Episode 29 | The Catalyst Series: How Procter & Gamble Is Scaling Solutions for Freight Decarbonization

How does one of the world's largest consumer goods companies reduce transportation emission intensity by 8% in a single year?

In this Catalyst Series episode, Andy Golding speaks with Frank Kreßmann, Director of Global Transportation Sustainability at Procter & Gamble, about how P&G is driving freight decarbonization across a global supply chain serving 5 billion consumers.
In this episode:

- How shifting road freight to intermodal delivered measurable results fast
- Why long-haul, cross-border battery electric freight is feasible today
- How Book and Claim offers a practical path to scaling biofuels now
- Why internal training is essential for embedding decarbonization into daily decisions
"If you want to make the right decision, you need to understand what right looks like." - Frank Kreßmann, Procter & Gamble

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Transcript

SPEAKER_01 0:08

Hello and welcome to another episode of Smart Freight Conversations, where we share interesting and important insights on freight decarbonization and the drive towards a zero emissions logistics industry. I'm Andy Golding, Director of Strategic Services here at Smart Freight Center, and I'll be your host for today. In this episode, we're exploring how large global shippers are driving decarbonization across complex supply chains, working with logistics partners and embedding sustainability into procurement and scaling low emissions solutions across global operations. Whether you're managing logistics, procurement, or sustainability within a large organization, this conversation will offer some practical perspective on how companies can really move from ambition to measurable impact. Joining me for this discussion is Frank Kressmann. Frank is the Director of Global Transport and Sustainability at Procter Gamble. Frank, thank you for being here today. Let's dive into today's conversation. And maybe to start us off, could you tell us a little bit more about Procter ⁇ Gamble and about your role within the organization?

SPEAKER_00 1:22

Yes, sure, and thank you for having me here. So Procter Gamble, or PG, as we say in short, is a global consumer goods company serving about 5 billion of consumers around the world every year, across categories such as fabric and home care, personal health, which includes aura care, baby care and family care, uh, grooming and beauty. We have some of the most trusted brands that if people maybe don't know what Bright and Gamble is, I'm sure many of most of the people know um some of our brands, which are to give some examples like Pempers, Pantene, Head and Shoulders, VIX, Gillette, Braun, RB, Oli, just to name a few of them.

SPEAKER_01 2:07

So five billion customers that you serve?

SPEAKER_00 2:11

Consumers.

SPEAKER_01 2:11

Consumers, consumers, correct. That's a lot of people. That's a lot of products. That's a lot of things that need to move around and get shipped. So as a global consumer goods company with a very large and I can imagine extremely complex supply chain, what has been PNG's most meaningful achievements so far in reducing emissions across your logistics supply chain operations?

SPEAKER_00 2:36

Let me start a bit back in my role. So in my role, I'm trying to advance transportation emissions reductions across our global supply chain. And I also provide the reporting of our transportation emissions. Now, in that role, I'm of course working with all our internal functions, our regional partners who are operating transportation in order to find the right way to remove translation emissions. We are working with external partners, with carriers, with associations like the Smart Trade Center, with academic partners, and try to find solutions how we can decarbonize transportation. And we are also supporting the, in larger view, the decarbonization of the whole translation industry because we think we need to move as an industry. Now, in um what has been our main focus? Now we have we are at the moment we are focusing on some of the most like well-known levers in reducing translation emissions, which is minimizing air freight, converting roads to intermodal shipments, maximizing asset utilization, using alternative fuels, biofuels and electric, and uh improving supply network design. With those measures, we have been focusing in the last years on the first three of them: uh minimizing air freight, converting mainly road to rail shipments, also some to sea shipments, and improving uh the utilization of our assets to make the trucks and containers more full. With those measures, we have been able to approximately reduce our transportation emission intensity by 8% in one single year. Wow. Now, going forward, we understand we also need to tap into the other technologies that I mentioned, converting to alternative fuels and also electric, so biofuels and electric shipments.

SPEAKER_01 4:40

That's it's really nice to hear about all of the efforts that you're putting in, all of the different things that you're doing, and also that you are seeing results, you're seeing an impact of this. But I have to ask you a question uh beyond regulation, beyond compliance, beyond doing this, because we have a regulatory box that we need to check, what motivates PG to take this leadership stance in freight decarbonization? And how are you translating that into day-to-day logistics and procurement decisions?

