Shippers Seek Nat-Gas Fleets to Boost Environmental Image
This story appears in the July 15 print edition of Transport Topics.
Some of the nation’s largest shippers said they are shopping for carriers to haul freight using natural gas-powered trucks, a trend that could spur further use of the alternative fuel.
Owens Corning, the Ohio-based insulation and shingles manufacturer, is among those pursuing carriers running natural-gas trucks and identifying routes where adequate fuel is available.
“We probably, four out of five days, have some kind of conversation with a carrier about an opportunity in one of these lanes,” said David Uncapher, head of transportation sourcing and operations for the manufacturing firm.
Twenty-two lanes already are under contract to carriers using natural gas or waiting on delivery of trucks, Uncapher said.
With 40 factories nationwide, Owens plans to double the amount of freight — currently 4% of $400 million annual spending — on natural-gas trucks, he said.
Procter & Gamble, maker of Tide and other consumer products, recently announced it will put 20% of its freight on natural-gas trucks in the next two years and has contracted with eight carriers, beginning this month.
“Our mantra is fewer, cleaner miles,” said Sean Turner, head of Procter & Gamble’s logistics purchasing group.
Shippers are adding critical momentum in the alternative fuel marketplace, carriers said.
“Without [shippers] . . . saying, ‘Here’s freight,’ there’s no reason for me to order [natural-gas] trucks,” said Mike DelBovo, president of Saddle Creek Transportation of Lakeland, Fla.
Saddle Creek is adding 100 natural-gas trucks to the 106 already in its 420-unit fleet, said DelBovo. The carrier will haul for Procter & Gamble and runs a pilot program for Office Depot in Florida. Office Depot also has pilots on dedicated routes in Philadelphia and Chicago.
Both compressed natural gas and liquefied natural gas burn cleaner than diesel, according to experts, but the overwhelming incentive — particularly for trucking — is its lower cost.
LNG, for example, generally costs $1.50 less on a per-gallon equivalent basis. However, trucks powered by natural gas cost substantially more to acquire.
But shipper interest in natural gas is what’s underwriting the experiment the trucking industry needs to determine if natural gas is viable long term, said trucking industry consultant Noel Perry.
“The people that actually purchase the equipment and run the experiments are sophisticated enough to know if it makes sense,” he said.
Among the other shippers hiring carriers running natural-gas trucks is SCA, the Sweden-based tissue maker that is running cargo on 15 natural-gas trucks between its plant in Neenah, Wis., and distribution centers.
“As our shuttle contracts come due in other regions, we’re going to look at the availability of natural gas at our other plants and put that as an option in the bid,” said Cliff Barber, SCA’s customer fulfillment director.
SCA also has plants in Alabama, Arizona, Kentucky and New York. SCA is using trucks supplied by Paper Transport, based in Green Bay, Wis.
Andersen Corp., the window maker, has seven natural-gas trucks running in and out of its Menomonie, Wis., plant and will add another seven this summer, said Lance Whitacre, Andersen’s vice president of logistics and order management.
“What we’ve tried to do is, rather than make it a mandate per se, we’ve tried to work with our carriers and our providers to look at where it has application,” Whitacre said.
While some shippers are moving full speed ahead, others are cautious, such as Covidien, the global medical products firm.
“Covidien is taking part in piloting this technology through two of our carriers to understand the financial and environmental viability,” said Lisa Clemence, director of corporate communications.
Meanwhile, Target Corp. has begun its own window-shopping in the natural-gas marketplace.
“We’re just getting started, but we would like to be an early adopter,” said Steve Carter, Target’s director of transportation strategy. “So we’re working with some of the natural-gas folks . . . right now, to learn.”
The alternative fuel has gained such traction with shippers that about 40 are leasing natural-gas trucks from Ryder System, said Scott Perry, vice president of supply management. “There’s conscious effort by every major shipper and distributor of product across the country to determine if natural gas has a place in their portfolio today,” Perry said.
Anheuser-Busch wholesale distributing company Golden Eagle Distributors in Tucson, Ariz., leases its 75 trucks from Ryder and 32 of them are powered by natural gas, reaping savings in fuel costs, said Golden Eagle senior vice president Bill Osteen.
