According to a report published today on the Wall Street Journal,home-improvement retailer Lowe's wants its delivery company to shift all of its several hundred trucks to natural gas by 2017. P&G already has 7% of its trucks on gas and could reach as much as 20% within two years. UPS says it plans to buy 1,000 natural gas trucks by the end of next year.Fedex Corp. plans to shift 30% of its long-distance trucks to natural gas over the next decade.
The nation's supply of relatively cheap natural gas is helping spur this shift. So are new natural gas engines that can power heavy-duty trucks that weigh up to 80,000 pounds. The first, a 12-liter Cummins Westport Inc. natural gas engine went on sale in July. Next year, Volvo AB the Swedish heavy truck maker, will introduce a natural gas engine for its trucks.
Long-distance trucking companies,like Con-Way,Schneider Nationa INC and Swift Transportation Corp. are testing compressed natural gas and liquefied natural gas powered trucks as they awaiting more powerful engines and a nationwide fueling and repair infrastructure.
About 5% of all heavy duty trucks sold next year will run on natural gas, up from around 1% this year, according to industry projections. Barriers to wider use are coming down, driven by the relatively low cost of compressed natural gas, or CNG, which sells for about $1.50 less a gallon than its equivalent in diesel fuel, which averaged about $3.87 a gallon this week.
The average heavy truck consumes as much fuel as 40 sedans in a year. Such vehicles make up just 1% of the U.S. vehicle fleet, but consume 20% of the fuel, according to Jim Arthurs, the president of Cummins Westport joint venture.
"Within five years, 30% of our fleet could be natural gas," said Ike Brown, president of logistics and trucking company, NFI Intermodal, which provides deliveries to Lowe's in Texas and has some 2,200-trucks in its fleet.
"It's cleaner than the average truck running today," said Steve Palmer, vice president of transportation for the Mooresville, N.C.-based Lowe's. "It's a long-term play that could save a lot of money." The retailer plans to have 100% of its fleet on natural gas by 2017. "And I do believe the 12-liter engine was the inflection point," Mr. Palmer said.
The cost of the natural gas trucks is still an issue. CNG trucks cost between $40,000 and $50,000 more than a diesel truck, which costs about $120,000, primarily because of the large carbon-fiber fuel tanks required to store CNG or liquefied natural gas. In large fleets, that premium could add millions of dollars to equipment cost.
Still, trucking companies see longer term benefits.
Mr. Arthurs, the president Cummins Westport, thinks the price of the trucks could come down quickly. There are only a handful of fuel tank makers, but they are expanding capacity and recently St. Paul, Minn.-based 3M got into the business, adding a major manufacturer to the supply chain.
Internal combustion and diesel engines can be converted to natural gas relatively easily.
"It has a very strong value proposition for us," said Mr. Peters, whose fleet at Ryder leases out or operates about 50,000 heavy trucks.
