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Guide to Deploying Clean Truck Freight Strategies (2017)

Chapter: Chapter 4 - Private-Sector Perspectives

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Suggested Citation:"Chapter 4 - Private-Sector Perspectives." National Academies of Sciences, Engineering, and Medicine. 2017. Guide to Deploying Clean Truck Freight Strategies. Washington, DC: The National Academies Press. doi: 10.17226/24957.
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Suggested Citation:"Chapter 4 - Private-Sector Perspectives." National Academies of Sciences, Engineering, and Medicine. 2017. Guide to Deploying Clean Truck Freight Strategies. Washington, DC: The National Academies Press. doi: 10.17226/24957.
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Suggested Citation:"Chapter 4 - Private-Sector Perspectives." National Academies of Sciences, Engineering, and Medicine. 2017. Guide to Deploying Clean Truck Freight Strategies. Washington, DC: The National Academies Press. doi: 10.17226/24957.
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Suggested Citation:"Chapter 4 - Private-Sector Perspectives." National Academies of Sciences, Engineering, and Medicine. 2017. Guide to Deploying Clean Truck Freight Strategies. Washington, DC: The National Academies Press. doi: 10.17226/24957.
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Suggested Citation:"Chapter 4 - Private-Sector Perspectives." National Academies of Sciences, Engineering, and Medicine. 2017. Guide to Deploying Clean Truck Freight Strategies. Washington, DC: The National Academies Press. doi: 10.17226/24957.
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Suggested Citation:"Chapter 4 - Private-Sector Perspectives." National Academies of Sciences, Engineering, and Medicine. 2017. Guide to Deploying Clean Truck Freight Strategies. Washington, DC: The National Academies Press. doi: 10.17226/24957.
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Suggested Citation:"Chapter 4 - Private-Sector Perspectives." National Academies of Sciences, Engineering, and Medicine. 2017. Guide to Deploying Clean Truck Freight Strategies. Washington, DC: The National Academies Press. doi: 10.17226/24957.
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Suggested Citation:"Chapter 4 - Private-Sector Perspectives." National Academies of Sciences, Engineering, and Medicine. 2017. Guide to Deploying Clean Truck Freight Strategies. Washington, DC: The National Academies Press. doi: 10.17226/24957.
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Suggested Citation:"Chapter 4 - Private-Sector Perspectives." National Academies of Sciences, Engineering, and Medicine. 2017. Guide to Deploying Clean Truck Freight Strategies. Washington, DC: The National Academies Press. doi: 10.17226/24957.
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27 This chapter describes input received from the private sector on clean truck freight strategies. A brief overview of the trucking industry is provided before the results of industry interviews are summarized. 4.1 Trucking Industry Background Trucks perform the bulk of freight movement in the United States. They include tractor-trailer combination trucks as well as single-unit trucks used in applications like urban pickup and delivery, waste hauling, and construction. There is no universally accepted definition of what differentiates a “freight truck” or a “heavy-duty truck” from a truck used for personal travel (e.g., pickups and SUVs). Typically the distinction is made based on weight or number of tires, with most studies assuming that trucks with six or more tires are freight trucks used for commercial purposes, and that four-tire trucks are for personal use. This boundary generally corresponds to a gross vehicle weight rating (GVWR) of 10,000 lbs. The scope of this study includes only trucks with a GVWR of 10,000 lbs. or more, which corresponds to vehicle Class 3 and above. According to vehicle registration data, in 2013 there were 2.5 million truck tractors and 8.1 million heavy-duty single-unit trucks in the United States. Table 12 shows how these trucks and their associated VMT are distributed between long-haul and short-haul operations. Long-haul trucks are defined here as those that travel the majority of their miles more than 200 miles from their home base. Long-haul combination trucks account for 61% of all truck VMT, which helps explain why this segment of the truck population tends to be the focus of energy and emissions reduction efforts. All of these trucks are also diesel fueled, so they add significantly to DPM and NOx emissions. Single-unit heavy-duty trucks account for 39% of total truck VMT. Smaller single-unit trucks are generally gasoline fueled, while many larger (Class 5–6) single-unit trucks are diesel fueled. Truck carriers can be grouped in three major categories: for-hire truckload, for-hire less-than- truckload, and private. In addition, the “parcel delivery and other” category is discussed here because of the unique nature of some for-hire operations. • Truckload (TL) service provides shippers who can fill an entire truck with direct point-to- point service. • Less-than-truckload (LTL) service is used by shippers with smaller shipments that do not require a whole trailer. LTL carriers provide local pickups, consolidate shipments into full truckloads at a terminal, carry shipments to a destination terminal, and then provide local delivery from there. C H A P T E R 4 Private-Sector Perspectives