“Our experience is about 40% less than what we were paying for diesel,” said Osteen, adding that the firm is moving to all natural-gas trucks.
Charles Musgrove, vice president of operations for Dillon Transport, said natural gas is going to change trucking. Illinois-based Dillon runs natural gas-powered tankers for Owens Corning.
“It’s going to change the carbon footprint; it’s going to change the rate structure,” Musgrove said.
That was the case with Andersen Corp. and Eagan, Minn.-based Dart Transit, Andersen’s Whitacre said. The companies agreed to eliminate the typical fuel surcharge and alter the price of shipments on the lanes where natural-gas trucks are utilized.
Senior Reporter Rip Watson contributed to this story.
Premium 2000+™ is one of the country’s fastest-growing privately held companies. We have made the Inc. 5000 list three of the last four years. Considering such phenomenal growth you would think it might be time for a brief respite–but we expect to at least double our warranty sales in the next twelve months. The main reason we anticipate this kind of growth is the management of our sales team by Berkshire Fleet Services (BFS) (whose parent company is the Carrbridge Berkshire Group).
Carrbridge Berkshire Group and its subsidiary, The Compass Group, has long been a recognized name in transportation, especially in the logistics sector. They have worked with the nation’s largest fleets, including Coca-Cola, Pepsi Co, YRCW, Conway, Gildan, Russell Athletic, Target, Georgia Pacific, GNC, and ORECK. It has built a reputation as a cost saver for those fleets, and their product manufacturing customers. Berkshire Fleet Services (BFS), using the same concept of vetting the best products and companies and putting them together, has chosen Premium 2000+™ as its flagship product. BFS is organizing its sales team to assure that all commercial truck segments, including dealers, component manufacturers and remanufacturers, fleets, municipalities, service centers, finance groups, and equipment auctioneers, are aware of Premium 2000+™ products and programs. Because of the brand recognition and good will built by Premium 2000+™, BFS wants to “leave no rock unturned,” according to its President and CEO, Kirk Eskridge, while bringing on new and innovative products to our customers. “We want everyone who relies on commercial trucking to recognize the Premium 2000+™ brand when they are buying, selling, servicing, and financing their trucks. The entire industry needs to be aware of how Premium has changed the aftermarket warranty landscape over the last 13 years. No one else has a better claims approval ratio or better customer service department. Our surveys among new and used truck dealers bear that out,” says Mr. Eskridge.
After all is said and done, our job is getting trucks with mechanical issues back on the road. We have always avoided telling our prospects that we sell warranties: we insist that we help dealers sell trucks. We are about customer retention for those who offer our programs. In fact, we have been so successful with that strategy that we have never really had to advertise for new business.
We have relied for years on word-of-mouth and referrals for our steady growth. This growth and what is now on our horizon dictates that we focus completely on the back end (claims) of the business. We are confident that Berkshire will provide better organization and direction for the sales side of our business. We are delighted that Mr. Eskridge agreed to carry this load for us so we could expand and improve on our administrative processes. Kirk and his team have a great history of success within transportation and we are excited that they have chosen Premium 2000+™ as the lead product for their representation.
UTA members will see many of the same faces as Premium 2000+™ representatives. You will see some new ones as well, but we will all be carrying the same message –we are here to assist your truck sales and your return on investment. Berkshire Fleet Services will handle all marketing and sales inquiries at 800-903-7489 ext. 801 or Info@BerkshireFleetServices.com.
You can also visit www.BerkshireFleet.com for more information.
YRC Worldwide’s potential revival of a bid to buy ABF Freight System is being shaped by the company’s previous lessons, Bloomberg News reported Friday, while the Teamsters union called a potential merger “unconscionable.”
Arkansas Best disclosed Thursday that YRC had approached it about buying ABF — its less-than-truckload unit that competes with YRC — but that it had rejected YRC’s overture.
YRC CEO James Welch, who has been in his position since July 2011, said the main reason for the initiative was to increase freight density, leading to improved profits.
