Even before the COVID pandemic deepened America’s fondness for online shopping, delivery drivers in New York City were dropping about 1.5 million packages on New Yorkers’ doorsteps every day.
This daily avalanche of commerce has brought with it traffic congestion and parking chaos serious enough that NYC’s city council recently passed a bill meant to curb the fight for curb space. But the ubiquitous boxy delivery trucks, which have descended on cities and suburbs around the country, don’t just cause frustration for other drivers. They belong to a category of vehicle — medium- and heavy-duty trucks — that belches out roughly 24 percent of U.S. transportation emissions, even though it makes up only 5 percent of all the vehicles on the road, according to the U.S. Environmental Protection Agency.
Delivery truck emissions, along with the CO2 streaming out of the tailpipes of other corporate vehicles, is a problem Merchants Fleet aims to address. The up-and-coming fleet management company has set aggressive electrification goals: 50 percent of its own fleet by 2025; and 50 percent of its clients’ fleets by 2030.
To get there, it has pre-ordered 40,000 electric vehicles, committing roughly $2.4 billion to pay for them, Hari Nayar, director of electrification and sustainability at Merchants Fleet, told GreenBiz. This includes a total of 18,000 electric cargo vans and midsize delivery trucks made by General Motors’ BrightDrop subsidiary, which has also inked sizable deals with Walmart and FedEx.
"We want to be the most electric fleet management company on the planet," said Nayar, who joined the Merchants Fleet just over a year ago. "When these vehicles come out, we want to be either No. 1 or No. 2 in line. We don't want to be No. 25 in line, we don't want to be No. 15."
From a pure size perspective, Merchants Fleet may need that kind of moxie to assure its place in line. A midsize North American fleet management company based in Hooksett, New Hampshire, the company manages roughly 160,000 vehicles, including not just work and delivery trucks but the company cars used by sales representatives and other staff with driving intensive jobs. By way of comparison, Element Fleet Management, one of the largest managers of corporate fleets, has more than 1 million vehicles on the road globally.
There’s a very wide range of knowledge, of preparation and of experience out there.
And it’s not like delivery behemoths such as FedEx and Amazon are taking a lackadaisical approach toward electrification. Amazon has ordered roughly 100,000 electric cargo vans from Rivian, the buzzy EV company that it owns 20 percent of, with shipment of the first 10,000 of those planned for this year. Additionally, the e-commerce giant has ordered "thousands" of Stellantis’ new Ram ProMaster, another electric delivery van expected to launch in 2023.
In other words, demand for these vehicles is outstripping supply, something Nayar expects to continue even as the number of fleet EVs on the road climbs this year. In fact, converting 50 percent of Merchant’s own fleet "is an achievable goal even today, if we wanted to do that," he said. "However, it doesn't make a lot of business sense, because the charging infrastructure to support that doesn't exist in the United States today. … And a lot of the vehicles exist in PowerPoints on websites or in media reports, but people haven't really experienced them."
The company set the target for 2025 because that timeline syncs up with the growth plans of EV charging stations companies that Merchants Fleet has relationships with, Nayar added. And of course, Merchants is keeping an eye out for the details of the Biden administration’s infrastructure plan, which includes $7.5 billion for charging stations.
Big influence, big emissions
Corporate fleets can "have outsized influence on the successful electrification of the entire transportation sector," according to a report published by RMI in January 2021. Converting large fleets of vehicles to electric can "drive scale," resulting in lower costs for an organization as it transitions. It can also help streamline permitting and utility interconnection processes and influence broader trends towards electrification.
Beyond that, businesses urgently need to take a leading role in electrification because commercial vehicles also have outsized greenhouse gas emissions, and those emissions have skyrocketed over the last 30 years.
Between 1990 and 2019, emissions from medium and heavy-duty trucks jumped more than 90 percent, the largest percentage increase of any major transportation mode. The category includes vehicles used for other purposes, such as utility and service trucks, but the growing consumption of goods, now ordered on a whim at the click of a button, has been the main driver of the increase.
All told, the U.S. accounts for an estimated 18 percent of global road freight CO2 emissions, the largest share of any country in the world.
Not all fleet operators have ambitious electrification goals, though. Back in 2020, when RMI surveyed fleet managers for local and state governments, utilities, universities, private technology companies and delivery services for its report, the organization found that over 80 percent had already begun electrifying their fleets. However, they weren’t all ready to hit the road running, Chris Nelder, one of the report’s authors, told GreenBiz.
"There’s a very wide range of knowledge, of preparation and of experience out there," he said. "For example, we talked to some fleet managers who didn’t know the first thing about utility interconnection. They had no idea that they had to start talking to their utility a year or more in advance of needing a significant increase in power at their facility, if they were going to install a bunch of charging stations for a new fleet of electric vehicles. And then we talked to other fleet managers who are so far ahead of the game, they’re ahead of basically anyone else in the sector because they run massive operations worldwide that are trying to go electric."
Merchants Fleet aims to be on the leading end of the spectrum.
The company recently launched the Electrify Fleet Hub, a one-stop online information platform designed to help fleet managers through the EV transition process. The hub allows users to research current and future EV models based on their specific needs; provides EV adoption planning, charging and infrastructure roadmaps and financing sources; and includes other resources such as white papers, infographics and webinars.
The company also influences its clients and its own employees by allowing them to test out vehicles. "We try to facilitate pilots of vehicles," Nayar said. "We have one coming up early in Q1 of this year. We will have access to BrightDrop’s EV600 for select clients of ours.
"One of the things that I am very passionate about is … that first experience has to be a golden experience. That is what’s going to accelerate adoption. And the first experience really has to be for the driver who's operating the vehicle, not the C-suite person who approved it, or the person who wrote the purchase order, but the person who’s delivering those packages, or the person who's driving that school bus, or the operator of that crane or forklift. That is the individual you need to target because if they love the vehicle, 90 percent of the job is done."