Green Spot: More Value For The Chain

Considering that an estimated 40% of the containerized cargo coming and going from the U.S. passes through the ports of Los Angeles and Long Beach, a lot of press has accompanied the goals of the San Pedro Bay Clean Air Action Plan. Rather than try to fight the tide, the fine folks at Foss Maritime are bringing a new tool in the fight to get the job done right -- a hybrid tugboat.

Add that to a rigorous program of energy audits and process improvements, as well as a new, LEED-certified HQ, and you've got a green program to be proud of. IW got the scoop from Susan Hayman, Vice President, Health, Safety, Quality & Environment, Foss Maritime.

IW: How are you addressing energy efficiency?

Susan Hayman: We have recently hired outside firms to complete energy audits for our tugboat fleet and office building. The audits have been completed and we are awaiting the final reports and recommendations. We are also in the process of testing more energy efficient lighting on our tugboat fleet. Foss Maritime Company was also the first transportation company to become a partner in the USEPA SmartWay program for its maritime operations. To be accepted as a SmartWay partner, Foss committed to an action plan to improve its fuel efficiency and reduce greenhouse gas emissions.

IW: Have you evaluated alternative, renewable (i.e., solar and wind) energy production?

Hayman: Foss operates a fleet of 63 tugboats and 69 barges. The majority of marine vessels, including tugboats, use generators to supply power for lights, refrigeration etc (Hotelling") while alongside a dock. Foss has worked with our energy suppliers to provide shoreside electrical power connections to provide the power for hotelling while our tugs are alongside the dock. This is more energy efficient and cost efficient when compared with running diesel powered generators.

IW: How are you addressing facilities and equipment management?

Hayman: Our current office building is over 80 years old and is no longer energy efficient. We made a decision about one year ago to completely demolish our current office building and construct a new building. We are currently working with a property development group on a new building design. Our current plans are to reach at least a silver LEED designation with the new building.

IW: How are you addressing waste reduction? Please give specific examples and results, if possible.

Hayman: We have on-going recycling programs for both our shore based facilities and on our vessels. In our office building we have also installed motion sensors on our lighting. As evidenced previously, we are now focusing our efforts primarily on waste reduction of fuel since we are in the transportation business. We have been experimenting with various propulsion systems for better fuel efficiency. As an example, by making changes to our propellers and propulsion nozzles we have improved the fleet average lbs of thrust/ hp from 23 lbs to 38 lbs. with resultant fuel consumption savings.

IW: How are you addressing water conservation/pollution?

Hayman: Foss has a stated goal of zero spills to water. In October of this year Foss was honored by The Chamber of Shipping of America which recognized 59 of our vessels for outstanding environmental records. Altogether, the ships have achieved the equivalent of 362 years without an environmental mishap. We assiduously report and apply corrective actions for any loss of containment no matter how small to avoid any spills to water.

Foss also has five oil barges operating in California and we have exited the business of moving oil in the Pacific Northwest. We are in the process of replacing the five barges in California with new barges we are building in Texas. These new barges are all double hulled and have vapor recovery systems, which are not required by regulation. So far two of the five barges have been replaced and the subsequent three barges will all be replaced by the second quarter of 2009.

With the exception of four ocean going tugs, Foss vessels use shoreside vacuum trucks to discharge oily water from the bilges instead of using oily water separators which are traditionally used on vessels.

IW: How about air pollution?

Hayman: We are building the world's first hybrid tugboat using a combination of batteries, generators and small main engines. This tugboat is currently under construction at our shipyard and is scheduled for delivery to San Pedro Harbor next summer. A third party consultancy firm has calculated emissions reductions of 44% NO_x and 44% PMs. There will also be a fuel savings of at least 30%.

As of November of this year we have converted our entire fleet to only burn Ultra Low Sulfur Diesel fuel at 15 ppm sulfur content. In Puget Sound alone this will eliminate 9 tons of SO_x emissions per year and 0.7 tons of particuate matter. For the Portland/Columbia Snake River area this switch will eliminate 8 tons of SO_x per year and 0.6 tons of particulate matter. We converted the California fleet to ULSD at the end of 2006.

Foss has a long tradition of innovation and we are continuing to push the industry forward with regard to technological advances. As an example we have been using ECOTIP fuel injectors for a decade for NOx reduction and were the test platform for the CBOI fuel injectors. We have since started using the CBOI injectors for approximately 50% NO_x reduction.

Also, we have worked with engine manufacturers to successfully convert six boats this year from uncertified engines to certified Tier 1 engines. This was done on a voluntary basis with no regulatory requirement.

IW: Are there any partnerships/programs you participate in? Have you received any grants/incentives?

Hayman: Foss is the first carrier partner accepted into the EPA SmartWay Transport program for its marine transportation operations. We are also engaged in a working committee on air pollution with the Port of Seattle. We are members of many maritime organizations that are not directly related to pollution prevention but serve as forums to share best practices on a variety of subjects including environmental issues.

Over the past decade we have received various funding grants from the Carl Moyer program in California. In 2007 we received $1.35 million in grant funds from the Port of Los Angeles, Port of Long Beach and the South Coast Air Quality Management District in support of the Hybrid Tug Project.

IW: Have your green programs received executive sponsorship from the C-suite?

Hayman: Our C-suite has been actively engaged and supportive of all of our environmental initiatives. We are a privately held company in a very capital intensive industry; therefore, the sponsorship of our executives and owners is critical to our success in this arena. Foss has a written and reinforced set of Core Values as a company. Our number one core value is the safety of our people but one of our other important core values is to be god custodians of the environment and to be community minded.

