Airfreight giants DHL Express and FedEx announce big US SAF deals

Two of the world’s largest airfreight companies, DHL Express and FedEx, have announced fresh deals to buy sustainable aviation fuel in the US, advancing separate commitments that by 2030, SAF will comprise at least 30% of their jet fuel. In the biggest transaction, DHL will procure 83 million gallons (240,000 tonnes) over three years from US energy major Phillips 66, initially for delivery to Los Angeles International Airport and later to other Californian gateways including San Francisco International Airport. Meanwhile, Memphis-based FedEx has started using SAF at Chicago O’Hare International and Miami International airports, more than doubling its US uptake. In Chicago, it has procured 1 million gallons of neat SAF from Air bp, delivered as blended product, while in Miami it has signed with Associated Energy Group (AEG) for 3 million gallons of blended SAF. These two deals follow a 3 million-gallon SAF purchase at Los Angeles in May.

The DHL Express-Phillips 66 partnership is one of the biggest SAF deals for either a US producer or within the air cargo industry, the companies claim. They estimate the total SAF consignment, to be produced at the Rodeo Renewable Energy Complex, north-east of San Francisco, will reduce the airline’s lifecycle greenhouse gas emissions by about 737,000 tonnes over three years, compared to flights using conventional jet fuels.

Initial supplies of the fuel, produced from feedstocks including used cooking oil, fats, greases and vegetable oils, will be sent to Los Angeles International Airport, DHL’s main western US gateway, with future deliveries planned for other Californian hubs it serves, including nearby San Francisco.

The deal will also support DHL’s GoGreen Plus programme, through which customers can compensate for the emissions of their air freight shipments by contributing to the cost of decarbonisation technologies and SAF used to power DHL flights.

The Rodeo Renewable Energy Complex, part-powered by solar energy, produces SAF and renewable diesel from feedstocks including waste oils, fats, greases and vegetable oils. It has annual capacity to deliver up to 150 million gallons of neat SAF.

“By securing a reliable supply of SAF, we are not only reducing our carbon emissions and those within our customers’ supply chains, but also setting a precedent for the logistics and air cargo industries in the US,” said Travis Cobb, EVP Global Operations and Aviation at DHL Express.

“This agreement between Phillips 66 and DHL demonstrates our shared commitment to SAF market leadership and credible action in the growing SAF industry,” added Brian Mandell, EVP Marketing and Commercial for the fuel company.

Meanwhile, in addition to its 2030 commitment to use 30% non-fossil jet fuels, FedEx is targeting 2034 as the deadline for a 40% reduction in emissions intensity from its fleet of close to 700 aircraft, compared to a 2005 baseline.

Its two new SAF deals, for 1 million gallons of neat product from Air bp in Chicago and 3 million gallons of blended product from Associated Energy Group (AEG) in Miami, more than doubles the scale of the company’s May commitment in Los Angeles, its first in the US.

In that deal, FedEx committed to procure 3 million gallons of neat SAF delivered as blended product from renewable fuel producer Neste. In all three procurements, the minimum SAF blend ratio is 30%.

FedEx moves an average 16 million packages each day across its global network of 650 airports in 220 countries, using aircraft ranging from short range Cessna Caravan cargo planes to long-haul Boeing 777 freighters. Its commitment to increase the use of SAF in the US coincides with a surge in the company’s volumes of domestic package freight.

“Each executed agreement signals to fuel producers that airlines are willing and eager collaborators to help scale the SAF market,” said Karen Blanks Ellis, Chief Sustainability Officer and Vice President of Environmental Affairs for FedEx. “The aviation industry still faces a mismatch between available SAF supply and carriers’ demand, but we are encouraged by the early signs of increased SAF production globally this calendar year.”

FedEx is the first US-based all-cargo airline to source and use SAF at Chicago O’Hare International Airport, an initiative which Blanks Ellis said was supported by existing fuel infrastructure at the airport and “enabling policy conditions at the state level”.

The Miami SAF procurement supports major international operations, with daily freight flights to and from markets across Latin America and the Caribbean, where, in a range of locations, FedEx is also increasing the use of electric delivery vehicles.

And in Los Angeles, the use of blended SAF from the May deal with Neste will represent around 20% of jet fuel used annually by FedEx at that hub.

Although this year’s three SAF deals in the US are new for FedEx, use of the fuel is not new to the airline. In 2018, it participated with Boeing in the aircraft manufacturer’s ecoDemonstrator technology testing programme, in which one of its Boeing 777 freighters became the first commercial aircraft to operate with 100% SAF in both engines during test flight in the US, which were also used to evaluate a range of new technologies.

Through a mix of aircraft fleet modernisation and fuel conservation initiatives undertaken last financial year, FedEx said it achieved its next-decade target of a 30% reduction in aviation emissions intensity, compared to 2005, and claimed a reduction of 140 million gallons of jet fuel, reducing not only emissions but shaving $400 million off operating costs.

“Our aviation network represents the largest amount of FedEx fuel use globally and, as a result, is our biggest opportunity to drive down emissions,” the company said.

“However, this technological reality means that reducing overall fuel consumption and increasing operational efficiency must go and-in-hand with alternative fuel uptake in order to reach emissions goals as an industry.

“As we work toward our goal of carbon-neutral operations by 2040, we need the SAF market to continue to grow to meet industry demand.”

Photo: DHL

Tony Harrington
Correspondent