SPEAKER_00 5:11

So at PNG, we have publicly announced our greenhouse gas reduction ambitions. So we've said now drill down to the transportation sector, we've said we want to reduce by the year 2030 the trans finished product transportation emissions intensity by 50% versus our 2020 baseline, so 2020. And by the year 2040, we want to get to net zero emissions. Now, 2030 is four years away from from now. That feels like tomorrow for me. So I just mentioned the the main labs that we are currently um working on. So we have made a lot of progress using the um the strategies of reusing air freight, converging to our model, and um using our um assets to the full extent. Now, going forward, we see a big demand of uh making further progress with the the new, I call the new strategies, um, which we're also talking here with SmartFender, Smart Week a lot, which is uh using alternative fuels and electric shipments. Now, those technologies they are available, but they also come with a at the moment with a premium. So road electric and biofuel shipments, they are still a bit more expensive than the comparable shipments with diesel. So we need to work with the our industry partners, with our carriers, with associations like uh SmartFight Center, like our academic partners, um to make those, to remove those barriers of those strategies. And I think we're going to talk this a bit further in the conversation.

SPEAKER_01 6:54

Yeah, and you've just hit on something that's really important, which is collaboration, and that we we no single organization can decarbonize alone. It it will take collaboration across the entire value chain. So if we zoom in on collaboration across the supply chain, we know that decarbonizing freight is going to require strong collaboration across shippers, carriers, logistics service providers, technology partners. How is PNG working with its logistics service providers and within its logistics ecosystem to accelerate emissions reductions?

SPEAKER_00 7:29

Yeah, let me give you one example. So I completely agree. It's no company alone can decarbonize rate transportation. That the endeavor is just so big. So we need collaboration. Now, for us, a great way is to drive collaboration is working on those EU Horizon projects. In those projects, we are working with um normally in consortia, in larger consortia, with uh partners in that consortia, which is like a cross-section through the transportation industry. So there's really like an ecosystem in a um in a consortium. And the benefit of those, of working with those consortia and those uh European horizon projects is that I'm working with industry partners in those projects on a daily basis. I normally would not work together when we just talk about uh procuring freight transportation. I can give an example. We are at the moment um getting to a very interesting phase in the uh EU-funded project called Cephas, which is all about to demonstrate the feasibility of long haul, heavy duty, and cross-border of road electric haul. And we have just like a few weeks ago, in the context of that project, um, started to operate a daily shipment on battery electric vehicles from our DC and manufacturing plant in Mir in France to the Port of Saint-Bruges in Belgium. This is just a great way to learn in those projects.

SPEAKER_01 9:00

And what have been some of the most interesting learnings coming out of those projects so far?

SPEAKER_00 9:05

So, first of all, I have seen battery electric in the past, and let's say like half a year, a year ago, more in the context of this is technology we think we can use for heavy duty, but it's more for the short haul. And we knew, and it's it's known in the industry. I mean, battery electric on the big vehicles, the heavy-duty vehicles, the 40-ton trucks, the long distances across the border with all the different regulations we have uh in areas like in Europe, uh, and the increased weight of the vehicle of the GCS because of the batteries, that is a challenge. What I can tell so far, we are now still in a learning process because just a few weeks we've started operating the lane. But what I'm really amazed, I need to say heavy duty, long distance cross-border, um, and combined with mega charging, it is feasible, it is workable.

SPEAKER_01 9:59

I love that. What an amazing uh practical example of it, you've just said it's feasible, it's practical, it's workable. So, how do we scale that? And the the you know, the question that I want to ask is from your perspective, you now have this example from these corridor projects that you're working on. What are the biggest barriers to scaling this low emission freight solution or other low emissions freight solutions for that matter? And how do we scale them across global supply chains?

SPEAKER_00 10:29

Yeah, let me um use here another example that um we are working parallel. So I said we on the alternative fuels, I see like the two big pillars, electrification and biofuels. Um, we are also we know that because of the current infrastructure and the situation, it will not be possible um to and also the assets which are available. I mean, we cannot just start from 0 to 100% electrication. So I see biofuels as a very interesting technology because obviously um with Drop New Fuser HDO, it can run on existing equipment, and um it is an available technology, but it requires some additional steps. Now we also know that biofuel is a bit more expensive than uh diesel. Yeah, so we need to work on concepts, and here the Smart Freight Center supported book and claim framework is the right framework that we need. Um, why is the right framework? Because it allows the carrier to utilize and and operate biofuel in the locations where it's for the carrier most inexpensive to fuel. Most often they go like they buy it in bigger bulk and go through their pumping stations. But then, of course, they can only use the fuel in the context of their um their hub, their hub environment. But with Book and Claim, we can start, we can use, we can execute biofuels with the carrier. They consume the fuel, but they can allocate the environmental benefits to us via the book and claim. Now we just have uh worked out a in a collaboration with the carrier, with European carriers, and a verifying body, a system that allows us to tap into those low emission transports, but yet having also a um a very an audible and transparent way of claiming those environmental benefits. In that context, we have developed a biofuel SOP, which contains those three pillars. It's the policy that defines the rules on the feedstock that we allow for the transportation, the the governance process that we want, and also the reporting methodology. It has an operational guidance in which the the carry establishes a book and claim framework where can track the fuel that they have procured and consumed, and how much of them they allocate to the customer, which in that case would be to us, and also a scheme for a verifying body who assesses then the consumer volumes and the systems. This is a a standardized and uh practical approach that is yet flexible, and uh because once the carrier is qualified for a certain execution of certain lane, we can easily use that carrier and um make it work for several lanes. So it's it's very because of the standardization, it's quite easy to scale it up because of that uh standardization. We have brought it also to SmartFit Center, and we have just in the in December published a white paper on that because we really want to have other carriers and shippers uh being able to reapply and drive scale in that system of book and claim to use biofuels.

