July 2016

Get Bearish On Fuel This Summer

With diesel fuel hovering around $2.08 per gallon in the first three months of 2016, and averaging about $2.30 for the second quarter, the DOE said it expects its average price to continue rising during the summer 2016 and each quarter after that, before reaching $2.86 per gallon in the final three months of 2017.

The reason diesel prices will creep up is that the DOE’s crude oil price forecasts have been revised upward as well. Crude oil prices are forecast to average $43 per barrel in 2016 and $52 per barrel in 2017. All the more reason to start getting “Bearish” with the commodity and work now to mitigate and hedge against the effects of rising fuel prices and their impact on operational expenses and spending. One strategy may prove an early winner is investing in fuel-efficiency technologies for your fleet.

In a recent blog on commercial truck fuel efficiency, the Rocky Mountain Institute (RMI) notes that “With trucking predicted to grow by two percent or more each year, improving the fuel efficiency of this industry is critical to … supporting profit margins in an increasingly regulated industry. Achieving an average fuel efficiency of 9 MPG—a 50% increase from the current level of 6.2 MPG—would save North American trucking $40 billion per year in fuel ...”

In its blog, RMI noted that there seems to be a gap between the availability of fuel-efficiency-driving technologies and fleet and truck owner’s uptake of these solutions. Citing recent data from the North American Council for Freight Efficiency (NACFE) and Carbon War Room (CWR), RMI said that with more than 70 efficiency technologies available to the industry offering cost savings and relatively quick return on investment, both NACFE and CWR were at a loss as to why fleets weren’t lapping up the solutions. The NACFE launched in 2009 with the help of RMI--an outcome of the Transformational Trucking Charrette and the NACFE’s inaugural meeting. NACFE and CWR identified several market barriers limiting adoption of efficiency technologies, including:

Insufficient information stifling demand: Lack of credible information on the performance of these technologies, including return on investment and payback timesPerception of efficiency technologies as insufficiently reliableFinance: In some instances, lack of access to capital to cover upfront costsSupply: Lack of availability of these technologies from manufacturers or other vendors In 2013, CWR and NACFE created the information clearing house Trucking Efficiency and its accompanying website to address the barriers preventing large-scale deployment of fuel-efficiency technologies and help operators understand and adopt proven technologies confidently. Trucking Efficiency, said RMI: creates and shares comprehensive, unbiased reviews of available efficiency technologies, provides a forum for the industry to come together for open dialogue and collaboration, facilitates greater industry demand for improved efficiency.

The adoption of numerous efficiency technologies makes economic sense for fleets and truck owners under current market and policy conditions says CWR. For example, “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 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. One fleet, Werner Enterprises, informed CWR that it 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 confidence report on 6x2 axles by the information clearinghouse, UPS changed its 2014 tractor purchases from a 6x4 to a 6x2 configuration to improve fuel economy by 2-4% according to the director of automotive engineering at UPS. Frito Lay, noted CWR, has been using the data in these reports for the past few years to accelerate its efforts to improve fuel economy and in 2014 the company’s fleet aerodynamics efforts were expanded to include tails on the back of the trailers to improve efficiency by another 3-4%.

The industry’s technocrats aren’t asleep at the wheel either. With support from the Swedish Energy Agency, Volvo Trucks recently announced a new concept vehicle - the Volvo Concept Truck--the result of a five-year research project aimed at creating more energy-efficient vehicles and cutting fuel consumption by more than 30%. For the most part, the faster vehicle makers like Volvo include efficiency-driving technologies as integral elements of standard designs, uptake of these technologies will remain slow. Volvo said it is working toward creating a more common, commercial ready tractor/trailer efficiency technology platform. In its recent press release the company said that with almost a one-third lower fuel consumption, Volvo Trucks’ new concept vehicle shows how it is possible to drastically boost productivity in long-haul operations. Among the secrets behind these remarkable fuel savings are aerodynamic design and lower curb weight.

"We continuously work on developing more energy-efficient vehicles. This is a high-priority area both out of environmental concern and in order to reduce our customers' costs. We're proud to be able to drive this development. Our concept truck showcases the immense power of on-going technical advances," says Claes Nilsson, President and CEO Volvo Trucks. One of the key factors behind the low fuel consumption said Volvo, is the massive 40% improvement in aerodynamic efficiency that has benefited both the tractor and trailer. "We've modified the entire combination and optimised it for improved aerodynamics as much as possible. For instance, we use cameras instead of rear-view mirrors, which cuts air resistance, so less energy is needed to propel the truck," explained Åke Othzen, Chief Project Manager at Volvo Trucks.

In addition to the aerodynamic improvements, said Volvo, the concept vehicle is fitted with newly-developed tyres with lower rolling resistance. The trailer weighs two tons less than the reference trailer, which translates into either lower fuel consumption or the possibility of a higher payload. Work on the Volvo Concept Truck started in 2011 with the aim of improving the efficiency for long-haul truck transportation by 50%. The project truck, test driven on Swedish roads in autumn 2015, also includes an improved driveline. According to Volvo because the concept vehicle is part of its overall research and development efforts the concept won’t be available to buy anytime soon. However, said the company, some of its aerodynamic features have already been implemented on Volvo Trucks' series-produced vehicles and more of its solutions may be fitted to the Volvo’s commercial line the future.

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