Fossil fuel consumption associated with transportation represents more than 50 percent of all REI's GHG emissions, half of which is related to moving people and the other results from transporting products. Moving people includes business travel and employee commuting. The transportation of products includes shipping goods from manufacturing facilities to our distribution center and then to our stores. This figure also counts the emissions generated from shipping products directly to our Internet and catalog customers.

Moving Products—22.8% of total GHG emissions

Transporting gear and apparel from factories around the world to our stores and members is a complex task. To create our GHG inventory, we made a judgment about who owns the emissions with each leg of the journey. For reporting purposes, we attribute the transportation impacts to whoever owns the goods at the time or whomever schedules and controls the transportation. For example, when a vendor ships products from their location to our distribution center, we take responsibility because we pay for shipping and control the method and timing of deliveries. We also include the emissions resulting from sending product by truck from our distribution center to stores, or when we fulfill an Internet order by shipping a package via a carrier such as UPS. This approach means REI assumes responsibility for emissions in three areas: goods inbound (for vendors or factories to our distribution centers or stores) ; intra-company transfers (shipments from our distribution center to our stores, between stores, or from stores back the distribution center); and direct fulfillment (Internet and catalog sales shipped directly to customers).

Increases in REI's GHG impacts could potentially result from the growth of our business, in particular increasing the number of stores and factories that supply our goods, and additional use of air transport to fulfill direct next day customer orders. On the other hand, the 2008 opening of our distribution center in Bedford, Penn., which provides the distribution point for stores East of the Mississippi, will help to reduce total truck miles, resulting in less GHG emissions and lower logistical costs. In 2007 we will work to identify consistent metrics and methods to calculate our transportation impacts, and develop specific action plans with milestones to address them.

Goods Inbound:

This category has three sub-sections:

Sea shipments. This calculation is primarily shipments of REI brand gear and apparel from overseas factories to U.S. ports and then to our distribution center. We computed the impact of container loads based on the container-miles. We used CO2 per container mile data published by the clean cargo group accounting for the average of all container ships.

Truck transportation for vendors to our distribution center is computed by a ton-mile calculation used the vendor location, distance of the shipment and the freight weight to arrive at a total ton-miles of freight. The CO2 impact per ton mile is derived from the average values published for "less than truckload" freight shipments consistent with our method in inter-company transfers.

Direct delivery to stores from vendors occurs via parcel post and the CO2 impacts have been computed based on total ton-miles of freight multiplied by the average impacts of parcels computed in the same way as our direct fulfillment section.

Intra-company transfers:

This category is dominated by less-than-truckload freight transportation of goods from our distribution center to our retail locations around the country. We do not own a truck fleet, but contract for common carrier freight services. This category also includes the occasional transporting of goods between stores and shipments back to the distribution center and the impacts of using our vans to move people and mail between facilities.

Our method of calculation is to measure total tons of cargo, number of deliveries and the distance from the distribution center to each store. We use these factors to compute a total freight "ton-miles" traveled. National average truck fleet data for fuel mileage (7 miles/gallon) and truck hauling weight) along with a standard conversion from diesel fuel gallons to pounds of CO2 (22.2 pounds/gallon) This gives us a factor for pounds of CO2 per freight ton-mile. Multiplying our total freight ton-miles by this factor gives a reasonable calculation of our CO2 impact.

With the opening of our East Coast distribution center, we anticipate emissions to decrease in this category in 2007 due to a reduction in truck miles. In addition, we hope to benefit from new packaging solutions aimed at reducing packaging weight. Over the long run, we hope to work with freight companies that utilize emissions reduction solutions, such as alternative fuel vehicles.

Direct Fulfillment:

This category includes fulfillment of customer orders placed via the REI catalog or at REI.com or REI-OUTLET.com. The majority of these shipments go through the United Parcel Service or other carriers such as FedEx or the U.S. Postal Service. To compute our CO2 impact, we separated shipments between ground and air transportation.

For ground shipments, we assume a delivery directly from our fulfillment center in Sumner, Wash., to the customer. While this neglects the possible shipment routes to and from the carrier's logistical system, we think it is a fair representation of the distance traveled. To simplify calculations, we have assumed the average shipping distance is 1342 miles (delivery to Denver). We computed the total CO2 impact based on our average package weight shipped for that distance and used the same CO2 factor computed for truck delivery.

For shipments by air, we neglected any ground component because the air impacts are so large that it makes the ground portion negligible. To account for the CO2 per air mile, we used the passenger air travel factor developed by the Climate Neutral Network. However, we adjusted the impact for the average weight of a package compared to a person. This may overstate the impact because cargo transportation is more efficient in terms of pounds per aircraft, but it has the benefit of consistency with our other reported metrics. In 2007 we may revisit this calculation and readjust our baseline based on feedback from stakeholders.