Subscribe to our free, weekly email newsletter!



Future fuel economy standards for heavy duty trucks could be beneficial for shippers

By Jeff Berman, Group News Editor
March 06, 2014

Reducing emissions and increasing over-the-road transportation productivity is likely to be at the top of many shippers’ strategy playbooks. What’s more, it is also very timely these days, considering the White House recently called on the Department of Transportation and the Environmental Protection Agency to develop new fuel economy standards for heavy-duty trucks.

When he first raised the new standards, for which a proposal is due in March 2015 with the new rule coming about a year later, President Barack Obama called for the DOT and EPA to partner with various entities, including manufacturers and autoworkers and states and other stakeholders like truckers to come up with the specifics.

As previously reported, the President stressed the fact that the nation wants trucks that use less oil, save more money and cut pollution, and he noted that the White House’s National Clean Fleets Partnership, which was established in 2011 and is focused on helping large companies cut down on diesel and gasoline usage in their fleets by meshing electronic vehicles, alternative fuels, and fuel-savings measures into their daily operations, is now up to 23 member companies, including transportation titans UPS and FedEx.

Specifics of the improved fuel efficiency standards is Obama calling for have yet to be disclosed, but he did note that for in order to have businesses and manufacturers meet the new goals, the White House is offering new tax credits for companies that manufacture heavy-duty alternative-fuel vehicles and those that build fuel infrastructure so that trucks running on biodiesel or natural gas or hybrid electric technology, will have more places to fill up.

Jason Mathers, senior manager, supply chain logistics, for the Environmental Defense Fund (EDF), said this rule has tremendous potential for shippers and their supply chains in that it brings huge opportunities to cut emissions and reduce fuel consumption, as well as an overall benefit for the economy by reducing petroleum spend.

“From a shippers’ perspective, they are in the unique position regarding the real time costs of operating trucks in that they pay for fuel through the fuel surcharge and also a little bit through linehaul fees,” noted Mathers. “Along with that are linehaul fees that reflect the costs of purchasing a truck and maintaining and staffing it, with fuel representing about 40 percent of the total costs of owning and operating a truck.”

This rule addresses number one costs of shippers for moving freight and from that perspective it is a little bit different than it is for fleet partners in that the trucking companies’ top concern is upfront costs and more efficient trucks will cost more to purchase and cost a lot less to operate making it a good long-term proposition.

“Shippers could be in a nice position to operate and work with their fleet partners to encourage them to support a strong role, and shippers who save on fuel surcharges with a little bit of that going back to their carrier partners could help to offset the higher costs of a new truck,” explained Mathers.

While specifics of the rule won’t be available for nearly a year, Mathers stressed that when details become available shippers should pay attention to the stringency of the rule in terms of efficiency gains, noting that the higher the efficiency gains are, the more the cost savings and fuel savings need to be balanced.

Other factors for shippers to pay attention to regarding the rule include:
-the timeframe for it to go into effect, which will impact related technologies and standards applicable to it;
-to see if it includes requirements for aerodynamic trailers that can reduce tractor-trailer fuel consumption by up to ten percent; and
- if federal agencies will call for low cost fuel saving technologies and

Mathers made it clear that there are many complex issues on the table when it comes to drafting this new rule, adding a lot of work will be put into to in order to draft the best rule possible. And with that, he said, comes opportunities in the coming months for the shippers to work with federal government agencies and engage in public forums to make their needs clear in this process.

This rule presents a terrific opportunity to push the conversation forward and beyond just talk with a rule that can truly make a difference from supply chain, economic, and environmental perspectives. Let’s hope all the key players are up to the task.

About the Author

Jeff Berman headshot
Jeff Berman
Group News Editor

Jeff Berman is Group News Editor for Logistics Management, Modern Materials Handling, and Supply Chain Management Review. Jeff works and lives in Cape Elizabeth, Maine, where he covers all aspects of the supply chain, logistics, freight transportation, and materials handling sectors on a daily basis. .(JavaScript must be enabled to view this email address).


Subscribe to Logistics Management magazine

Subscribe today. It's FREE!
Get timely insider information that you can use to better manage your
entire logistics operation.
Start your FREE subscription today!

Recent Entries

The PMI, the ISM’s index to measure growth fell 0.8 percent to 52.7 (a PMI of 50 or greater represents growth). PMI growth has been at 50 or higher for 31 straight months (with the overall economy growing for 74 months), and the current PMI is 1.7 percent below the 12-month average of 54.4.

The current status of FedEx’ planned acquisition of Netherlands-based TNT-NV and a provider of mail and courier services and the fourth largest global parcel operator for $4.8 billion, which was initially announced in April, remains in flux, with continued actions being taken by the European Commission.

Panjiva said that the 1 percent sequential growth was in line with typically flat growth from May to June, as higher monthly growth typically takes hold in July and August in advance of the holiday season.

Hackett officials described this new offering as a short-term index that offers up “the sentiment for trade at a glance,” akin to other key economic metrics like the PMI and Consumer and Carrier confidence indices, while providing access to specifically see where a group of economic indicators are in relation to trade for the current month, too.

While many industry analysts contend that distribution centers near U.S. East Coast ports will see a surge of new business after the Panama Canal expansion, real estate experts say this phenomena is already underway.

Article Topics

Blogs · DOT · White House · All topics

Comments

Post a comment
Commenting is not available in this channel entry.


© Copyright 2015 Peerless Media LLC, a division of EH Publishing, Inc • 111 Speen Street, Ste 200, Framingham, MA 01701 USA