28 Guide to Deploying Clean Truck Freight Strategies • The parcel delivery and other category includes parcel delivery firms and household goods carriers. Parcel delivery carriers such as UPS and FedEx provide expedited delivery of small parcels and provide other high-value transportation services. Household goods carriers pro- vide moving services to individuals. Household goods carriers are included in this category because their operations are somewhat distinct from traditional for-hire carriers. • The private trucking category is made up of shippers that carry their own cargo, usually because they believe this gets them the highest level of reliability. Private carriage is often used by major retailers with large and elaborate supply-chain networks. 4.1.1 TL Versus LTL The TL and LTL sectors are completely different in terms of their operation and the number of firms. An LTL operation of any size requires a network of terminals, which constitutes a significant barrier to entry for new carriers. The large national LTL carriers each have 200 to 300 terminals. In TL service, by contrast, there are virtually no barriers to entry. If an individual can afford a tractor and trailer and find a few customers, he/she can get into the business. Including single truck owner- operators, there are hundreds of thousands of TL motor carriers in business. There is a high degree of competition in the TL business. In 2012, there were more than 408,782 for-hire motor carriers on file with the U.S. DOT, and an additional 662,544 private fleets. There were also nearly 168,680 “other” interstate motor carriers. Most for-hire trucking companies are small businesses, with almost 97% operating 20 trucks or fewer and 90% operating six trucks or fewer (http://www.trucking.org/News_and_ Information_Reports_Industry_Data.aspx). Many truckers are owner-operators who operate as sole proprietors and contract themselves out to other firms. In some cases, these individuals may have multiple customers and make inde- pendent decisions for themselves regarding equipment and operational issues. In other cases, owner-operators work for a single company as contractors and have less leeway to make indepen- dent business decisions. By some estimates, there are approximately 350,000 owner-operators. Table 13 shows the number of companies and trucks (power units) and the VMT for the 103,360 for-hire motor carriers reported by the U.S. Census as independent businesses. Since Truck Type Area ofOperation Trucks VMT Number Percent Number (millions) Percent Single unit Short haul 7,150,695 67% 71,901 26% Long haul 975,312 9% 34,681 13% Subtotal 8,126,007 77% 106,582 39% Combination Short haul 346,056 3% 7,414 3% Long haul 2,125,293 20% 161,022 59% Subtotal 2,471,349 23% 168,436 61% Total 10,597,356 100% 275,018 100% Source: Truck and VMT sub-totals from FHWA, Highway Statistics (https://www.fhwa.dot.gov/policyinformation/statistics.cfm); range distribution based on U.S. Census, Vehicle Inventory and Use Survey (https://www.census.gov/econ/overview/se0501.html). Table 12. 2013 U.S. truck population by vehicle type and operating range.

