Transport Topics



Roadsigns E39.wavDan Ronan: From Transport Topics in Washington, D.C., this is RoadSigns. Here is your host, Seth Clevenger. Seth Clevenger: Thank you for listening to RoadSigns, the podcast series from Transport Topics that explores the trends and technologies that are shaping the future of trucking. In this episode, we're going to examine the expanding menu of alternative fuels and the trucking industry over the past couple of years. The conversation about the future of commercial vehicles has focused on electric-powered trucks. Truck manufacturers have been making significant investments in battery-electric vehicle technology, and they've begun to introduce their first electric models as they prepare for commercial rollouts. But will there continue to be a place for other alternative fuels to diesel, such as natural gas? And how will the alternative fuels landscape evolve in the future? We'll set out to answer those questions in this episode. To learn more, we're going to speak with two alternative fuel experts. Later in the program, we'll hear from Stuart Weidie, president of Alliance AutoGas, a nationwide propane auto gas filling network. But first, we're excited to welcome Chad Lindholm, vice president of natural gas provider Clean Energy. Thanks for joining the program, Chad. Chad Lindholm: Thanks for having me. Seth Clevenger: So in recent years, there's been a significant movement within the trucking industry to explore and implement cleaner fuels. And natural gas is currently the largest alternative to diesel is out there. But truck manufacturers and many of their tier one suppliers have been investing heavily in bringing electric-powered trucks to market. So when I ask you, Chad, how do you see alternative fuels evolving in the years ahead within the trucking landscape? Do you see a place for both natural gas and electric as well as potentially other power sources? Chad Lindholm: Well, that's a good question, Seth. And we get it asked often and talk about it certainly with customers. And internally as a company, there's no question that the space is a large space and there is a tremendous room and opportunity for all fuels and technologies to find a place we think here, clean energy, that it really comes down to the right fuel for the right application. And that not only will include what we're seeing with some of the evolution of the electric space, but also notes on hydrogen that are coming out. There is more exciting news around natural gas hybrid technology that were heavily involved and certainly on the renewable natural gas front. So at the end of the day, we look at this space as depending on numbers, you pulled something around 35 billion gallons per year market terms of consumption. And in a normal year, as your listeners are aware, there's north of you know, there was a run rate north of 250,000 trucks being ordered. So plenty of room out there. And we look forward to continuing to provide our solution to a number of fleets across the nation. Seth Clevenger: You know, I think it's interesting to see this menu of different fueling options begin to emerge and we'll see how it all plays out in the years ahead. But I'm curious to hear your thoughts on what you're hearing from your customers. What are the primary factors that are driving interest in natural gas right now? Was it the business case? Is it emissions regulations? And maybe shippers with corporate sustainability goals or some combination of those factors? Chad Lindholm: No question. There's a combination in different fleets and interested parties. So each discussion is unique and tailored to that individual fleet. But, you know, at the end of the day, we believe fleets are looking for certainty and they're looking to minimize risk. And what we mean by that is a technology that's proven that's here today, that has a robust supply chain with known channel partners that can not only deliver the product, but also service and support. And that's where we feel natural gas engine and truck technology certainly delivers for these fleets. When you pushed aside from that and you can ensure fleets of peace of mind and those critical areas so they can get from point A to point B and deliver the goods that the consumers need on time on schedule, then certainly a push around emission reductions. And the big focus today on corporate sustainability goals is tremendously important. And we, again, feel like we have a solution that helps those fleets as well as their shippers achieve. And in many cases, exceed those goals. Seth Clevenger: And when you think about the many applications in the trucking industry and in finding the right fueling option for the right application. What types of fleet operations do you think are best suited to natural gas? Chad Lindholm: Well, you know, initially it was shorter routes and lighter loads. So fleets typically returning home and hauling and we call that air, you know, paper type products. There was fleets that just like products. The evolution that's happened in our space has been exciting and it's been significant over the last decade or so as improvements have been made to the onboard