“It’s a way to attack a challenge we both share,” he told Transport Topics, adding that the two companies’ network locations are nearly identical, with the potential to add about 17,500 daily ABF shipments to the current 45,000 handled by YRC Freight.
YRC’s Teamsters-represented employees are working under the terms of a 15% pay cut, which was granted in exchange for stock ownership in the company.
Teamsters General President James Hoffa said that because his union’s members have already made those concessions to YRC — and are currently considering a new five-year pact with ABF parent Arkansas Best Corp. — such a merger would amount to “interference in the collective bargaining process.”
ABF and the Teamsters agreed last week to the terms of a new five-year labor contract, but that pact still must to be ratified by the union’s rank-and-file members.
YRC and Arkansas Best are both publicly traded companies. YRC’s stock rose about 3.8% Friday to about $14.60 a share, while Arkansas Best’s slipped less than 1% to about $16.60 after jumping 9% on Thursday.
Paccar — parent company of Peterbilt and Kenworth — announced a decline in sales leading to a 28 percent drop in earnings, but Paccar’s first quarter earnings were down $91.2 million from the same quarter in 2012. Net sales for Paccar fell from $4.78 billion (2012 first quarter) to $3.92 billion in the first quarter of this year.
Daimler AG, parent company of Freightliner and Western Star brands, said its truck sales dipped 3 percent in North America, while global sales dropped 6 percent. Freightliner CEO Dieter Zetsche said the numbers were below the company’s expectations. Moreover, Daimler’s truck division saw a 69 percent decline in earnings, dropping to $151 million for the quarter from 2012′s first quarter’s $489 million.
Volvo, which owns Mack, too, reported revenue of $8.9 billion in the quarter, a decrease of 25 percent from last year’s first quarter. North American Truck Sales, however, were down 32 percent, while global sales were down 23 percent.
To follow up on a previous article on economic trends and the reality of the U.S. market, a news article was released this week vaunting the increased profits of 10 of the nations largest truckload carriers. Very encouraging……until you look at the real reason behind this. All 10 recorded increases in profits, not because of increased business, but the sale of assets. That is not encouraging. We will follow and see how the smaller fleets and LTL carriers react in order for us to truly see the national picture.
FBI and IRS agents raided the Knoxville, Tenn., headquarters of truck-stop operator Pilot Flying J Travel Centers on Monday, the Knoxville News Sentinel reported.
An FBI official told the paper that agents arrived with a search warrant as part of an ongoing investigation, but declined to provide specifics.
“The FBI secured our headquarters today and informed us they are investigating Pilot Flying J,” CEO Jimmy Haslam said in an e-mailed statement late Monday, the News Sentinel reported.
“We will cooperate appropriately with any and all external investigations and conduct our own. I believe and trust there has been no wrongdoing. The integrity of our company always has been job number one,” he said.
Pilot Flying J, which operates one of the largest travel center networks in North America, was founded more than 50 years ago by Jim Haslam, the father of Tennessee Gov. Bill Haslam, who was once president of the company, the newspaper said.
Here we are rolling into the second quarter and for the first 90 days of the year, every other day has been an article telling us the trends are up or trends are down. We don’t make the news, we can only report it, however do any of us understand this up and down economy? We are going out on a limb here and say…..NO. We counted 20 articles telling us that the trends are up, tonnage is up, truck sales are up and money is abound and on the way. We also counted 30 articles letting us know that trends are down, volumes are low, truck sales are lowest in 20 years, fuel prices are up and fuel prices are down. What are we to take from this contradicting information? Well, here is our take and here are the facts: Truck sales are down, freight volumes are down, transportation companies are not hiring at any consistent rate and fuel prices are high. Yes, high. Even though we see a few pennies up and down here and there, we as a nation have gotten used to prices nearly double from 4 years ago and that is passed down the line as will all cost to the end consumer, which causes people to buy less in return companies make less and there is less freight to ship. In the middle of this is the fact that when companies make less, they hire less, causing transportation companies to do the same and down the line. We realize this is common sense, however we have gotten used to this so when we see any positive news we are ready to believe things are back to normal……they are not. Most if not all economic analysis for articles these days are based on local economic trends and not national, skewing the information to the public as a whole. What is happening in Charlotte is not comparative to what is happening in Memphis or Detroit or Chicago. A lot of news these days are generated by PR and press release sites. This doesn’t mean the news is bad or even inaccurate but we assure you it is biased favorably because as we all know, people love to associate themselves with winners. There is nothing wrong with that, by any means, however when we look at that for answers about what is really going on in the economy, our advice is to look at your own and you will see a much clearer picture. Over the upcoming articles, we will visit deeper into this as the year rolls around……wait, new article today, “Truck orders rise 10.4 % from last year”, wonder what the article will be next week?
