The Obama administration’s initiatives to limit CO2 emissions are about have a big effect on the American trucking sector. The new regulations complement existing initiatives taken to reduce CO2 emissions in passenger vehicles and electricity generation.
The Environmental Protection Agency is scheduled to launch an initiative to improve the efficiency of truck engines this week. Although the details have not been made public, several press reports have asserted that larger trucks will be obliged to improve their fuel efficiency by “up to 40%”. The benchmark would see the largest vehicles increase their miles per gallon from 5 or 6 today to 9 miles per gallon in 2017.
Potentially the energy saved could be substantial. Although heavy commercial vehicles represent a few percent of the vehicles on the road, they consume approximately 20% of the vehicular fuels used in the US every year. This is both because of their size and intensity of their use.
However, commercial vehicles are invariably more efficient that private passenger cars with more appropriate power-to-weight ratios and gearing. This is hardly surprising as the fuel is a major cost driver in any road freight business. Therefore improving fuel efficiency will not be easy.
Such is the size of the target for fuel consumption it would imply that the main focus of the new regulations appears to be on improving engine technology. This is unlikely to be cheap, with suggestions that the price of the largest trucks could increase by tens of thousands of dollars. It could also imply that other fuels could be used, such as natural gas although in the long-term there are other options including forms of hydrogen-diesel mix or even electric power. These latter solutions however, are some way-off.
Assuming that these new initiatives are implemented, it might tentatively be suggested that the future of trucking in the US is one of lower fuel costs but greater capital expenditure. Such a shift may influence the structure of the market in the long-term with larger better capitalised providers becoming more competitive over their smaller, financially weaker rivals.
GLOBAL SUPPLY CHAIN INTELLIGENCE (GSCi)