Following UPS’s achievement of traveling one billion miles using alternative fuels, Mike Casteel, director of fleet procurement, UPS, discusses the Rolling Laboratory fleet and what the future holds for advanced technology and alternative-fuel vehicles.
How and why was the Rolling Laboratory established in the first place?
UPS has been using alternative-fuel vehicles in one form or another for decades. In fact, our commitment to seeking out alternative fuels actually dates back to the 1930s when UPS tested electric vehicles. But as everyone knows, there have never been large-scale viable alternatives that were cost competitive with gasoline and diesel fuel. We began referring to the alternative-fuel fleet as a rolling laboratory more than 10 years ago simply to recognize the fact that much of what we are doing is relatively experimental, and, also to recognize that we learn something new with each deployment or project.
What were some of the biggest challenges in those first few years?
One of the biggest challenges we have faced is the one we are facing today, which is the effect low oil prices have on alternative-fuel technology investment. Over the last 30 to 40 years we have seen cycles repeated where oil prices would rise and create increased interest and investment in alternative-fuel technology. Then oil prices would decline and interest and investment would dwindle to a trickle. When oil prices rose again, it was like starting over to regain some of the momentum that had been lost from the last cycle. We are seeing more resilience in this current down cycle of low oil prices as some investment and development is still taking place. But there has been a noticeable drop-off in interest among most fleets, especially those smaller fleets without the economies of scale of a UPS.
Challenges on a more micro level would include learning which technologies work or do not work in specific operational situations. UPS operates thousands of vehicles each day in a wide variety of routes and duty cycles. If we are using a gasoline or diesel truck we pay little attention to the route on which it is deployed. These trucks are designed to operate on any route, long or short range, heavy or light starts and stops. But when deploying an alternative-fuel vehicle, consideration needs to be given to the route, how the driver operates the vehicle, fueling infrastructure and other metrics. Some of this is obvious. We knew, for instance, that we could not run an electric Class 6 truck 150 miles on a 100kW battery pack. But on shorter, more reasonable routes, we did not know exactly how the load and the frequency of stops and deliveries in a given route would impact the range of the vehicle, not to mention how the driver drives the vehicle. These nuances are applicable to virtually all of the various alternative-fuel vehicle technologies and the answers are different for each.
How has the program developed over time?
The program has certainly grown, especially over the last few years. At the end of 2014, UPS had more than 5,000 alternative-fuel and advanced-technology vehicles in operation. Now we have more than 7,200. And we just announced reaching our goal of driving over one billion miles with the alternative-fuel fleet, most of those miles having come in the last two years. This dramatic increase in miles driven is primarily due to our Class 8 natural-gas truck fleet. When the Cummins ISX12G natural-gas engine was introduced in 2013, it represented the first affordable and dependable heavy-duty engine running 100% on natural gas. This allowed over-the-road trucks to begin using low-cost natural gas without compromising performance or power. And Class 8 over-the-road trucks are where the miles and diesel fuel displacement occur. At UPS, a Class 8 heavy truck runs 10 times more miles per day than a medium- or light-duty delivery truck. So although we can certainly grow the alternative-fuel fleet with the smaller trucks in greater numbers, we must deploy Class 8 in order to truly impact the miles driven and also realize a meaningful reduction in the use of diesel fuel.
Not to say this is easy. The cost of natural-gas trucks has come down, but they are still considerably more expensive than a diesel truck. And so is the fueling infrastructure. With low diesel prices, it is difficult to make the math work, and only under optimum conditions can we do that.
What have been some of the biggest advancements in alternative fuels and the vehicles that use them?
There have been many, especially recently. Aside from the introduction of the heavy-duty natural-gas engine mentioned previously, another example that comes to mind is the rapid advancement of electric and hybrid-electric vehicles. Passenger car EVs and HEVs are advancing with greater range and lower cost than ever. But we are also seeing those same advancements in some medium-duty applications.
