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Carriers consider natural gas, but with hesitation, survey finds

Ninety-four percent of respondents cite fuel station availability as an obstacle while almost 90 percent are concerned about higher vehicle purchase prices. Additional concerns include needed product specs/performance (51.4 percent) and secondary market value (50 percent).

The Trucker News Services

8/22/2012

Slightly more than half (51.4 percent) of carriers are considering natural gas (NG) fueled trucks when new trucks are purchased, but these carriers do see hurdles, says a recent survey by Transport Capital Partners, who teamed up with ACT Research to better understand how carriers are thinking about the potential of natural gas fuel for their fleets.

“The survey confirms the growing interest in natural gas by carriers encouraged by the large difference in price, but also shows the complexities of  choices in terms of type of fuel, fuel supply systems, payload impact, station availability and so forth,” said Richard Mikes, TCP Partner and survey leader.

Ninety-four percent of respondents cite fuel station availability as an obstacle while almost 90 percent are concerned about higher vehicle purchase prices. Additional concerns include needed product specs/performance (51.4 percent) and secondary market value (50 percent).

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While carriers are potentially interested in NG as a fuel alternative, three-fourths of carriers would need a payback in only 1-2 years to facilitate a purchase decision.

"The good news about natural gas as a source of energy for transportation is that the diesel gallon equivalent (DGE) compared to diesel is relatively insensitive to major swings in domestic natural gas spot prices,” said Ken Vieth, senior partner and general manager of ACT Research. “Diesel, in contrast, is highly sensitive to crude oil prices globally with major price swings possible."

Half of the carriers surveyed reported that they would evaluate the new truck technology in this year and the next, with 28 percent saying that there will not be any new plans until 2013.

A handful of the carriers stated that their decisions would depend on the success and performance of the technology as well as the results from other carriers implementing the change. 

“The carrier’s overall decision can best be viewed through a truck life cycle economic model which considers initial costs of NG engines/systems, possible revenue reductions for payload impact, differential between diesel and NG prices over time, maintenance cost impacts in carrier shops and over the road, and estimated sale price of used equipment,” Mikes said. “TCP has experience assisting carriers in such scenarios of equipment life cycle options.”

 Almost half of the carriers surveyed would require a commercial NG fueling station to be within 100 miles of their operations, and for those carriers considering NG, LNG was preferred over CNG by 38 percent to 28 percent. CNG is more preferred by the larger carriers, however.

Carriers are still learning about NG as a fuel alternative though. Slightly over one-third of respondents reported little knowledge about the potential use of natural gas engines as part of their fleet while almost half (45.8 percent) report their knowledge as “average” or “above average”.

As for predictions about the future, 29 percent of carriers expect NG fuel will account for under 5 percent of their fleet five years from now, 27.8 percent reporting that it will account for 16-25 percent, and 19 percent predicting that it will account for 6-15 percent of their fleet.

Of the carriers surveyed, the majority (44.4 percent) had an approximate length of haul between 300-600 miles and used their class 8 engines for line haul – short-to-long (90.3 percent).

TCP provides advisory services related to transportation mergers and acquisitions, capital sourcing, and operations and strategy with regional offices in Florida, Iowa, Colorado, Pennsylvania, Tennessee, and Virginia.  Please visit www.transportcap.com for more information.

Kevin Jones of The Trucker staff can be reached for comment at kevinj@thetrucker.com.

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