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FedEx Adds Fuel Efficient Vehicle – Analyst Blog

One of the largest package delivery companies, FedEx Corp. ( FDX ) has reportedly added 1,900 fuel efficient vehicles to its fleet. We believe the company’s focus on increasing such vehicles remains concurrent with its target of making its fleet 30% more fuel efficient by 2020.

The company raised the fuel efficiency standard by approximately 50% from the 20% target set in 2008. We believe the company’s efforts will not only translate into sustainable transportation solutions for its customers, but will also improve

In 2012, the company released its fourth annual Global Citizenship Report, in which it highlighted its efforts to achieve a sustainable freight transportation system. The report highlighted that FedEx targets reducing aircraft carbon emissions to 30% by 2020 apart from meeting at least 30% of its jet fuel requirements through alternative fuels by 2030. We believe that the growing environmental awareness among corporate houses like FedEx stems from the stringent actions taken by the regulatory authorities to restrain environmental pollution.

The U.S. federal and state governments as well as regulatory bodies like the U.S. Department of Transportation (DOT) and National Highway Traffic Safety Administration (NHTSA), as well as the U.S. Environmental Protection Agency (EPA) have taken several measures to curb global warming.

One of these key measures is the establishment of the National Program in 2009 – an agreement between the federal government, state regulators, and the auto industry. This is a two-phased program to set standards for establishing fuel efficiency improvements in 30 years, including the first-ever global warming pollution standards for light-duty vehicles.

The key highlights of the first phase (2012-2016) are setting the global warming pollution standards of 250 grams per mile, on average, for model year 2016 vehicles. In addition, NHTSA requires fuel efficiency standards of an average of 34.1 miles per gallon in a new vehicle. Cumulatively, these measures are expected to translate into 23% improvement in new vehicle pollution standards, representing an average annual improvement of 5% by 2016.

The phase two (2017-2025) of the National Program covers the standards for light vehicles, finalized by the EPA and DOT in Aug 2012. These standards require reduction in green house gas emission by cars and light trucks to 163 grams per mile in 2025 that would lead to fuel efficiency of 54.5 miles per gallon.
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