Private-Sector Perspectives 29 owner-operators are included in the data reported by the major carriers who hire them, these figures include a vast preponderance of the trucks and independent drivers that work in the industry. The data show that the LTL segment of the for-hire transportation industry is much more concentrated than the TL sector. LTL firms with over 500 trucks are responsible for more than 85% of LTL VMT. In the TL sector, firms with over 500 trucks are responsible for just 30% of TL VMT. 4.2 Interviews with Motor Carriers As part of the research, ATRI conducted in-depth interviews with motor carriers in various operational environments who have adopted emissions- or fuel-reduction technologies to deter- mine their decision-making processes and lessons learned. Conducted from December 2014 through February 2015, 12 motor carriers participated in these interviews. Three-quarters of the interviewed carriers were for-hire trucking companies, while the rest operated private trucking fleets, which complement their primary business. ATRI also conducted a supplemental inter- view with a lending company to understand potential financing considerations when purchasing these technologies. The companies interviewed are listed in Table 14. Annual revenues for the carriers interviewed ranged from several hundred thousand dollars to several billion dollars, with half earning $60 million or less. These carriers hauled a wide range of commodities, including dry goods, food products, appliances, small packages, containers, and energy products. The for-hire companies were made up of a variety of carrier types, including TL, refrigerated, LTL, flatbed, intermodal, and heavy-haul. The typical length of haul was as much as 1,000 miles, with the average being nearly 400 miles. Private and intermodal carriers tended to have the shortest lengths of haul. The participating carriers operated from one to several thousand Class 8 trucks (some operated smaller trucks as well), with two operating fewer than 25 trucks and half operating 250 or fewer trucks. These trucks averaged 115,000 miles per year, with some logging as little as 50,000 miles per year while others traveled as many as 300,000. The average truck age was 4.7 years, with some companies trading in trucks in as few as 4 years, while others kept their trucks until they wore out. A 5-year manufacturer warranty was identified as one consideration when determining trade-in schedules. Carrier Type Average Length of Haul Companies Trucks Estimated VMT Number Percent Number(thousands) Percent Number (millions) Percent LTL Short haul 2,032 2% 5 0% 128 0% Long haul 1,493 1% 118 11% 9,978 9% Subtotal 3,525 3% 123 12% 10,106 9% TL Short haul 54,802 53% 98 9% 3,602 3% Long haul 33,556 32% 767 74% 99,144 87% Subtotal 88,358 85% 865 83% 102,746 90% Other 11,477 11% 49 5% 1,684 1% Total 103,360 100% 1,037 100% 114,536 100% Table 13. 2013 motor carriers, trucks, and VMT by carrier type and type of operation.

30 Guide to Deploying Clean Truck Freight Strategies The number of trailers ranged from one to almost 100,000, with half of the interviewed car- riers operating fewer than 500. The average age of these trailers was 8.6 years, with the majority of companies holding onto trailers until they wore out. Every carrier interviewed purchased or leased their tractors and trailers as new equipment with financing arranged either privately or through a bank. 4.3 Technology Deployment 4.3.1 Exhaust Aftertreatment Technologies To gain a better understanding of the current state of emissions reduction technologies, ATRI discussed the status of the exhaust aftertreatment systems being used by these motor carriers. All of the carriers indicated that they have trucks with DPFs in their fleets. Most of these filters were installed as original equipment when the trucks were purchased (i.e., MY 2007 or newer). A few fleets had retrofit filters installed in response to state emissions mandates. While the emergence of DPFs has been associated with significant reductions in emissions, many of the carriers expressed disappointment in their operational performance. Many cited higher maintenance and cleaning costs as factors that increase the complexity of operating trucks equipped with DPFs. The time needed to repair and clean these systems is another cost factor that was identified. Company Carrier Type Fleet Size Walmart Private 806 single-unit trucks 6,243 tractors Coca-Cola Private 2,042 single-unit trucks 5,994 tractors H-E-B Private 505 tractors UPS Parcel 5,599 tractors in delivery 106,000 total package cars, vans, tractors, and motorcycles Bum Steer Trucking TL N/A Bulldog Highway Express TL 150 tractors Devine Intermodal TL 160 tractors (including owner-operators) Knight Transportation TL 3,991 tractors Mesilla Valley Transportation TL 1,200 tractors Roadstar Trucking TL/LTL 45 tractors Total Transportation Services Inc. TL/LTL N/A Mountain Valley Express LTL/Dedicated 187 tractors Table 14. Private-sector companies interviewed.

