06/12/2010

Fleet operators pushing toward 'green'

Industry tries to balance cost, efficiency against environmental issues

If the average Joe wants to reduce his environmental impact, he might switch to a car that uses less gas or one that runs on alternative fuels.

But what would be the environmental impact if the people who operate hundreds, even thousands, of vehicles decided to do the same?

Turns out, a number of them are doing just that.

Driven in part by tougher federal and state emissions rules and in part by the recession and uncertain fuel prices, many major companies have decided it's good business to reduce the environmental impact of their fleets, industry experts say. As a result, owners of many of the nation's largest commercial fleets are experimenting with alternative-fuel vehicles.

Telecommunications giant AT&T Inc. , which is headquartered in Dallas and has the nation's largest commercial fleet with more than 77,000 vehicles, is in the early stages of a 10-year, $565 million initiative to replace more than 15,000 vehicles with more fuel-efficient models, including those powered by compressed natural gas or other alternative fuels .

Wal-Mart Stores Inc., which reportedly operates more than 7,000 tractor-trailer trucks, is testing diesel-electric hybrid trucks and is retrofitting 15 trucks to run on reclaimed waste cooking grease collected from its stores.

United Parcel Service Inc., which operates more than 72,000 vehicles in the United States and more than 100,000 globally, has more than 2,000 alternative-fuel vehicles in its fleet, said Mike Hance, vice president of automotive engineering.

The trend is "big and hot and all over the place," said Annie Protopapas , an associate research scientist with the Texas Transportation Institute at Texas A&M University.

The trucking industry is a huge player in the economy. Calculated by dollar value, long-haul trucks transport 75 percent of the nation's goods (calculated by weight, it's 66 percent), according to the Center for Transportation Research at the University of Texas.

That also means delivering goods plays a significant role in air pollution; the transportation sector accounts for 28 percent of U.S. greenhouse gas emissions, according to the Environmental Protection Agency.

To address those issues, "companies are increasingly coming up with sustainability plans that factor into all of their processes," Protopapas said.

Big fleets, big impact

Although many alternative-fuel vehicles are still in the guinea pig stage, said Robert Harrison, deputy director of UT's Center for Transportation Research, fleet operators are starting to ease them in.

For 2008, the most recent year for which there are complete statistics, there were 775,667 alternative-fuel vehicles in use in the United States. About 129,000 of those were medium- or heavy-duty vehicles — including vans, trucks, delivery trucks, tractor-trailers and buses — according to the Energy Information Administration . The number of alternative-fuel vehicles was projected to rise to 1.3 million last year.

UPS' decision to invest more heavily in alternative-fuel vehicles is emblematic of the trends.

Hance said UPS decided to be a leader in alternative-fuel fleets because sustainability "is a huge issue for our company and for our community."

"We do feel because we are the largest fleet and we do have the most alternative-fuel vehicles ... we're the first on a lot of these things, and we take a lot of pride in being first," Hance said. "So we take that pretty seriously, always trying to be No. 1 in those areas, with the quantity and also with the diversity of our fleet."

Hance said the company is experimenting with a variety of vehicles, including those fueled by compressed natural gas, propane and liquid petroleum gas, and also has several dozen hybrid and all-electric vehicles. The company has started experimenting with hydraulic-hybrid vehicles that use pressurized fluid as an additional power source to the engine, Hance said.

"In general, just like there is no one path to get overall good health, there's no one path to get to sustainability for our vehicles," Hance said. "We try to deploy as many alternatives as we can, because there is no miracle cure right now. There are a lot of solutions, but not one that is the clear-cut winner for our future."

UPS has 127 alternative-fuel vehicles in operation in Texas, including 30 hybrid electric vehicles in the Austin metro area, and Hance said there are plans for more compressed natural gas vehicles in the state in the near future.

Hance said Texas is "one of the top states in the country" in encouraging companies to use alternative-fuel vehicles. The state offers a number of incentive programs, including grants to companies that replace diesel fleet vehicles with alternative-fuel or hybrid electric vehicles and grants for companies that replace diesel vehicles with vehicles using liquefied petroleum gas .

"It's really a tribute to the Texas state government officials to help support our efforts," he said. "It's really a partnership; it's UPS, it's the state and local officials and the manufacturers all kicking in a little to make (alternative-fuel vehicles) viable."

Efficiency of space counts, too

Alternative-fuel vehicles are not, however, the only way to make a fleet greener. Another approach is illustrated by the H. E. Butt Grocery Co., the dominant supermarket chain in Central Texas.