fuel systems around a quantity of storage in terms of gallons onboard. The weight impact of those gallons onboard, the improvement around just overall engine performance and reliability. So it's expanded and it's expanded in such a way that while shorter routes are still something that's prominent, the technology is lended itself to fleets running upwards of a thousand miles a day in between fills. And we see the regional trucking aspect moving each and every quarter into in some cases, linehaul applications and truly coast to coast, border to border. So it's an application that really fits all different fleet parameters. And we usually think of natural gas as a fossil fuel. But clean energy also offers a renewable form of natural gas called Redeem, which is made from bio methane gas extracted from landfills and dairy farms. It's a really different form of natural gas. How much can fleets reduce greenhouse gas emissions? You know, with both conventional and renewable natural gas compared to diesel? Well, it's an exciting space to be today, and we're proud to be at the forefront of the renewable gas revolution. And the reductions, frankly, are significant. There's not a lot talked about there. We're kind of, they're kind of forgotten. There's certainly buzz with other technologies out there. But let me put this into perspective. Today, you know what we have, you know, essentially blue gas, conventional natural gas. So we have what we refer to as green gaps for renewable gas. Conventional blue gas provides right out the gate in most cases, a 30% reduction in greenhouse gases as compared to diesel. Green gas, on the other hand, can provide as much as a 250% reduction. I didn't misspeak there. A 250% reduction and there's a new buzzword that's starting to catch on in circles and it's referred to as a carbon-negative fuel. We're excited to be in that space and begin to get the message out to fleet operators and the shipper community, policymakers, the media, that this is a viable alternative that at the end of the day provides more greenhouse gas emission reductions than any other technology that is being talked about in the space. Seth Clevenger: It's really interesting that you're able to harness, you know, a bio methane, you know, as the source of the fuel here. It does seem like a really interesting option. And, of course, you know, as a fleet starts to consider, you know, getting into natural gas or just moving beyond diesel and testing out other fueling systems and technologies. And one of the issues we often hear about is concern about the price. You know, the upfront price investment. So I do want to talk to you about Clean Energy Zero Now program. You know, so that essentially is allowing companies to lease or purchase natural gas trucks equipped with Cummins Westport ISX 12N and near-zero engine for the same price as a diesel fleet. Talk about that. Walk us through it. Tell us more about that program. Chad Lindholm: Sure. We're excited about it. Been in the throes now for the better part of a year and in a way, educating some fleets and re-educating others on the advancements made in our field. With today's natural gas engine technology and fueling infrastructure and support structure, as I referred to earlier, Zero Now is a program where, you know, after talking with these fleets and as you mentioned, recognizing that upfront hurdle cost and not an absolute guarantee or that certainty around, well, when's my payback going to occur? What's going to happen with oil and diesel prices, not just short term, but near-term? No one has a crystal ball there. So what we did was we said we're going to take away that risk. We're going to eliminate the upfront costs and we're at on the back and going to guarantee a price that's lower than what you'd otherwise pay for diesel is pegged to the regional pad index. We're able to do that through some unique partnerships that we've developed with the engine manufacturer, community, the fuel system, community key principal dealers. And last but certainly not least, our largest shareholder total. What we do along those lines is we don't step into the truck purchasing, financing and leasing process. Fleets are able to do that as they normally would under the role of normal purchasing cycle. We offset that cost to fleets again through totality, a unique hedge mechanism where we in turn not only eliminate the upfront cost of today roughly $40,000 to $50,000 incremental for a natural gas option, but then peg a discount to diesel pad for the duration of that trucks life. So what's that mean to a fleet? They have day one savings that are guaranteed and are guaranteed in the long term at the fleets running these trucks in California, for instance. And today, paying, you know, on the pad price $3.25 a gallon for diesel. In most cases, they're paying around $2 for natural gas. If that same fleet is running trucks in Texas where diesel significantly lower, like most parts of the United States. And let's just say diesel is hovering around to twenty five pad and we guaranteed a comparable discount. They could be paying as low as $1.50 for fuel. We're excited about it. A number of