It is well known that higher productivity vehicles and fuel efficiency standards for trucks are gradually reducing the per-vehicle demand for diesel, which is likely to change operations at truckstop and travel plaza locations across the country.
“You have each truck burning less fuel, so you have less frequent stops,” said Roger Cole, a past chairman of NATSO and editor of the NATSO Foundation’s Biz Brief.
During The NATSO Show 2016, Bob Costello, chief economist for American Trucking Associations, told operators his members are getting 7.5 to 8 miles per gallon. “I’ve had a few that are getting close to over nine in very tightly controlled situations,” he said. (See here information on his presentation,Top Economists Share Their Outlook for the Years Ahead, here.)
A study by the North American Council for Freight Efficiency found that a variety of technologies increased mileage for 14 large carriers to 7 MPG in 2014. Without the technologies, the fleets’ average would have been 6.1 MPG.
Equipment manufacturers are continuing to improve fuel efficiency. Volvo Trucks recently announced a new concept heavy-duty vehicle it is testing in Sweden that offers nearly one-third lower fuel consumption. Volvo’s goal is to increase fuel efficiency in long-haul trucks by 50 percent. The concept truck uses cameras instead of rear-view mirrors to improve aerodynamics and lower rolling resistance tires. While the vehicle is not yet available, Volvo said some of its aerodynamic features have already been implemented on Volvo trucks and more may be available in the future.
Teryn Norris, director of energy technology for PIRA Energy, said new engine standards, which will phase in over time, will result in a 21–42 percent reduction in fuel use by 2027 when compared to 2010 engine standards. “Those standards phase in beginning in 2021. They are pretty aggressive and there are 46 different engine categories that are covered,” he said.
The Department of Energy’s SuperTruck Program, which first launched in 2010, has spurred fuel efficiency, said Ethan Groveman, director of product development at PIRA Energy Group. Vehicles developed under the SuperTruck program dramatically increase tractor-trailer fuel, engine and drivetrain efficiency through the use of advanced technologies, DOE said. The agency announced its SuperTruck II project in March that provides funding for companies to improve heavy-truck freight efficiency by more than 100 percent relative to a manufacturer’s best-in-class 2009 truck.
“A number of the technologies are still in the prototype phase and they’ll need substantial improvement to be commercialized,” Groveman said.
Last year, Walmart introduced a truck prototype that combines aerodynamics, microturbine-hybrid powertrain, electrification, advanced control systems and cutting edge materials to drastically improve fuel efficiency.
“Going forward, I expect we will see more trucks that have improved load capabilities and serious MPG improvements. They are here now and more are coming and we, as an industry, better be prepared,” NATSO’s Vice President of Membership Darren Schulte said.
Although fuel use per vehicle is decreasing, the DOE’s Energy Information Administration predicts a 23 percent increase in diesel demand between 2015 and 2040. “The EIA is clearly projecting far more transportation miles,” Cole said, adding that more transportation miles could put even more pressure on truck parking. “If you’re burning less fuel and there are more trucks on the highway, where do you park them all?”
Groveman said the attractive price of diesel is encouraging companies to utilize trucking to move freight. It is also likely to slow the adoption of fuel efficient technologies and a move to alternative fuels. “Oil prices are half of what they were and there are indications the oil industry can maintain substantially lower diesel prices, so a lot of those incentives to minimize fuel expenditure are still there but are not as pressing as they once were,” he said.
Opportunities Within Truckstops
Schulte anticipates that new technologies on fuel efficient trucks could create new opportunities for truckstop and travel plaza operators. For example, it could lead to new types of work in the shops to repair the trailers and tires. “While these are current activities, the new trailer could possibly bring in a host of safety features and thus repair opportunities that we don’t even consider today,” Schulte said.
Operators may also find shop opportunities related to the new gauges, which are electronic. Turn and click seems to wear out much slower than anything electronic. “Additionally, there are likelyopportunities for add-on sales in areas we have not yet anticipated,” Schulte said.
Many operators, including Jim Goetz of Goetz Companies, are already working to boost sales in other areas to help offset the economic cost of fuel efficiency gains. “We have started offering liquor, and our primary focus is the local market and tourists heading to their cabins,” Goetz said, adding that the location also offers mixers. “Years ago we never would have thought of selling it.”
Goetz is also exploring shop opportunities, such as repairing side curtains and trailer tails meant to increase fuel efficiency. “We’re not necessarily looking to install those but can we get certification in doing repairs on those,” he said.
The Role Of Alternative Fuels
As fuel efficiency increases, one way to improve overall profits is to increase margins on diesel. “Biodiesel is potentially one method for doing that,” said David Fialkov, vice president of government relations for NATSO.
Goetz said he has considered the overall effect biodiesel could have on sales. “Because of the fuel efficiency landscape, the pie has to grow to keep the same amount of gallons,” he said.
Cole said embracing alternative power sources may be a solution for truckstop and travel plaza operators looking to diversify their offerings. Although it is too early for many to jump into the natural gas arena, independent operators should take the time to learn about electric charging stations, CNG and LNG so they know when it is time to make an investment, Cole said.
However, Fialkov said interest among fleets in natural gas is diminishing due to the low fuel costs and because Congress hasn’t increased the gas tax.
In 2014, Groveman, who worked with the NATSO Foundation and the Fuels Institute on the 2014 report “An Assessment of the Diesel Fuel Market: Demand, Supply, Trade and Key Drivers,” estimated that natural gas demand was growing. However, PIRA Energy has altered its projections since then. “The economics for the natural gas introduction into the heavy-duty market are lower now than they were two years ago,” Groveman said.
“Because oil prices were high and the outlook was higher, we thought natural gas would have more growth. Our outlook is now close to our low natural gas outlook we projected in 2014, maybe even lower,” Groveman said, adding that PIRA Energy has seen the progress on electric vehicles moving along faster than expected. “It enables automakers to have another option to meet fuel efficiency standards.”
While fuel efficient vehicles will alter demand, PIMA Energy predicts that diesel will remain the primary fuel out to 2035.
An Increase In The Fuel Tax
The adoption of fuel-efficient technologies is dependent on a number of factors, and Fialkov said an increase in the fuel tax could spur reduced fuel use for heavy-duty and passenger vehicles while also increasing funding for the nation’s highways.
“Automakers are in kind of a tough spot where you have increasing demands for more fuel efficient vehicles while customers are requesting more SUVs. It is creating a gap between what the government wants and what consumers want,” Fialkov said. “An increase in the fuel tax would potentially bring customer demand in line with what the government is trying to do.”
Photo Credit: Jules Clifford/NATSO
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