Green trucking is a $25B opportunity, retailers say
The trucking industry is getting greener — and this month, a coalition of 12 major producers and retailers wrote an open letter urging the Environmental Protection Agency to step on the gas, and implement swifter and stricter fuel-economy standards for the freight sector. The companies, which include Ben & Jerry’s, Organic Valley, General Mills (NYSE:GIS) and Patagonia, want regulators to mandate a 40 percent reduction in trucks’ fuel use by 2025 — a markedly more ambitious target than the government’s current plan to require a 36 percent reduction by 2027.
The companies argue that the stricter standard would slash U.S. emissions by an additional 40 million metric tons of greenhouse gases by 2030 — equivalent to permanently shuttering a dozen coal-fired power stations. Better fuel efficiency would also reduce the operating cost of heavy trucks by $0.21 per mile driven, for total savings of more than $25 billion a year. “We believe that stronger cost-effective standards make economic and environmental sense,” the companies said. “The availability of fuel efficient trucks is critical to reducing our carbon footprints as well as our fuel costs and ultimately cost-savings to the consumer.”
Whether or not the retailers get their way, America’s trucking industry is clearly charting a course for a more sustainable and fuel-efficient future. Truckers hauled more than 72 percent of all freight tonnage moved in the U.S. in 2007, according to the Department of Transportation, with freight companies shipping a total of 18.3 billion tons of goods. That total is expected to soar to 30.2 billion tons by 2050, creating ever more demand for fuel — and with heavy trucks already accounting for 20 percent of all fuel used in the U.S., increased freight traffic will create ever more demand for fuel-efficient methods of moving goods around the country.
Increasingly, too, it’s truckers, not Tesla-driving private motorists, who are the real champions of new fuel-efficiency technologies. Heavy trucks have a short operational lifespan, especially the high-mileage trucks that account for the bulk of the sector’s fuel use, with most long-haul trucks ready for replacement within just three years. Over that period, trucking companies typically spend about five times as much on fuel as they originally spent on the truck itself — and that, in turn, means that investments into more fuel-efficient trucks can usually pay for themselves in a matter of months. “History has demonstrated that the industry is ready and willing to accept new technologies that provide fuel economy benefits, as these can translate into competitive advantages in the market,” asserts a recent Department of Energy report.
The big question is less whether truckers will embrace fuel-efficiency technologies than which specific technologies will succeed and which will fail. So far, the industry has focused on incremental upgrades: the adoption of less viscous motor oils, for instance, has allowed trucking companies to boost fuel efficiency without making major capital investments in new trucks or engine technologies. More aerodynamic bumpers and wing-mirrors can similarly make a decent dent in truckers’ overall fuel usage, as can the use of lightweight suspension systems and smaller, less cumbersome fuel tanks. That approach has given rise to what’s known as a “total vehicle” approach to fuel efficiency, with everything from tires to transmissions being poked and prodded in a bid to eke out new efficiencies.
To achieve the kinds of improvements called for by the federal government and the retail sector, however, truckers will need to take more drastic action. One possibility: switching diesel-powered trucks for natural-gas-powered haulers, which are theoretically cleaner and cheaper than diesels, but have so far failed to win a large user-base in the U.S. “For many fleets, switching a portion of their diesel-powered trucks up for replacement at the end of their trade cycles with natural gas-powered trucks just makes good business sense,” insists Andy Douglas, Kenworth Truck Co.’s national sales manager.
Another potentially promising approach: the use of highly automated trucks capable of driving more efficiently than any human trucker can manage. That might sound like science fiction, but automated trucks are already widely used in the mining industry, and McKinsey recently predicted that highway freight carriers would play a key role in bringing automated vehicles into the mainstream. Indeed, a coalition of six European manufacturers including Daimler (ETR:DAI), Volkswagen’s (ETR:VOW3) Scania division, and Volvo (STO:VOLV-B) recently sent several convoys of semi-autonomous trucks on a pioneering road trip, demonstrating WiFi-based technologies that allow trucks to travel in close formations known as platoons. By riding in one another’s slipstreams, officials say, the trucks are able to reduce their collective fuel consumption by as much as 10 percent.
Some analysts expect the current oil-price crash to slam the brakes on truckers’ efforts to improve efficiency, with a decade of efficiency-focused innovation giving way to competition based on speed of delivery. “The emphasis within the entire transport system is shifting from minimizing (fuel) cost to maximizing speed and convenience,” writes Reuters market analyst John Kemp. In the long run, however, fuel costs are expected to continue to spiral upwards, and federal regulations will ensure a continued push for fuel efficiency in the freight sector. For the freight industry and investors alike, it’s a safe bet that truckers will continue to give a warm welcome to both incremental efficiency improvements and paradigm-shifting new technologies.
Companies to watch
* Daimler’s Freightliner unit is testing its prototype self-driving “Inspiration Truck” in the Nevada desert. “We have to manage the growth of our industry in a way that works for the environment and the economy. And that’s exactly what autonomous trucks can do,” says Daimler trucking chief Wolfgang Bernhard.
* Rhode Island startup eNow is working on solar technologies that could handle many functions — such as lifting gates or cooling the cabin — for which big rigs currently rely on their diesel engines. Eliminating the need to keep trucks idling could reduce fuel use by 8 percent, saving about a gallon of fuel per hour, and could also save trucking companies thousands of dollars in maintenance costs by reducing wear and tear on engine systems.
* Cummins (NSE:CUMMINSIND)has been spearheading the DoE-funded SuperTruck program, which uses waste-heat recovery systems to boost the power output of diesel engines, with prototypes delivering up to a 75 percent fuel-economy improvement relative to a 2009-vintage diesel truck.
Ben Whitford is the US correspondent for The Ecologist. He has written for the Guardian, Newsweek, Mother Jones, Slate, and many other publications.