fleets have stepped up and started the program with us. And we have generated tremendous interest from the truck community as we continue to roll this out and message it across the country. Seth Clevenger: Got it. And this is available now for heavy-duty trucks, right? And I understand there's plans to extend it to the medium-duty market as well? Chad Lindholm: You're right. We've had the 12-liter engine on the road for several years, and I've been able to directly market this program to those fleets that run in the typical Class 8 tractor-trailer application. But we're excited as the 6.7-liter Cummins engine comes out into the marketplace with the same emission reduction benefits as the 9- and the 12-liter platforms. There's no question that we've begun to have discussions in the straight truck market with fleets running shorter routes on a comparable program, and they're excited to hear about it. And we're getting ready to fulfill a number of orders. Seth Clevenger: Natural gas trucks have been in the marketplace now and in significant numbers for some time now, it's been a number of years. So I'm wondering how much of a used market has emerged at this point for natural gas trucks? You know, I know there has long been sort of an unanswered question about that. But what are you seeing on that front? Chad Lindholm: Well, it's starting to grow. You know, the challenges as you launch new products, new engines, and getting to a point where one used products for five or six years down the road or even available to, you know, what's the residual value on those units? So we've worked through that process for the better part of the last decade. And we're really at a point now where we believe we have a known and proven residual value on used 12- liter trucks and we're seeing a couple hundred of these right now. I certainly hope more of that increases in time as more new truck orders come on. But we're seeing a few hundred of these trucks come into the market space on an annual basis. We get pretty involved in the process of helping fleets on the front end, find users on the back end, kind of play that the middle man to ensure that truck finds a secondary life, that we can be a fuel partner for that new fleet. Sometimes that means we're involved with the dealers that take these trucks back on track lease type programs or directly with the fleet. And they have a great use in the independent owner-operator community. Four different contracted fleet carriers. Certainly that includes port and drayage operations. We see a lot of that excitement building right out in the ports of Los Angeles and Long Beach. And it's starting to lend its way to other drayage applications across the country. And we've started to see a pickup in the United States Postal Service fleet carrier space, where these regional trucking companies are again looking for options and looking for cost-competitive options to bid out and achieve their sustainability goals with cleaner, greener trucks. Seth Clevenger: Now, for as long as trucking has been testing and implementing natural gas, there's also been this debate about compressed versus liquefied natural gas. And based on what we've seen in the market so far, you know, CNG has seen broader adoption than LNG. But was the current demand breakdown between those two options that clean energy? Chad Lindholm: You know, we've done both. And we can get to sit here, you know, and you can argue all day long on the virtues of one versus another. No one else really is dug in there deep on both technologies. They're both great technologies from a building and running stations, from delivering product to the end user, in our case being the truck fleet. There are some considerations and as I mentioned earlier, right fuel for the right application that certainly can be applied to the CNG and LNG discussion. But what we do see today is about an 80/20 split, you know, 80% CNG truck orders, 20% LNG truck orders. Historically, that had somewhat been driven by the nature of the regional trucking in and shorter routes where CNG certainly made a lot of sense. And you didn't need all of the storage onboard and that have to be concerned about weight impacts as trucking becomes available. Natural gas. And there's more interest in linehaul and why, as I mentioned earlier, coast to coast, border to border. I think you'll see that 80-20 split shifts slightly. Who knows where it will ultimately end up. But you'll see some LNG truck deployments start to happen for a range of reasons, for access to fueling infrastructure that's already built and maybe some other considerations that fleets have out there. And what we looking at here is clean energy is, again, because we do both fuels, we're going to present a fleet with both options and ultimately met. Let them make the decision that best suits their needs. Seth Clevenger: Sure. Now, before I let you go, Chad, I would like to hear your thoughts on where you see the trucking industry headed in the future as we implement alternative fuels and continue to push to reduce emissions. What do you think commercial trucking is going to look like 10 years from now? Chad Lindholm: Wow. Well, I