We have always believed the parcel delivery business is a prime candidate for electric vehicles because our trucks come home every night and sit stationary in the same place in our buildings for 10 to 12 hours in many cases while being loaded for the next day’s run. And they run relatively low miles but they stop and start frequently, which allows for high levels of brake regeneration to recharge the batteries.The challenge is and has always been the cost of the batteries and the charging infrastructure. Most buildings, including those at UPS, were not originally designed with wiring and related electrical capacity to accommodate the high levels of electricity needed to recharge medium-duty electric trucks with high-capacity battery packs. So when we deploy EVs or plug-in HEVs, these buildings must be modified to increase the capacity for delivering sufficient electricity to these vehicles. That can add significant cost to an already expensive situation. But we are seeing those costs come down; hopefully that will continue to the point that we can take advantage of the obvious opportunity we have, due to the way our delivery fleet is used each day. We are also working on projects involving hydrogen fuel cells, and working with companies to develop new sources of renewable fuels, both diesel and natural gas, which can be used in our existing fleets with no modifications to the vehicles.
How are the vehicles adapted to accommodate alternative fuels?
Natural-gas trucks require high-pressure fuel tanks in the case of CNG, or cryogenic insulated fuel tanks in the case of LNG. Electric vehicles have obvious differences in that they have no internal combustion engine (ICE) at all, with the entire drivetrain and fuel system replaced with electric motors and battery packs. We are working with plug-in HEVs that run the majority of their routes on electricity, but use a small gasoline engine to recharge the batteries en route in order to extend the vehicle range.
In contrast, we are using a renewable diesel fuel for which no modifications to the truck are needed. The fuel is virtually identical to low-sulfur diesel fuel and can be blended seamlessly into the fuel system. So it just depends on the situation as to how the truck is impacted.
What does the future hold for the Rolling Laboratory?
We plan to keep doing what we have been doing. We do not know what the future holds for oil and traditional fuel prices or volatility. What we do know is that it will change. It always has and always will. There are too many dynamics at work for traditional energy costs to remain stable for long periods of time. However, we also must recognize the economics of the short-term situation and measure our desire to continue advancing the alternative-fuel vehicle agenda against the backdrop of low oil and diesel prices. And although today’s low energy costs are a challenge to alternative-fuel investment, they are also beneficial to the economy and in some ways may turn out to be beneficial to development of alternatives in the long run. The people and companies in the alternative-fuel and vehicle-development industry have been forced to rapidly advance their performance and reduce costs in order to remain competitive with low-cost oil. At some point, when oil costs increase, those that survive the current cycle will be very well positioned to provide needed alternative-fuel technologies at reasonable costs, and hopefully without requiring any type of subsidy from outside (government) agencies. The danger we face today could be that not enough of the best will survive, and we could repeat the cycle that has been seen many times in the past.
Is there a financial benefit to posts using alternative fuels or is it purely environmental?
There is a financial benefit as well as an environmental benefit in many situations. And with some, there is a belief that economic benefits may one day be possible if a given technology is developed to scale, and the short-term investment is a down payment on potential future returns, both environmental and economic. UPS believes strongly in our sustainability approach, and we focus on long-term gains that fit into our operations and our culture. And we also recognize that a positive environmental agenda can work hand in hand with a positive economic result. Sustainability has many meanings depending on the context. But one such meaning is the ability to continue what you’ve started. Not just UPS, but any person or company that wishes to continue to advance a positive environmental impact will ultimately fail if the economics do not support the environmental initiatives.
How long before alternative-fuel vehicles encompass half of UPS’s delivery fleet?
The UPS fleet is one of the largest in the world and we operate across the globe. We will continue to explore all viable options for alternatives to traditional fuel as relates to the vehicle and also to the fuel. There are too many factors in play to say how or when we might reach such a lofty goal as 50% of the fleet. But if or when the technologies evolve to make such a goal possible, we will more than likely have already been working with it in our Rolling Laboratory and we will be well positioned to support it.
September 14, 2016