SPEAKER_01 13:48

Thank you for sharing that example. And also, I love that we have uh published this white paper together because somebody has to help make it easy for other people, somebody has to move the markets. And this action that you're taking, this white paper, is it's a proof of concept, really, of this is how we're doing it, this is how it's working, and this is how we can scale this. And when it's only when we scale it that we really get meaningful and tangible decarbonization benefits. You also spoke a lot there about book and claim, and I know that book and claim itself is a developing story, it is a massive opportunity in decarbonization, and it's really bold to see shippers like yourselves taking action in book and claim whilst we're still building out the standardization, and we know we know that we need to build the trust and credibility around book and claim because decoupling the emissions from the physical supply chain can feel complex. It's not actually all that complex, but it is a very meaningful opportunity to really ramp up and scale our decarbonization efforts. So I appreciate you sharing that that insight with us.

SPEAKER_00 14:57

You're welcome.

SPEAKER_01 14:58

You spoke about the role of standardization, we've spoken about collaboration. What are the what other aspects do you think are necessary to really drive the market and stimulate movement?

SPEAKER_00 15:16

So you mentioned standardization. Um yes, we have we have frameworks and standards. We have the greenhouse gas protocol as a as a framework. We have a ISO standard, the 14003, on how to report translation emissions. And those are standards are important, they define very clear and transmit rules, and it allows to compare translation emissions across the industry. So those standards are important. Now we know that those standards they don't evolve every other year. And there's a good reason for it, they need to be worked out like very carefully, and whatever comes to standard needs to be like really deeply discussed and clear that this is the right way to do. So standards don't evolve that quickly. And the ISO 1403 was published in April 23. This is three years ago, and this actually went at the Smart Week uh back in April 23, uh the book and claim framework was actually announced. So we have seen that book and claim and other um new technologies they are evolving much faster than those standards can evolve. And that is okay. Now, here is the industry coloration which comes into play. Because we as an industry, we need to take this mindset of those standards, take those like the mindset of how to report, how to create transparency, how to create audibility, and evolve this into industry standards. And this really requires the full industry, the trade association, like SFC, the carriers, the shippers, um, the service providers to work together and create quasi-marketing market standards building on the same principles as the reporting standards. So this way we can build trust, we can provide transparency, we can provide audibility. This for me is the way how we need to proceed as an industry. Technology is developing at a much faster speed. We don't want to wait for technologies. We need to adopt the new technologies. We understand that we we have made big progress on reduction, but we also understand we will not meet our ambitions if we don't adopt the new technologies. So we really need to work as an industry together in the mindset of the reporting schemes, um, using that level of transparency and audibility, but uh adopt the new technologies to allow for shippers and carriers to use it. We need them to reduce our greenhouse gas emissions.

SPEAKER_01 17:54

If that's not a great rallying cry, I don't know what is. We need to work together as an industry. Um and you're right, you're 100% right. We need to come together, and I do think that that is where organizations like Smart Freight Center and events like Smart Freight Week can really bring industry together. We also obviously have our shippers' circle at Smart Freight Center, which brings shippers together to navigate all of this complexity in a space where everybody is driving forward towards decarbonization. But we're also having this conversation from the perspective of the work is already happening and from the perspective of people who understand the work and understand what needs to happen. What about the people who are just getting started? And the for this, I want to ask you about the capacity building and education side of this. What is the role of training and internal capacity building in helping teams to really rally up and accelerate their efforts?