don't want to speak for our trucking customers, but I guess I'll give a bit of our perspective as natural gas fuel provider. Certainly, there's going to be a diversified approach that these fleets, we believe, are going to look at with fuels and technologies. And instead of having all your eggs in one basket with a traditional diesel fuel product that's powered the industry for the last umpteen decades, there is going to be a mix. And that is going to be a unique challenge, but also a great opportunity for these fleets out there. Depending on the duty cycle of the application they have, the type of routes they have, the type of products that they're delivering. And we really see that we are going to continue to work with fleets that are going to have a mixed portfolio. And that, in our view, is a good approach to have is a fully, as you're looking at deleveraging risk and looking at technologies and looking to maximize your service levels while keeping your costs in line over the long term. Seth Clevenger: Yeah, well, it's certainly going to be fun to watch this all develop in the years ahead as we see fuels and power sources other than, you know, the traditional diesel really begin to garner a larger share of the trucking market. I do think that's a good stopping point, though. So I'd just like to thank you again, Chad, for joining the podcast and sharing your insights. We really appreciate it. Chad Lindholm: My pleasure, Seth. Thank you. ---Seth Clevenger: Next on RoadSigns, we're excited to welcome Stuart Weidie, CEO of Blossman Gas and president of Alliance Auto Gas Nationwide, autogas, fueling and vehicle network. Thanks for joining the program, Stuart.Stuart Weidie: My pleasure. Happy to be here.Seth Clevenger: So in recent years, there's been a lot of conversation and investment in fuels other than diesel within the trucking industry. Several years ago there was an intense focus on natural gas. And now the conversation has turned mostly to electric power trucks. But in this episode, I wanted to take a look at some of the other alternatives that are out there. And one of those alternatives is propane, autogas. I'm sure that some of our listeners don't know much about propane as a vehicle fuel. So I could just start out by telling us what it is and how it works. Stuart Weidie: Well, first of all, propane is a domestically produced fuel here in the United States. It comes as a biproduct of natural gas refining. And about 15 to 20% of it is from oil refining. We've got a network of 75 million miles of pipelines spread around the United States in addition to rail systems and other methods to get the product around the country. It's a 110-plus-year-old fuel. And maybe that's part of our problem. I often call a propane to sell fuel because it's so ubiquitous in many ways. But not many people have heard about it, especially as a transportation fuel. And there are over 27 million vehicles running on propane or gas globally. Unfortunately, there are only about 185,000 here in the United States. But it's a very popular alternative fuel to petrol or gasoline and diesel in other parts of the world. Seth Clevenger: Now, what are some of the advantages of propane autogas compared with diesel? Why would a fleet operator in the transportation industry consider using propane instead of diesel? Stuart Weidie: Well, that's a question we often get, and there are quite a few positive benefits. The first one that seems to be most effective in terms of the development of the market here in the United States is its cost advantage over the last 12 years. Propane autogas has been around 30 to 35% less than gasoline in 40, 45% less than diesel. So there's a very definite cost savings benefit. But one of the things that's happening, and I think this is a nice development in the transportation sector as well as other energy generation methods, is we're trying to find ways to be more responsible and good stewards of the earth resources and the environment, and propane versus diesel, especially for taking a school bus as an example of diesel school bus reduces NOx or nitrogen oxides by 96%. And when you compare it to regular gasoline emissions, it's 30% less in greenhouse gases and up to 60% less NOx. When you're using propane autogas, so there's a very definite emissions benefit. It's a cleaner burning fuel. In addition to the cost benefit. I think everybody wants to be green until it costs something. So we hit both of those benefits and in our mind Seth Clevenger: Now, it could give us a few examples of the types of transportation customers that have implemented this fuel in their operations. Just some examples of the types of operations you mentioned, you know, buses. What else is out there? Stuart Weidie: Well, paratransit vehicles and other vehicles moving people around communities. Think of your local community that's taking elderly folks and the infirmed to doctor's appointments to the grocery store to pick up their medications and so forth. That has been a very popular adopter of propane out of gas throughout the country, primarily because those vehicles are running all day, every day and they use them. They have a