How a greener trucking industry could save $40 billion per year
The global trucking industry produces 1.6 billion metric tons of CO2 per year (PDF), making it responsible for 5.75 percent of total greenhouse gas emissions. Even when the rest of us are enjoying cheaper fuel, fuel remains the largest cost of operating a truck, costing more to a company than the driver. Heavy-duty tractor-trailers in the United States alone consumed 25 billion gallons of fuel in 2013. That’s around $105 billion at average 2013 prices.
With trucking predicted to grow by 2 percent or more each year, improving the fuel efficiency of this industry is critical to reducing greenhouse gas emissions and supporting profit margins in an increasingly regulated industry. Achieving an average fuel efficiency of 9 MPG — a 50-percent increase from the current level of 6.2 MPG — would save North American trucking $40 billion per year in fuel and reduce greenhouse gas emissions by 20 percent.
Identifying available solutions and market barriers to adoption
The good news is that there are options to make this happen. The adoption of numerous efficiency technologies makes economic sense for fleets and truck owners under current market and policy conditions.“If 100 percent of the heavy-duty tractor-trailers in the U.S. invested in a set of aerodynamic devices by 2020, the fleet would avoid 50 million tons of CO2,” said Tessa Lee, an associate researcher at Carbon War Room. “This would save nearly $33,000 in fuel costs per truck over the five-year life of the truck, paying back the initial investment in just 14 months.”
Recognizing over 70 efficiency technologies available in the industry that offer cost savings and relatively quick return on investment, the North American Council for Freight Efficiency (NACFE) and Carbon War Room (CWR) began investigating why — with profitable solutions at-market in the industry — fleets weren’t lapping up the solutions. NACFE was launched in 2009 with the help of RMI, as an outcome of the Transformational Trucking Charrette and the NACFE inaugural meeting, both highly supported by the industry.
NACFE and CWR identified several market barriers limiting adoption of efficiency technologies, including insufficient information, finance problems and supply issues.
Lack of credible information on the performance of these technologies, including return on investment and payback times, stifles demand. Another issue is the perception of efficiency technologies as insufficiently reliable.
In some instances, companies lack access to capital to cover upfront costs. Even when management is willing and able to make changes, lack of availability of these technologies from manufacturers or other vendors can slow adoption.
The barriers facing the industry fit well with CWR and NACFE’s strengths: CWR could leverage its experience in the shipping industry to fill a gap in market information and NACFE could leverage its knowledge of the trucking industry to study the available technologies. Together, we would be able to encourage technology adoption and work towards shifting industry behavior.
Overcoming market barriers
In 2013, CWR and NACFE created the Trucking Efficiency initiative to address the information and finance barriers to large-scale deployment of fuel-efficiency technologies and help operators adopt proven technologies with confidence. “It was a great match. NACFE had the industry knowledge and network, and CWR had the boldness, brand, and ability to articulate our work to inspire action,” said Mike Roeth, executive director of NACFE and operation lead of Trucking Efficiency.
Trucking Efficiency creates and shares comprehensive, unbiased reviews of available efficiency technologies. It also provides a forum for the industry to come together for open dialogue and collaboration and facilitates greater industry demand for improved efficiency.
In the words of trucking heavyweight Mike O’Connell, senior director of the supply chain fleet of Frito-Lay, “the industry needs independent, credible assessments of the best fuel-efficiency technologies. Trucking Efficiency provides that information.”
When making decisions, fleets trust their own experiences first, followed by that of other fleets. Two nonprofits would be well-placed to aggregate information from the industry, including offering fleets the option to share their data and experiences anonymously, and be able to act as a credible source of information, free from bias. “If UPS makes an adoption decision, everyone else is watching. We wanted to be able to get UPS and other leaders in the industry together with small, medium and large fleets to discuss their decisions openly,” said Roeth.
To advance our goals, Trucking Efficiency provides comprehensive, unbiased technology reviews through a series of publicly available “confidence reports” and a first-of-its-kind tech guide centralizing all data on available technologies and opportunities for the sector. Each confidence report assesses available technologies, discusses challenges and best practices for their adoption, and provides figures on performance gains and payback periods, along with a multitude of datasets from industry testing.
Confidence reports on tire pressure systems, 6x2 axles, idle-reduction solutions, electronic transmissions and engine parameters are available. In 2015, plans are to publish confidence reports on tires, downspeeding, lightweighting, maintenance, driver coaching and aerodynamics.
“TruckingEfficiency.org has become a trusted source of information in our decision-making process around new components and specification that we are considering deploying within our fleet,” said Ezel Baltali, supplier relationship manager of Ryder System, Inc.
Trucking Efficiency also facilitates open dialogue in the industry through a workshop series, which brings together industry leaders and technology experts to facilitate shared learning on available efficiency technologies and provide open debate on the benefits and challenges of adopting them. This leads to connecting fleets with those they trust most, even their competitors.
Lastly, Trucking Efficiency is working to better understand the financial barriers preventing adoption of these technologies and exploring the development of innovative financial models to cover the upfront costs of purchasing technology and conducting performance testing.
Certainly ambitious, the goal is to work with the trucking industry to change decisions and decision making, creating greater efficiency as a part of the new normal for business. The work has benefited incredibly from partnering with the industry and leading NACFE fleets. Reports already affect adoption decisions of large fleets representing more than 100,000 tractor-trailers.
Successes so far
Steve Phillips, senior vice president of fleet resources at Werner Enterprises, told Carbon War Room, "Werner Enterprises has outfitted approximately 15,000 trailers with automatic inflation systems to improve fuel economy and tire wear while also decreasing roadside breakdowns, in conjunction with Trucking Efficiency’s first confidence report on Tire Pressure Systems."
Following a second confidence report on 6x2 axles, UPS changed its 2014 tractor purchases from a 6x4 to a 6x2 configuration (PDF) to improve fuel economy by 2 to 4 percent, according to Dale Spencer, director of automotive engineering at UPS.
The technologies that Trucking Efficiency proposes are not only a way for the industry to profitably increase its fuel efficiency, but also will help achieve myriad other benefits for fleets, drivers and the environment.
Along those lines, Frito-Lay has been using the data in these reports for the past few years to accelerate its efforts to improve fuel economy. “In 2014, our trailer aerodynamics efforts were expanded to include tails on the back of the trailers to improve efficiency by another 3 to 4 percent,” said O’Connell.
We continue to see a growing number of fleets shifting their adoption decisions to more efficient technologies. However, success is still a ways off. As Trucking Efficiency’s Roeth said, "Success for us is getting $70 billion back into the pockets of fleets and operators, and cutting fleet fuel bills significantly.”
It’s a tall order, but we are making progress. And, along the way, we can set the example for what can be achieved in trucking fleets throughout the world.
This article first appeared at RMI Outlet.