2016, logistics is launching a program to achieve zero waste at all 36 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.


WATER INITIATIVE

In 2009, Kroger implemented a program at our distribution centers 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. As a result of this initiative Kroger has reduced its water consumption at 18 of its distribution centers by 56 million gallons per year, the equivalent of 383 American households.

The goal is to achieve 10% water usage reduction at all sites. Water and sewer usage has declined at 14 sites. Water usage has been reduced by 11.6% from 2009 levels, and sewer usage has been reduced by 18.5% from 2009 levels. The overall cost of water and sewer has increased by 24% since 2009; however based on gallons saved, the calculated savings to date is over $240,000.

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