San Antonio-based H-E-B has about 400 tractor-trailer trucks in its fleet, and the company has found the best way to reduce its environmental impact is to cut down the number of miles its trucks are on the road, said Mike Moynahan , H-E-B's distribution assets design manager.

H-E-B has a small number of alternative-fuel vehicles, but the company has focused on finding more efficient ways to load its trucks, which results in fewer trips, Moynahan said.

"You say, 'How does that make you green?' Well, if you're running less trips, obviously you're running less fuel," Moynahan said.

He said by using more efficient packing procedures, H-E-B has increased the usable space in each trailer by 17.1 percent, and at the same time has decreased the average load weight by 16.4 percent. The result has been a 14 percent drop in the number of weekly trips, Moynahan said. The company makes about 6,500 delivery trips per week, he said.

"If you're doing that, what you've done is a reduction of fuel, a reduction of time that you're on the highway and the percent of vehicles on the road," Moynahan said. "If you are doing that, you are doing an awful lot toward eliminating miles and controlling expense and also making sure you are as green as you can get."

Those types of tactics are being used by a number of fleet operators, Harrison said.

"They're all doing it," he said. "The logistics industry never sleeps; they're always thinking of ways for how to do this more efficiently."

The green supply line

A key part of the shift to more environmentally friendly transportation is, of course, the availability and viability of alternative vehicles.

Among the companies involved in producing alternative technology is Austin-based Valence Technology Inc. , which makes lithium-based rechargeable batteries. The batteries can be used for a number of applications, but automotive is becoming a focus, said Robert Kanode , Valence's president and CEO .

Valance recently received an order to develop energy systems for 16 hybrid-electric buses for school districts in Ohio and Wisconsin . The company's applications are also in use in double-decker

hybrid buses in London and in electric and hybrid electric delivery trucks, Kanode said.

Kanode said for fleet owners and for alternative power providers, the key is to ask, "Where are the logical first customers that will pay the extra money for higher-cost new technology early, in lower volume, before the volume increases and the price goes down?"

For transportation to truly evolve in the United States, Americans need to take a look at what's happening in Europe, Kanode said.

"The European community as a whole, they are almost deeply as concerned about lower fuel cost as they are about the environment," Kanode said. "They think of things in carbon per person. In other words, if they can put 30 people on a bus, a fully loaded bus \u2026 that's the way they think, versus one person in a car. So all of those outlying metrics in society that would drive them to mass transit transportation and more efficient loading of transportation, they already have that. We don't."

Although federal and state regulations and incentives are encouraging fleet operators to be more environmentally conscious, there are still bottom-line issues that have kept the process from picking up speed. Alternative-fuel vehicles and cleaner-burning diesel engines are still more expensive than traditional vehicles.

"This stuff doesn't come cheaply ... so it does knock through to how much it costs to move freight," Harrison said. "That's going to marginally increase the cost of transport. And that's as it should be. I think we've had transportation much too cheaply, and we should be paying for social costs. In my view, we should be internalizing those and raising transportation costs, which is of course difficult for all of us as consumers, because it means some things are slightly more expensive. But it's a more efficient way of allocating resources than just allowing social costs like noise and air pollution to manifest itself in other ways, like medical costs and things like that."

For major fleet operators to continue to shift to alternative-fuel vehicles, more work is going to have to be done to increase efficiency and lower costs, Harrison said.

"I suppose it's a bit like university research — the (scientists) in the lab scratching their heads and inventing things. Then it goes up to the board, and the board says, 'Well, let's try this; let's do a pilot.' So they build a pilot in the lab. Then they say, 'We need a guinea pig," Harrison said. "And that's where we're at, in my view, with the current situation. There's no point in making hundreds of the vehicles, because they're still at a very early stage, and there needs to be guinea pig, fundamental testing of these to find out what's working and what's not before you do any of the cost (estimates)."

Protopapas of Texas A&M, however, said in the long term, it still makes sense to shift to alternative-fuel vehicles if "the operators are large enough to be able to absorb the high upfront capital costs."

"Due to economic competition and the perpetual drive to reduce operating costs, freight shippers and carriers already have significant incentive to minimize fuel costs and thereby (greenhouse gas) emissions, which are second only to labor costs and increasingly volatile," she said. "In the long term, they do realize substantial cost savings."

 

- Barry Harrell

 

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