An example is our recent voluntary change to Ultra Low Sulfur Diesel (ULSD). There is no regulatory requirement for us to do so in the Pacific Northwest. EPA mandates for ULSD do not come into effect for our industry until 2012. There was no cost benefit for making the change, only additional cost. However, our senior executives decided to go forward with this program because it was something we could do to demonstrate our commitment to our core values and it was the right thing to do.

IW: Have you seen impetus for these types of initiatives from the ground floor?

Hayman: Yes. In fact the idea for the hybrid tug was generated from our in-house engineering department. Our boat crews have also been actively engaged and helpful in the energy audit. Because of the nature of our business all of our employees are either working in an office on the waterfront in the ports we serve or on the water. The majority of our employees are mariners who spend all of their time working on the water. We consider the ports we serve as our home and all of us have a vested interest in improving the air and water quality.

Another example is that we are building the hybrid tug at our own shipyard in Rainier, Oregon. This shipyard has built eight conventional tugs of this class and this last tug of the series will be the hybrid tug. Even thought this effort means a considerable amount of extra work and complexity for the yard, everyone from the Shipyard Director to the welders, boilermakers etc. have wholeheartedly embraced this project and are excited and proud to be building this tug.

IW: How do you see sustainability fitting into core business strategy?

Hayman: Sustainability affects all facets of our business so it needs to be a factor in all of our business decisions. However, incorporating the mindset of sustainability to all levels of decision making in the company will take some time to accomplish. It is sometimes difficult to quantify the justification for sustainability. We are a "for profit" company and some of the pay backs for sustainability decisions are far off into the future and may not have a direct impact on the bottom line.

Our environmental leadership has been a positive development for us from a marketing strategy perspective. Having a dialogue with like minded customers on these issues is one more constructive way in which we can find touch points with our customers.

IW: How do you see the regulatory environment changing, and how will it impact your business?

Hayman: The regulatory environment is continually changing in all areas including air emissions, ballast water and pollution prevention. One of the challenges we face as a mid size company is having the manpower to track, respond and engage in the regulatory processes. One of the biggest impacts to our business has been the adoption by the California Air Resources Board of new harborcraft (tugs, ferries, etc) regulations. These regulations call for an aggressive timetable for converting all harborcraft engines in California to the best available control technology engines. This will be a major economic impact for our industry. Foss was fully engaged in this regulatory process. As a result we were better able to plan and develop a strategy for implementation of the regulation.

The maritime industry is one of the last industries to have felt the more intense scrutiny of regulators in the environmental area. We expect that the regulatory environment will continue to grow increasingly more challenging.

IW: How about the environment itself -- is climate change being factored into risk models?

Hayman: At this point climate change itself is not being factored into our risk models. However, one line of business we have is oil and gas field support where we specialize in harsh environments, including the Artic. For example, in 2006 we completed a three year project for a major international consortium to move 36 prefabricated modules from Korea to support construction of an LNG production facility at the Northeast tip of Sakhalin Island in the Russian Far East. Climate change and its impact on the areas where we operate is likely to have a significant impact on our customers and subsequently to our business.

IW: How important is corporate branding in this day and age?

Hayman: Corporate branding is very important. Foss began in 1889 when Thea Foss, a Norwegian immigrant, bought a rowboat, painted in white and green and began renting it out. This business grew and her husband Andrew, a carpenter, began building new rowboats. The company's tagline "Always Ready" stems from this early time when Thea Foss always had coffee ready for her customers. To this day the Foss tugboat colors are green and white and our tagline was modified in 2006 to "Always Ready...Always Safe" to more accurately reflect our core values. In 2006 we also changed our corporate logo and went through a significant re-branding effort. In our industry, a tugboat's colors are how the owner is identified; therefore, no two companies have the same colors. This is similar to a "house flag" for ocean going vessels. The one thing that has remained inviolate since Thea Foss first painted her rowboat is the green and white color scheme of our vessels. Now that we are being so closely identified with our environmental leadership being already known as literally the "green and white" company has proven to be fortuitous.

IW: And how are you publicizing your efforts to reach out to value chain partners and consumers?

Hayman: Foss uses a third party consultant to draft press releases for distribution to media contacts locally and for trade journals. Sometimes if the story is picked up by a publication and they would like to have an interview than we will make the appropriate executives available for interviews. Also, if invited we will speak at an industry or customer event generally with regard to a technological advance such as the hybrid tug.

IW: What are you the most proud of that you've accomplished so far, and why?

Hayman: The hybrid tug is a project that we as a company take great pride in achieving. This was an idea that was generated internally and we worked with our port stakeholders to support and partially fund the incremental cost. Although we did receive grants of $1.35 million, this does not cover the incremental cost of approximately $2.5 million so the remainder of the incremental cost will be borne by Foss. Even though there are increased capital costs with a hybrid tug, payback is achieved through reduced fuel and lifecycle costs. This is the world's first hybrid tugboat and represents a significant technological advance for our industry. We are building this boat in our own shipyard so when the project is finished all of the different departments in the company will have made a contribution to its success. We believe others in our industry are now working to develop their own hybrid designs so we are hopeful that this first hybrid tug will spur our industry forward to even more innovative designs and creative ways to reduce emissions.

IW: What's the best piece of advice you can give to companies considering "getting with the program"?

Hayman: I would posit that "getting with the program" happens when a company attaches value to its environmental initiatives. This value can be monetary or simply because it supports a fundamental core value of the company. Value is also achieved through the goodwill of the communities in which we live and work and the good feelings employees have about the company they work for. Value is also achieved through enhanced corporate image and marketing opportunities. It is doing the right thing and trying to help solve the problems you have the power to solve. Sometimes the environmental challenge seems overwhelmingly daunting but if a company can start with small successes, the bigger victories seem like a natural progression. In this way a company can continually challenge itself to find more creative solutions to these complex problems.