lot of mileage on them and the benefits really accrue to go on the cost saving side. Another area that's very popular is law enforcement, sheriff's department vehicles, some ambulances, package delivery services, which we think there's a good runway here in front of us with a lot of the changes that appear to be happening with people ordering things and having them delivered to home. It's sort of like a 50, 60, 70-plus years ago by delivered milk to the home. And now that's what goes around comes around, I guess. So law enforcement, people movers, package delivery services and then there are plenty of other service businesses, pest control as an example. So we're driving around the community all day. And so particularly people who are driving 20,000, 25,000 miles or more or more per year, they get the greatest benefit. Seth Clevenger: Sure. And I'm also aware of some Class 8 trucking companies that have tested propane autogas. But of course, it isn't in widespread use in freight transportation today. Now, the propane fueling system that I've read about actually substitutes propane for diesel at certain operating levels for the engine. So it's essentially using a mix of diesel and propane. You know, first off, just explain how that would work in a Class 8 truck. Stuart Weidie: Well, there's a propane injection system into a compression ignited engine like a diesel engine for a Class 8 truck. And we can substitute up to 30 to 40% propane into that engine. And it's still run within the proper operating parameters in the fuel system guidelines. And what that really does is it provides a cost effective partial solution to the fuel cost, but also it allows the missions to improve somewhat, marginally, maybe only 10 to 14%. But you can't put 100% today a diesel engine and have it replaced with propane because CTA rating is very important to a compression ignition engine. And that's not exactly what is possible right now. And so we're looking at Class 2 through 7 vehicles. So think of beverage delivery vehicles around the community. Those are perfect applications that are diesel now, that can be propane or autogas. Seth Clevenger: Always makes sense, of course, to look at the applications that are best suited to the alternative fuels that are out there. And those are good examples of where it might make the most sense. Now, are these fueling systems generally going to be retrofitted or is there an option to? Are there any factory options at this points and also for a retrofit? How does that play out in terms of engine warranties? I know that for certain large fleets and that's always going to be a big concern. Stuart Weidie: There are OEM options here in the United States and ROUSH CleanTech is Ford option they're working with Ford Motor Company to make F-250s up to that 750 commercial vehicles. But primarily the market is aftermarket and globally, around 80% of the market is aftermarket conversions. And that's a great question about their warranty. So the [Magnuson-]Moss Act requires that if you have an EPA certification, it does not void the manufacturer warranty. So not only is the manufacturer your warranty still stay in place if anything happens that was a cause of our system. In Alliance AutoGas, we have a five-year, 120,000-mile warranty. So that is a very important factor, as you mentioned, and particularly fleet adoption. Seth Clevenger: Now, one aspect of this that we talked about a little bit already, but I'd like to expand upon is just the potential market for propane in commercial transportation. Could you just explain a little bit more about, you know, precisely the vehicle types and the types of applications, business applications that you think will make the most sense for propane out of gas? Stuart Weidie: Well, we're exporting 27 billion gallons of propane out of this country today. If we just took that, we have the capability of converting over 6 million commercial vehicles to run on propane autogas in the United States. And I think that's relevant. That's important to understand in the context of there's no one solution. The electric vehicle has seemed to really gather tremendous amount of momentum, exposure and potential. But you can't possibly make enough batteries because there aren't enough materials and you have to look at how electricity is produced. So in this country, we really need to take a more holistic, I would call it a trans rational approach and convert six or seven or 8 million vehicles to autogas. The same for natural gas vehicles and the appropriate applications, which is very small roots. Garbage trucks, local buses, transit authorities and then have where it fits appropriately. The electric vehicle. But keep in mind, the electric vehicle has issues with weight in the load that they can carry. So they'll be applications for a number of options. And we can't think one option is going to solve all of our problems. That's one of the fallacies that I see repeatedly when I go to transportation conferences, is everybody there thinks their options can solve all the problems we need to work together with multiple options. And really, diesel is what we need to eliminate primarily. Seth