SPEAKER_00 18:55

Yeah, oh, that is a good question. Now, I could say the obvious capability building is very important, but there's actually much more behind than most of the people think. Many of the teams, operational teams, in logistics, purchasing, leadership teams, um, whoever's organized, whoever's involved in uh executing and making transportation decisions, those teams are making daily decisions. And as a company, we are shipping like daily hundreds of trucks. So we daily have to make in those teams decision on transportation, which mode to choose, if they're if you want to convert a transportation mode to another mode, if there are various options. The teams need to understand the emission tensity of those modes. This is not an this is not what people normally in the standard curriculum of training people in uh transportation operations purchasing. This is not part of the standard curriculum. Understanding uh emission tensity, understanding the impact of intensity and absolute emissions, understanding the impact that I'm doing with my decisions in my personal space on what at the end is landing in the company's reporting emissions report, that is something we need to train ongoing the organization. We need to treat emissions and emissions reductions with the same level of rigor as we treat any other business decision in the organization. And this needs to be trained, it's not falling from the sky.

SPEAKER_01 20:36

Oh, I love that. Can I can I frame that and make it a quote that we need to treat emissions and emissions reductions with as much rigor as we treat all other business decisions? And this really is where sustainability and emissions reduction and decarbonization need to become embedded in every decision that we make. And the role of education, exactly as you said, if if people don't understand how the how they make decisions and how those decisions impact overall emissions of the entire organization, we can't expect that they would make different decisions. And so we have to help people, we have to educate them, create that context, and it's only once they have that context, once they have that big picture thinking in which to operate, that they can make better decisions.

SPEAKER_00 21:25

I always say if you want to make the right decision, you need to understand what right looks like.

SPEAKER_01 21:30

I love that. I'm gonna frame that one too. If you want to make the right decision, you have to understand what right looks like.

SPEAKER_00 21:36

That's exactly how it is.

unknown 21:37

You're right.

SPEAKER_00 21:38

It sounds very simple, yes, and it's obvious. But it's but now when you see different transport modes, then the question is actually what do I need to choose now? What is there? I may make from a budget point of view this decision A, but how does this decision A look like from a emission point of view? Without a transparency, that decision will not necessarily be a good decision. And what does RAC look like? Exactly.

SPEAKER_01 22:01

Oh, that's such a great question. So, as the final question of this episode, I want a quick lightning round with you. So, a one-sentence sum-up. You've seen a lot of change happen. You've seen meaningful action in decarbonization take place. In the next three to five years, what are you most excited about in the world of freight decarbonization?

SPEAKER_00 22:27

So, first of all, looking to the next five to ten years. So, as I said, we have set our ambitions. We want to reduce across our operations, large transportation, greenhouse gas emissions by 50% by 2030. I said, we have done great progress, and I'm also proud of the progress that we have achieved. At the same time, as already said, we know that with the set of portfolio we have available today, it will be hard to make those ambitions. So it is very clear for me we need to continue to adopt the latest technologies. We need to drive biofuel electrification further. Electrification is a technology I'm really counting a lot on. Now we have made nice trials. We have done uh pilots and we try to get from pilot um to testing and then to scale once it works. But electrification also has its challenges when it comes to infrastructure. So over the next years, across the industry, and again, it's not something we can solve alone, it's an industry problem to solve. Um, we need to drive electrification, we need to increase the charge infrastructure. We also need to create uh accountability, particularly as a shipper, when we procure electric freight or any kind of freight as a scope three, which of us are scope three, category four emissions. We also need to make sure that we can have renewable electricity, um, that we get accounted for renewable electricity if we are shipping electric in scope three. And we need the smart fat center to play a big role in that process. It has been in since I'm on the job now, which is four years, it all the time has been a collaboration between the industry, with our partners, with our carriers, with associations. I don't see any point why this should go away. We need to continue the same level of collaboration. Those new technologies, they are interesting, they can help us on reducing further emissions, but they're not at the level of maturity as the technology that we already have at hand. I always say we have now 150 years of experience in optimizing and reducing cost and making the diesel engine available. We don't have another 150 years. We have much less. So the efforts and the endeavor we're embarking on is much higher than what we had over the last 150 years.

SPEAKER_01 24:56

So now's the time to put our heads down and get the work done and make change happen.

SPEAKER_00 25:02

We need to get the work done, we need to make change happen, we want to achieve our ambitions.

SPEAKER_01 25:07

Absolutely. Frank, thank you so much for joining me. I've really enjoyed this conversation from a shipper's perspective, and it's really nice to learn a bit more about what PNG is doing globally to reduce emissions.

SPEAKER_00 25:18

It has been a pleasure. Thank you for inviting me.

SPEAKER_01 25:21

Absolutely. If you would like to scale up your efforts in decarbonization, head to academy.smart freightcenter.org where you can access courses and a bunch of free educational media resources to help you on your decarbonization journey. Thank you for listening to this episode of Smart Freight Conversations. Until next time.