Shippers want want their carriers to start usingpowered trucks, and some are offering incentives to help speed up the transition.
LONG BEACH, CA. There's a movement afoot as some major shippers are actively encouraging carriers to embrace natural gas (NG) as a way to help them meet corporate sustainability goals or lower transportation costs. And in some cases, they are offering inducements such as larger contracts, rate premiums and even on-site NG fueling sites to speed up the transition, according to a panel of shippers at the Alternative Clean Transportation (ACT) Expo.
Honda, for example, has set a 30% reduction in CO2 emissions by 2020 as a global goal for the company. At American Honda Motor Co., its parts division is working to contribute to that goal by focusing on CO2 reductions in its extensive transportation network, according to Adam Bishop, sr. logistics analyst for domestic transportation. Moving some freight from truck to rail and employing newer, more fuel efficient trucks are helping to move the parts group in the right direction, but either LNG- or CNG-powered trucks also figure in its strategy, he said during the ACT Expo panel.
Two contract carriers operate 220 tractors that provide overnight parts delivery to 97% of Honda’s U.S. dealers, running 106,000 mi. a night, Bishop said. While Honda can’t require its carriers to make a switch to NG, the carriers’ lease costs for the tractors are passed through to Honda, “so we have some skin in the game,” he said. “We also have a good enough relationship with them that we can tell them we’d really like to move forward on this.”
In general, the fleets have also been interested in the cost advantages of NG, and have put half a dozen CNG tractors into service on the Honda parts routes in California on a test basis.
With fueling infrastructure often the largest barrier to CNG use for trucks, Honda Parts is making sure CNG fueling is available to expand the pilot program to its distribution facilities in Georgia and Ohio. The company’s largest automotive assembly plant in Marysville, OH, is also building an onsite CNG fuel station for its trucking providers, and that station will be able to service the parts carriers as well.
“We could have up to 50 NG tractors on the road within the next 18 to 24 months running about 30,000 mi. a night,” said Bishop. “As additional fueling locations are developed around the country, we’ll utilize this partnership to build more [NG] stations and we’re pushing that these stations will be open to the public so it’s not just our trucks that are going to benefit.”
Under pressure to reduce transportation costs, shippers are in position to accelerate the transition to less expensive NG, according to David Uncapher, transportation operations leader for Owens Corning. “Shippers have to be willing to share the cost [of converting to NG],” he said. “If you’re a shipper, and your greedy about it and want all the fuel savings, at least initially, with all the additional costs there [for carriers], you’ll be challenged to grow [NG use].”
As shippers, companies can also work collaboratively to build lanes or routes with enough demand to justify development of NG fueling location. “Shippers will create the demand that grows the infrastructure,” Uncapher said.
There also needs to be incentives for carriers to make the substantial capital investments required to transition to NG. “The majority of carriers we work with were initially standoffish until they saw one particular carrier grow sevenfold in our network,” said Uncapher. “There aren’t a lot of carriers coming to me saying they want run the same lane with the same volume and buy new trucks to do it, but continue to make the same money. So we really have to offer incentives like longer contracts, because the carriers have to see the opportunity for a gain to go out and make that investment.”