Wal-Mart reaching fuel goals for truck fleet: exec

A sign for a Wal-Mart store is seen in Rogers, Arkansas June 5, 2008.

WASHINGTON (Reuters) - Wal-Mart Stores Inc is on track to reach its goal of increasing the fuel efficiency of its truck fleet by 25 percent this year and has already reached a 20 percent improvement, an executive said on Friday.

The world's largest retailer also plans to introduce hybrid trucks into its fleet of more than 7,000 trucks later this year, said Matt Kistler, senior vice president of sustainability for Wal-Mart.

"With gas at $4 a gallon, we're keenly working on reducing costs," Kistler said at a conference on climate change at the British Embassy.

Kistler said to reach the goal of increasing fuel efficiency, Wal-Mart has reduced the size of its diesel tanks to lighten the truck load and has outfitted the trucks with more fuel-efficient tires.

Wal-Mart has worked on more high-tech initiatives such as a system that allows a driver to turn off the engine but keep the refrigeration component running.

"I think we're on plan to hit the target" of 25 percent increased fuel efficiency by the end of 2008, Kistler said. "We're hoping to roll out some more things."

Wal-Mart has set a goal of one day using only renewable energy and creating zero waste, and it has challenged its suppliers to remove nonrenewable energy from their lives.

Because of its status as the world's largest retailer, Wal-Mart is considered one of the few retailers with enough heft to make direct changes to global energy consumption.

While the efforts may help the environment, they are also designed to help Wal-Mart's bottom line.

Wal-Mart has said it would save $3.4 billion by reducing packaging 5 percent by 2013.

Kistler said that 5 percent threshold is "a very doable" goal and that some suppliers have already exceeded that goal, citing new milk jugs being rolled out at its Sam's Club stores on Friday that reduce plastic and resin by more than 5 percent.

He said rising raw material costs are an extra incentive to use less packaging. "It will allow us to reduce the size and use less raw materials while maintaining the same price position," he said.

Regarding improvements to its transportation, Kistler said Wal-Mart will have several hybrid trucks on the road later this year but declined to reveal a timeline for a broad rollout of the more fuel-efficient vehicles.

He said the company is not moving as fast as it could to develop the hybrid trucks because technology is evolving in the sector so rapidly and the cost of new parts is going down.

"We don't want to be stuck with technology that's not cutting edge," he said.

The fleet improvements come as fuel costs hit record highs, crimping retailers' profits. In May, Wal-Mart said higher transportation costs would remain a "potential headwind" for the rest of the year, and Chief Financial Officer Tom Schoewe said he was worried about the ongoing jump in fuel prices.

(Editing by Gary Hill)