Private-Sector Perspectives 31 The introduction of selective catalytic reduction (SCR) systems, in combination with DPFs, was generally viewed more favorably. Although SCR adds to the cost of new equipment, the increased fuel economy that has resulted helps to offset this added cost. Although this technol- ogy is in the early stages of use (beginning with MY 2010), few concerns related to its use or maintenance were raised. In fact, the use of SCR was cited as having a positive impact on the performance of DPFs. For fleets that operated trucks with retrofitted DPFs, no significant differences were noted between the original equipment manufacturer (OEM) and retrofit filters. It was noted that determining the condition and duty cycle of the truck’s engine was imperative when evaluat- ing the feasibility of retrofitting. And while retrofit filters are not as integrated with the engine as OEM filters, some viewed this as an opportunity to lessen the complexity of these systems. However, this lack of integration can also make it more difficult to attract standalone financing for retrofit DPFs. The majority of carriers indicated that they have been affected by accelerated replacement man- dates, affecting either truck engines or TRUs. While these programs have accelerated the number of DPFs in use, they also have, in many cases, condensed payment schedules while reducing the market value of older, noncompliant equipment. The combination of higher new equipment costs and lower resale values has resulted in a need for more financing. And while grant funding can help reduce some of the cost of meeting these mandates, the majority of costs still require financing. In cases where grants were received, tax implications were noted as another consideration. 4.3.2 Powertrain Technologies Although several carriers expressed an interest in various powertrain technologies such as those used for hybrid and electric trucks, very few had operational experience with these tech- nologies. The general consensus was that this technology is not mature enough to effectively operate in a Class 8 trucking environment. Concerns were raised over the additional cost of this technology and the ability to recoup these costs in operations that are weight sensitive or have lower utilization of regenerative braking. Moving parasitic loads such as condensers to electric power was mentioned as a more likely near-term strategy for improving the fuel economy of these types of operations. Fleets that did operate hybrid and electric trucks tended to use these technologies in smaller trucks or for local operations. The availability of grants to offset some or all of the additional cost was mentioned as an essential element to the deployment of these technologies. Concerns about financing these vehicles due to uncertain resale values were also discussed. And while an improvement in fuel economy was identified, how these vehicles were driven was cited as the most important efficiency factor. The complexity of the technology resulting in additional downtime when undergoing repairs was also mentioned. 4.3.3 Alternative Fuels Half of the interviewed fleets have operated or currently operate trucks powered by natural gas. Both types of fuel storage systems, compressed (CNG) and liquefied (LNG), have been used. Similar to hybrid vehicles, the additional upfront cost of natural gas trucks was cited as a major obstacle to widespread deployment. The role of grants in helping to offset some or all of this additional upfront cost was also discussed. And while this cost is offset over time by the lower cost of fuel, other costs related to operation and maintenance were less defined. The uncertainty of trade-in values makes the financing of natural gas vehicles more limited than traditional truck financing.