Clevenger: That's really interesting because I would say that within the last just few years we've seen the OEMS and, you know, a lot of the tier one suppliers have been, you know, as we all know, investing heavily in battery-electric. And that's pretty much offer, as you know, the propulsion system of the future. Of course, continued investment in refining diesel engines, of course, which aren't going away soon. But, you know, there's also natural gas out there. And, you know, your argument is that rather than just trying to convert all diesels to electric over time, you see a place for multiple fueling options, fuel options for different applications across the industry. Stuart Weidie: That the only option, as I said, just as an example, for one electric battery. And it takes a thousand pounds of weight. It's 500,000 pounds of raw materials to get processed to produce that battery. And those work, but they're very difficult to scale to everything. So we know that the OEMs and many others and look at some of the companies that have been created have larger values like Tesla than GM and Ford combined. They're very popular. But in terms of scaling these options out for everything, it's just not possible. We would have to increase by 14 times the expansion of our electric grid system of over the next 40 years in order to accomplish that versus what we've done in the past 60 years. So a dose of realism is important and there needs to be a general mix of all these things. Seth Clevenger: I appreciate that, Stuart. Before I let you go, this will give you a final opportunity to offer up any additional thoughts on where you see commercial transportation heading in the future and any additional thoughts you have on where we stand with the future of fuels and commercial transport? Stuart Weidie: Thank you for asking this question. This is very important. First of all, I'm a great believer in hybridization. We should have electric batteries with some sort of internal combustion or turbine engine recharging the battery along with regenerative braking on the vehicles. That is the perfect combination and leads us into the future. Maybe it's not as sexy as being all electric. The second thing is, I think our country needs to invest in renewable liquid fuels. You know, one of the things that is often misunderstood in 1970, vehicles emissions compared to one today is 99% less today than it was in 1970. And from going simply from port injection to a direct injection to other turbine and turbo charging options are going to happen in the future. We're going to see internal combustion engines get better and cleaner and more efficient. So the internal combustion engine is not dead. So when you put it in conjunction with the smaller electric battery, it's not as doesn't require as many materials and liquid renewable liquid fuels. I think we have a great opportunity to make tremendous impact on the cost. But improve our environment and deal with the climate issues that are facing our nation and the globe. Seth Clevenger: Well, I think that's an excellent stopping point. And I'd just like to thank you again, Stuart, for joining the podcast and sharing your insights. We really appreciate it. Stuart Weidie: Thank you so much. Enjoyed it. Seth Clevenger Before we close, let's take a moment to revisit our original question. As electric trucks gain momentum, will other alternatives to diesel continue to have a place in the trucking industry? It's becoming increasingly clear that electric power trucks will become an important part of freight transportation in the years ahead. But as we've heard from our guests, other alternative fuels may also have a role in the industry's future. Right now, natural gas remains the primary alternative to diesel on the market today. There was a time several years ago when natural gas seemed poised to capture a huge portion of the trucking market. Back when diesel prices were hovering around $4 a gallon. That never fully materialized, in large part because diesel prices have since dropped. But natural gas continues to offer a pathway to lower emissions, especially as renewable natural gas become more available. And we certainly could see more deployment of other fuel options, such as propane autogas in certain applications. All of these power sources from natural gas and propane to electric faced similar challenges, such as higher upfront vehicle costs and the availability of fueling or charging infrastructure. But in the long term, as the transportation industry continues to look for ways to reduce emissions and improve efficiency, it's a safe bet that companies will be choosing from expanding menu of fueling options in the years ahead. If you've enjoyed this episode of RoadSigns, please let others know, and review us on Apple podcasts and Spotify. If my questions have sparked questions of your own, share them with me and the RoadSigns team. You can email us at share@. We read them and respond daily. And of course, we'll be back in two weeks with a fresh episode of RoadSigns.Until then, I'm Seth Clevenger. Thank you for listening. ................
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