The trucking industry is going through an unprecedented time of change.
While this year's lockdowns demonstrated the world's reliance on trucking for critical groceries and e-commerce deliveries, the industry is also facing increased pressure to lower its emissions and adopt new technologies such as electric trucks and autonomous tech.
For commercial trucks, one of the best-known brands is Ryder, the almost 90-year-old Miami-based company that provides trucks and truck services for its more than 50,000 customers. While the bulk of Ryder's close to 300,000 commercial vehicle fleet runs on diesel, the company operates around 900 alternative fuel vehicles, including 29 electric vehicles. Two years ago Ryder announced a 1,000 electric vehicle purchase order for FedEx.
GreenBiz (virtually) sat down with Ryder's chief technology officer and vice president of new products for its fleet management services, Richard Mohr, to chat about how Ryder is making the transition to a cleaner fleet, including an electrified future. Mohr says: "It’s one of the most innovative times in the commercial trucking industry in the U.S. and that’s going to increase in the future." This interview has been lightly edited for length and clarity.
Katie Fehrenbacher: Where is Ryder now in 2020 in terms of the fleet and new technology?
Richard Mohr: We’re still primarily a diesel fleet just like the rest of the U.S. when it comes to heavy duty trucks. EV specifically, as a segment of alternative fuel, is probably the newest of all the alternative fuels in the U.S. We have a long history with natural gas as a low emissions fuel in the U.S. on the tractor side. So from that standpoint we’ve been comfortable with maintaining alternative fuel vehicles for a long time.
What’s different about EV is it comes with its own set of challenges. Where EV comes into play, there’s a lot more software and networking capabilities that need to be put into place to be able to run electric vehicles effectively. It’s going to become more important, from a fueling standpoint, understanding the state of charge of what those vehicles is and what the state of charge that is going to be needed to operate your business.
That’s kind of the now and what we’re looking at and certainly what we’re investing in for resources and partnerships to prepare for that transition in the U.S.
It’s one of the most innovative times in the commercial trucking industry in the U.S. and that’s going to increase in the future.
Fehrenbacher: When you look at the state of the electric truck market today, do you feel like it is breaking into the mainstream or is it still in the early stage research and development phase?
Mohr: It’s certainly in its early infancy. It’s well behind the automotive segment on EVs. You only have a couple EV vehicles [trucks] that are in operations in the U.S. right now.
Certainly, every OEM, traditional and non-traditional, has a game plan on how they’re going to get to production. Certainly you’re going to see this phase in over the next couple of years.
We think that final-mile light duty is certainly the first segment that you’re going to see the sooner growth in, because it fits the use case well with lots of start-stop, short and repetitive routes. What you’re seeing in the press releases [from Ryder] is us starting to pilot those light duty vehicles. Specifically the Workhorse units that we’re piloting in California right now and the units we’re getting from the traditional OEMs, those are light duty in nature.
We’re piloting an electric tractor right now in California, but all of that is R&D and trying to determine duty cycles and usage of those vehicles and range and what applications start to make sense.
It’s certainly coming. You’re starting to see a lot of the OEMs make significant investments in this because they know that there’s going to be place for this product among other products that they sell whether its traditional ICE products or natural gas products or what they’re seeing with the entrance to electric vehicles. It’ll certainly pick up steam but it’ll take awhile for us to get there.
Fehrenbacher: What is the strategy of working with startups in that way?
Mohr: We have the luxury of being fairly agnostic when it comes to OEMs that we deal with. We’ll deal with OEMs that our customers want to use that product. But I think in the beginning, we’re trying to get a mix of traditional and non-traditional OEMs to learn.
There’s a lot of innovation that is happening on the non-traditional side. You’re seeing EV companies with composite bodies and trying to lower the weight of those vehicles to allow for the batteries. So you’re seeing a lot of innovation that will end up lending itself to the traditional OEMs and how they change their manufacturing to accommodate for electric vehicles.
Our biggest issue is being able to service vehicles. We want to make sure that for companies that we partner with, we have ample access to parts to be able to service those vehicles and maintain uptime on those vehicles for our customers. That is one of the biggest decision points when we’re working with OEMs.