32 Guide to Deploying Clean Truck Freight Strategies The perception of fueling infrastructure for natural gas vehicles was somewhat mixed, with some carriers indicating that the availability of stations is creating more opportunities, while others are concerned about having to increase off-route, non-revenue miles in order to fuel. The high cost of building on-site fueling stations was mentioned as another barrier to expanding the use of these vehicles. In addition, lower diesel prices were seen as adversely affecting interest in converting to natural gas. Although natural gas was the main alternative fuel considered by motor carriers, other poten- tial fuels for trucking applications were discussed. While the availability of biodiesel is increas- ing, the ability to operate at higher blending levels continues to be a concern from an engine operation and maintenance standpoint. There is definite interest from some motor carriers in hydrogen fuel cell technologies, but the lack of market-tested vehicles and fueling infrastructure make widespread adoption a difficult proposition for now. Propane was mentioned in the con- text of an early conversion test but was otherwise not brought up as an option being considered by carriers. 4.3.4 Vehicle Technologies Many vehicle technologies are being used to help improve fuel efficiency. The foremost vehicle technology was truck-tractor aerodynamics. There was resounding agreement among all the carriers that tractor aerodynamics contributed to increased fuel efficiency. Aerodynamic technologies on trailers, such as skirts or tails, were not as universally accepted; carriers with shorter haul lengths or lower average speeds indicated difficulty in quantifying the benefits of trailer aerodynamics. The majority of motor carriers used low rolling resistance tires that were SmartWay certified. A trade-off between fuel cost savings and higher overall tire costs from faster tread wear out was discussed. A couple of carriers used super single tires; they found them to have better stopping distance in inclement weather and less weight, which allows for increased payloads. Tire pressure monitoring systems were used by some fleets, while automatic inflation/deflation systems were used to a lesser extent. One of the last vehicle technologies the researchers considered was idle reduction. The majority of carriers indicated that idle-reduction technology, in the form of engine shutdown settings, came standard on their trucks. And while most carriers used this setting, especially in conjunction with other forms of idle-reduction technologies such as APUs or direct-fired heaters, other carriers who did not use the shutdown technology still encouraged idle reduc- tion either through monitoring or incentives. Onboard idle-reduction systems were pre- ferred over on-site systems due to the ability to have the technology available regardless of the location. It was stressed that while all of these strategies were helpful in improving fuel efficiency, the one element that made the most difference was the driver. Driver awareness and driving tech- niques play an important role in allowing these vehicle technologies to be successful in improv- ing fuel efficiency. 4.3.5 Operational Strategies The most popular operational strategies used by motor carriers to improve fuel efficiency were routing software and speed governors. Although routing software was highly common among the carriers, fuel economy was typically not the primary consideration in the adoption of these systems. Some carriers noted that they used the software to assist in finding convenient fueling locations. Speed governors were used by all the carriers interviewed. Most of the carriers

Private-Sector Perspectives 33 set the speed governors between 60 and 65 miles per hour. The trade-off between using speed governors and the benefits of aerodynamics was noted. Off-peak incentives seemed to be the most dynamic of the operational strategies. Many car- riers stated that they would prefer that their trucks run during off-peak hours, but hours-of- service rules and loading dock hours often prevented them from doing so. However, carriers that did run during off-peak times found additional cost savings due to lower road and bridge tolls, less congestion, and less traffic. Loading techniques, as an operational strategy, differed among carriers. The length of haul and the contents of trailers greatly influenced whether a carrier used any sort of loading tech- nique. Some carriers indicated that the goods they transported weigh out, so they were not able to take advantage of all of the trailer space. Others used a variety of techniques, including double- stacking systems and pin-wheeling methods. Many carriers stated that their loading techniques were based on routing; commodities were loaded using a last-in, first-out strategy, based on the order of deliveries. The operational strategy that seemed to cause the most dissatisfaction among motor carriers was gate appointments. Although a couple of carriers expressed positive views of gate appoint- ments, they also acknowledged having to sacrifice flexibility to meet strict appointment windows. Many carriers stated that the gate appointment system was an inefficient way to transfer goods because of too many uncontrollable factors interrupting travel time. In order to avoid gate appointments, many carriers use drop and hook (i.e., leave a trailer on-site) when possible. Increased communication between shippers and carriers was identified as another method for avoiding loading conflicts. Many intermodal carriers who used chassis pools also owned and maintained their own chas- sis. However, these carriers expressed a need for a neutral chassis pool that would allow for interchangeability between ocean carriers and terminals to increase efficiency. 4.3.6 Additional Strategies Ways to improve fuel economy through driver performance were mentioned as additional strategies. Pay and performance incentives as well as driver training specific to the type of truck being driven were two strategies being used to improve driver performance. The use of systems to monitor and evaluate speed management, idling times, and other driver functions was noted as a highly effective method for improving fuel economy. The ability to improve fuel economy by purchasing new, fuel-efficient trucks was also dis- cussed. Productivity gains by increasing load capacity through the use of longer and heavier trailers were also highlighted. Greater opportunities for benchmarking and collaborating with others in the industry were identified as ways to help carriers obtain better information about which technologies work and which do not. It was acknowledged that some limitations to obtaining and disseminating this type of information likely exist. However, the development of a credible fuel economy data- sharing initiative could not only help expand information sharing but also ensure that technolo- gies are robust enough to meet the demands of over-the-road operations. 4.4 Role of Government As the final step in understanding options for deploying emission and fuel reduction tech- nologies, ATRI discussed the role government could play with motor carriers. The expansion of infrastructure was identified as one of the main hurdles to deploying fuel-efficient technologies.

