UPS Sees 40% Savings by Switching Long-Haul Fleet to Natural Gas
http://www.businessweek.com/news/2013-07-25/ups-sees-40-percent-savings-by-switching-long-haul-fleet-to-natural-gas
Posted on 08/26/2014 6:14:13 AM PDT by thackney
...Higher purchase prices compared with diesel trucks, improved diesel fuel economy and continued scarcity of fueling stations are damping natural-gas-powered truck demand. About 10,480 of the heavy-duty trucks are expected to be sold this year, up 20% from the 8,730 sold last year, according to Power Systems Research. However, some forecasters had expected sales to about double to 16,000 vehicles this year amid the trucking industry's enthusiasm for natural gas a year ago.
What happened? A big roadblock remains the premium for a heavy-duty gas truck—$50,000 more than the about $150,000 for a new diesel-powered truck. In theory, the payback for that higher price is recovered from fuel savings of between $1.60 and $1.70 for the gas equivalent of a gallon of diesel. Paybacks can average four years considering the average truck travels 125,000 miles a year.
But truckers say the fuel savings isn't all it seems. Mileage from a natural-gas-powered truck is about 20% less per energy equivalent than a diesel truck, meaning a gas truck consumes the same amount of fuel for 200 miles as a diesel truck uses for 240 miles. Moreover, fuel costs—as well as any natural-gas fuel savings—are typically passed on to a trucking company's customers.
"If you're paying $1 per gallon less for fuel, they'd want that money for themselves, but you need that to pay off the equipment," said Mike Card, president of Combined Transport Inc., which operates a fleet of 500 diesel trucks specializing in hauling heavy or wide cargoes, such as wind energy towers.
At current fuel prices, it takes about four years to recover their investment....
Large fleet operators typically replace their vehicles every three to four years, leaving little time for them to benefit from the lower fuel costs of natural-gas-powered trucks.
(Excerpt) Read more at online.wsj.com ...
I imagine it’s not wildly different, but I wonder just how many diesel engine techs know enough about natural gas powered engines to service them correctly. Retraining could be another cost of bringing NG vehicles into a fleet, along with stocking any parts that are different from the diesel rigs.
The economics work only if trucking customers are willing to pay a premium to have their stuff transported in a less-polutting vehicle. Which they aren’t.
Or if the government provides a subsidy for purchase.
Or if the government imposes a higher tax on diesel to make up the difference.
Or the government mandates natural gas trucks.
In my area of NE Texas we have two of these CNG filling stations. The current price is $2.04 a gal, there are at least two companies in the area who’s entire fleets run on CNG. Since I work in Propane they are in direct competition with my industry but right now its just a distraction.
They have a long way to go before it’s a viable alternative for OTR trucking companies.
Ping.
I would expect with more growth in this market, that premium will come down with proven designs and some competition.
WHAT'S NOT TO LIKE?..........
I suppose there are many fewer natural gas filling stations. I suppose you have to fuel up twice and it might be hazardous to have Diesel and natural gas fueling in the same place. I suppose that most are not interested in the extra hassle and extra costs.
UPS Sees 40% Savings by Switching Long-Haul Fleet to Natural Gas
http://www.businessweek.com/news/2013-07-25/ups-sees-40-percent-savings-by-switching-long-haul-fleet-to-natural-gas
I don't understand that. Why would a common facility increase hazards that would exist at two separate facilities?
Fuel Cost Savings is the driving factor.
The diesel fuel is already more expensive than natural gas.
Yes. I meant an additional tax on diesel sufficient to make it cost-effective to buy a natural gas truck.
Yes. Getting the most efficiency from the engine will require this.
http://www.cumminswestport.com/natural-gas-academy-videos/engines
As soon as truckers convert the government will get greedy and raise natural gas taxes to “fix the highways for the kids.”
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