Fehrenbacher: Are there goals or targets about introducing lower emission fleets for Ryder?
Mohr: Not specifically on EVs right now. We do have goals around our corporate sustainability. That includes everything from what we do with oil and water and waste products.
The reason why it’s difficult to predict [EVs] right now is because we don’t know when you’re going to see large tranches of vehicles available to be deployed into the U.S. I can’t even tell you right now how many units to anticipate being available on the market that are zero-emission EVs. No one knows right now. I can give you my best guess based on all of the OEM relationships I have.
I have some internal goals of what I’d like to get to this year and next year from a charging infrastructure and vehicle side, but those are personal goals that I’m setting for the teams.
Fehrenbacher: What’s the biggest driving factor for changing the makeup of the fleet and investing in new vehicles?
Mohr: As a fleet manager, you’re looking at your total cost of ownership. That’s the biggest decision that you’re trying to make on whether you’re moving to an EV or sticking with an [internal combustion engine]. Your total cost of ownership is everything from your vehicle acquisition cost, whether it’s a lease or a purchase, including your fuel costs on that vehicle. On an EV, you have to take into considering your charging costs of that vehicle, your costs of electricity and your cost of the installation of electric.
Unless you have some corporate goals around sustainability and trying to understand this market, a regular small business is probably not going to move into an EV until we can show that the total cost of ownership for that vehicle is going to outperform their traditional product.
Fehrenbacher: Is there demand from your customers for alternative fuel vehicles?
Mohr: Sure. We have a number of corporate advisory boards that are large customers with us and that’s a topic that comes up all the time with them and what their goals are and how do they get prepared for this.
You saw the 1,000 units that FedEx signed with us on electric vehicles. They’re certainly a company that is preparing for that. And then you’ve seen public orders with Tesla — it’s mostly the large companies that have the infrastructure of the tolerance to spend some money right now to invest in this while they learn.
Fehrenbacher: What are your thoughts on policy and regulation and specifically the Advanced Clean Truck rule?
Mohr: I think there’s two approaches in the U.S. The states can take a carrot or a stick approach to pushing EV standards. They can use the carrot, and provide incentives for businesses to offset the cost of this technology early to increase adoption. Or with the ACT rule, California just took the stick approach and said, "This is gonna happen and here are the phased in times that it’s going to happen at." So I think you’re going to see a mix of those different strategies throughout the U.S. as states decide on how they want to position this on the commercial side.
There were 13 states that signed onto the [memorandum of understanding] of the ACT. So we’re looking at all of those states and how that impacts those states and how do we help customers get prepared for that. And then certainly there are still a lot of states that didn’t sign onto that MOU that are also using incentives very efficiently to help businesses start to offset electrifying a fleet.
Fehrenbacher: Have there been any incentives in any states that you’ve found to be most helpful to your customers and Ryder?
Mohr: The most useful incentives are coming from the local power companies around infrastructure. And that’s bringing electricity to the curb that you need for electrification. And then helping with the offset of the hardware costs from bringing in charging. Those seem to be the most effective, because it’s really infrastructure that you’re going to need to operate those vehicles.
I think offering incentives on the vehicles themselves, on bringing down the costs of that acquisition, is really something you do very early when those costs of vehicles are extremely high because they’re so new. Eventually you’re not going to have to offset the costs of the vehicles because they’ll get in line with where they need to be.
Fehrenbacher: What is Ryder’s strategy around EV infrastructure? Is it to own and operate it?
Mohr: We’ve partnered with a company called In-Charge, a California-based company. They were funded by ABB, one of the largest electric hardware providers in the world, and Macquarie Capital, one of the largest private investment banks in the world. And we use In-Charge as our partner to help our customers with energy mitigation, the infrastructure grants, installation and engineering for our customers’ facilities.
Fehrenbacher: Have things changed around goals and plans for sustainability in the wake of COVID-19?
Mohr: From a sustainability standpoint, it hasn’t changed anything for us.
Certainly it’s a speed bump for new technology. You’ve seen a little bit of a hiccup in timelines, but nothing that would affect us right now. You have certain EV providers that have slowed down for 30, 90, 120 days around manufacturing of production and releasing vehicles but nothing that would interrupt our business.