Volvo and Mack Trucks announced a partnership with Shell Oil Co. to support expanded use of liquefied natural gas in heavy-duty class 8 trucks.
The agreement, which is not exclusive, will include a strategic collaboration on issues such as fuel specification and emissions performance, as well as general sharing of analysis and data with all aspects of the growing natural-gas market, Volvo said.
“Customer interest in natural gas as a heavy-duty truck fuel will only continue to grow,” said Göran Nyberg, president of Volvo Trucks North American sales and marketing. We here at Transportation News believe that the happiest party in this deal is T.Boone Pickens. Let’s wait and see if the government finds a way to get involved.
Volvo plans to introduce its own LNG-fueled engine next year, and the agreement “is part of our effort to collaborate with various stakeholders to ensure that the market is supported with the necessary infrastructure,” Nyberg said.
Out of all the companies that spring up during changing economic times, Berkshire Fleet Services intrigues us the most. When asked, Kirk Eskridge, CEO of Berkshire Fleet Services, has a clear vision of where the market is heading and how he intends to help the transportation industry as well as the companies that work with the industry get there. Berkshire is strategically aligning itself, in their view, with the best companies in each particular market segment. With a large staff of professional consultants, each with years in the transportation industry, Berkshire is able to take products, programs and services straight to the top of an organization and build a strategic plan of implementation with the decision makers. With Berkshire’s flagship client, Premium 2000+ Truck Warranty Programs, based out of Winston Salem, North Carolina, Berkshire is taking a well established company into fleet, OEM and vocational markets that have never been attempted before. “Offering a service to extend ownership and give peace of mind to fleet owners for one cent or less per mile is not only helpful to a transportation company but absolutely imperative in this economic environment.” says Kirk Eskridge. As we take a look at what he says, his words make sense when you study the steady decline in indicators such as new truck manufacturing numbers and the decline of orders. Berkshire is also looking at technology companies to assist in identifying the best in the business. According to Eskridge, “There are so many companies popping up to try and flood the market that it is nearly impossible to determine which is a right fit as well as being an original creator of software and technology components.” He is right again, the more we look into this market segment, the more we find internet-only companies reselling and we are finding most of the industry buys from the same place. There are very few unique players out there and it looks as if Berkshire is going to put their stamp on who is the best. Berkshire is allowing transportation companies to have a One-Stop-Shop to identify which ones they determine are the best in each specific market segment. This is a very interesting concept and one we will be watching closely as they move forward. Eskridge makes very clear, “We are not looking to promote Berkshire, we are looking to build the brands of our strategic partners that we represent because we believe that they have been vetted as the best in the industry. Our brand will build by the company that we keep and we want the industry to know when they come to Berkshire Fleet Services to look for programs, products and services that we only represent the very best.” With their sales outsourcing strategy, Berkshire may be helping two-fold by allowing those service and product providers to focus more on their business and allow Berkshire to handle the sales and marketing side reducing and controlling operating costs. It is always interesting to see new business models emerge and we believe this one is on to something.
The company said that after an investment of $165 million, it currently has DEF at the pump in 3,000 lanes at 400 of its 650 locations.
DEF is available at all Pilot Flying J locations in one-gallon and 2.5-gallon containers, the company said.
DEF is a necessary additive for diesel engines that have selective catalytic reduction systems to limit nitrogen oxide emissions.