34 Guide to Deploying Clean Truck Freight Strategies For example, the limited network of natural gas fueling stations was identified as a barrier that continues to prevent the effective deployment of natural gas vehicles. The other barrier that received significant discussion was the cost of implementing these technologies. Many carriers stated that they had used grants to offset a portion of the cost of pur- chasing new trucks. Tax incentives were also identified as another way that government could play a role in assisting in the deployment of clean truck freight strategies, especially if multiyear certainty could be ensured. Several carriers felt that the implementation of emissions reduction requirements in California should have been done over a longer timeline or only for new equipment. A need was also expressed for better communication from the government about available grants, especially for smaller carriers that may not have many available resources to pursue these opportunities. Overall, the government’s role in implementing fuel-efficient technologies through the expan- sion of infrastructure and the use of grants and tax incentives was popular. The consensus among motor carriers was that a balance of personal carrier responsibility and limited government inter- vention was necessary to maximize the deployment of these technologies. 4.5 Summary of Motor Carrier Interviews The interviews with motor carriers provided important lessons from the real-world adoption of newer emissions control technologies and also captured valuable perceptions of new tech- nologies and strategies that can affect their widespread acceptance. • The ability to finance advanced technologies is a major concern for motor carriers. Lower- emissions technologies are not only more expensive than conventional technologies, but the penetration of continually advancing technologies reduces the value of older models, which makes resale and financing more challenging. Additionally, short regulatory timelines can condense payment schedules. • Exhaust aftertreatment devices are already commonly used, although some are more widely supported than others. DPFs are already installed in all of the trucks of the motor carriers interviewed; however, truck operators are largely unhappy with the devices because of increased maintenance. SCRs with DPFs were preferred over DPFs alone because SCRs improve fuel economy. • Powertrain technologies are currently not mature enough for widespread adoption. Truck operators are not sure that hybrid and electric trucks can meet the operational demands of their business. Also, the uncertainty of the real-world impacts of these technologies pre- vents wider adoption: motor carriers questioned the time to recoup additional costs, the impact of added weight from the powertrain, and the maintenance required for the advanced powertrain. • Natural gas trucks have had limited deployment, but there are concerns that remain to be addressed. Half of the motor carriers interviewed had operated natural gas trucks. However, the additional vehicle cost, fueling infrastructure, and fluctuating costs of natural gas and diesel have prevented carriers from more widely adopting natural gas trucks. • Changing driver behavior has had a greater impact on fuel efficiency than vehicle tech- nologies and designs. Motor carriers agree that fuel-efficient technologies and designs (e.g., tractor aerodynamics, trail skirts, and low rolling resistance tires) improve fuel econ- omy. However, they have found that the largest efficiency gains come from improving driver behavior.

Private-Sector Perspectives 35 • There are a range of significant trade-offs between the costs and benefits of operational strategies. Gains in fuel economy from speed governors and co-benefits from routing soft- ware make those strategies the most widely accepted. Strategies such as off-peak operations, efficient loading techniques, and chassis pools can improve fuel efficiency, but use of such strategies is limited by the operational requirements of each carrier’s business and operating environment. Carriers found gate appointments particularly difficult to work with because of the numerous factors that can unexpectedly affect travel times in the delivery business. • The trucking industry can benefit from increased sharing and dissemination of best prac- tices and data. Because there are relatively few examples of real-world experiences and limited opportunities to test these emerging technologies and strategies, motor carriers can benefit from sharing information and best practices with each other. • Motor carriers prefer a balance between personal carrier responsibility and government intervention to deploy new technologies. Public agencies can support the deployment of emissions control strategies by providing financial support to cover incremental costs; expand- ing alternative fuel infrastructure; and improving outreach of assistance programs, especially to smaller carriers. Motor carriers would also prefer flexibility in adoption mandate timelines.

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