The entire transportation industry and shipper community is faced with one of the major challenges of our time, how to cope with the ever increasing cost of fuel and with global warming. There is no quick fix or easy answer. Let’s take a look at some of the initiatives under way.

Fuel Surcharges Help but they are not the Solution

While fuel surcharges may or may not cover the cost of fuel, they are by no means a solution to the problem. The fact is that ever increasing fuel costs and fuel surcharges raise the cost of goods and services and are an inflationary force in our economy. If a transport company cannot cover its fuel costs, this jeopardizes the viability of the enterprise. As companies fail, less truck capacity will ultimately mean higher freight costs. If fuel surcharge costs are accepted by shippers, they are ultimately passed on to consumers in the form of higher cots at the retail level..

Speed Limiters being introduced in Canada

The Canada Safety Council supports a proposal to mandate speed limiters on trucks set to a maximum speed of 105 km/h. A speed limiter, sometimes called a governor, is a built-in microchip that allows a truck engine’s top speed to be preset. Trucks built in the last decade come equipped with this technology. Nonetheless, regulation would ensure all trucks operate at a safe speed. That would reduce highway collisions related to tailgating and improper lane changes. In addition there are major environmental advantages. The measure will conserve fuel and help Canada meet its commitments under the Kyoto Accord.
In November 2005, the Ontario Trucking Association asked the provincial government to require all trucks that operate into, out of and within Ontario to activate the speed limiters and to set the highest speed a truck can go to no more than 105 km/h. The environmental, safety and economic benefits of mandating the activation of speed limiters at a maximum speed of 105 km/h include:

• Fuel savings of up to 10,500 litres of diesel fuel per year for a typical tractor-trailer unit — or 50 million litres in total for all such trucks in Ontario. At today’s diesel prices, this would equate to annual savings of about $ 8,400 per truck.*
• A reduction of as much as140 kilo tonnes of greenhouse gas emissions per year.*
• Less severe car-truck crashes.
• Improved tire and brake wear.

Bill 41, the Ontario law mandating the use of speed limiters passed another legislative hurdle on May 16 when it received approval in principle from the Ontario Legislature. All three parties supported the Bill. Given the fact that the Liberals have a majority government, it is unlikely that the bill will be significantly altered at this stage of the game. It will next go to a legislative committee for consideration then likely return to the Legislature for final passage before the Legislature adjourns for the summer at the end of June.

The government then intends to develop the necessary regulations over the summer and have the law ready for implementation in 2009. There will likely be a period of educational enforcement early in the year with full enforcement by the fall of 2009.

The USA moving in a similar direction

With an eye on the environment and a more sustainable future, the American Trucking Associations recently announced several initiatives that it said will help to reduce fuel consumption and CO2 emissions, as well as help to thwart global climate change. Dubbed “Trucks Deliver a Cleaner Tomorrow,” ATA President and CEO Bill Graves said in a statement that this endeavor can reduce fuel consumption by 86 million gallons and CO2 emissions by 900 million tons for all vehicles over the next ten years.

In a report drafted by the ATA Sustainability Task Force, which is led by Tommy Hodges, ATA Vice Chairman and Chairman of Titan Transfer Inc. the following six core recommendations of “Trucks Deliver a Cleaner Tomorrow” were presented:

a) Set governors on new trucks to limit speeds to no more than 68 mph and reduce the national speed limit to 65 mph for all vehicles;
b) Reduce engine idling;
c) Increase fuel efficiency by encouraging participation in the U.S. EPA SmartWay Transport Partnership Program;
d) Reduce congestion by improving highways, if necessary by raising the fuels tax;
e) Use more productive truck combinations; and
f) Support national fuel economy standards for trucks.

Two large American trucking companies have taken proactive steps recently to reduce fuel consumption and reduce CO2 emissions. In March, Con-way said its LTL subsidiary Con-way Freight turned back the speed governors on its 8,400-tractor fleet from 65 to 62 miles per hour. And last week it announced that Con-way Truckload has turned back speed governors on its 2,700-tractor fleet from 70 to 65 miles per hour. Meanwhile, Schneider National said last week its fleet of more than 10,600 drivers will reduce truck speed to 60 mph, resulting in a savings of more than 3.75 million gallons of diesel fuel and reducing CO2 emissions by 83.25 million pounds, annually.

It’s Time to Revisit Larger Trucks

The American Transportation Research institute has concluded in a new study that the use of heavier trucks can be an effective way for the industry to reduce fuel consumption and emissions. “The estimated fuel efficiency improvements found in this study translate directly into equivalent percentage improvements . . . of CO2 emitted”.

“As we look for ways to reduce congestion and greenhouse gas emissions, without sacrificing the supply chain efficiencies that the trucking industry supports, higher productivity vehicles should be part of an overarching solution,” said Doug Duncan, president of FedEx Freight and ATRI chairman. With larger trucks, proponents claim, carriers could reduce their overall fleet size by shipping more freight with less equipment, which in turn is easier on the environment and highway infrastructure.

A coalition of about 30 trucking carriers, shippers, and manufacturers was in Washington in an attempt to convince Congress to adopt several demonstration pilot projects involving larger trucks in select U.S. states. The plan could be written into an upcoming congressional highway reauthorization bill. The current highway bill is scheduled to expire in September of 2009. Americans for Safe and Efficient Transportation -- which includes several state trucking associations -- is targeting Maine, Minnesota, Wisconsin, South Carolina and Georgia to experiment with larger, heavier trucks. Texas also remains a strong possibility to be added. Various union and lobby groups continue to oppose this initiative. They argue that heavier trucks will cause more damage to roads and bridges and pose a safety hazard.

Research and Produce Alternate Efficient Fuel Sources

Certainly the production of alternate fuels is another answer to the problem. The current food shortage (produced in part by the diversion of corn production from the food supply to energy production) and the inefficiency of ethanol as a crude oil substitute raise issues about the viability of at least this option. We are years away from having electricity powered cars and trucks to replace the current gasoline and diesel fueled engines. Nevertheless, there is an urgency to continue to perform R & D and tests of crude oil substitutes.

Hybrid Trucks begin to Gain Acceptance

UPS has ordered 200 hybrid electric vehicles (HEVs) and 300 Compressed Natural Gas (CNG) vehicles for its U.S. delivery fleet. No financial details were disclosed.

The purchase means the UPS alternative fuel fleet -- said to be the largest such private fleet in the United States -- will grow 30 percent from to 2,218 low-carbon vehicles. "Alternative fuel research and development is just one of the ways that UPS is mitigating climate change risks," said Bob Stoffel, UPS's corporate sustainability officer. "We also are focused on aggressive conservation programs and improving network efficiency to cut fuel use."

The new HEVs will next year join 50 of the same type delivery trucks already in operation and are expected to save 176,000 gallons of fuel annually and reduce CO2 emissions by 1,786 metric tons each year, which UPS said is equivalent to removing almost 100 conventional UPS trucks from the road for a year.

The 300 CNG vehicles will be deployed later this year and join more than 800 such vehicles already in use in the United States. These vehicles, which run on natural gas, are expected to yield a 20 percent reduction in emissions over the cleanest diesel engines available today. While these vehicles represent a small percentage of the vehicles in the UPS fleet, this is certainly a positive move.

Will a Carbon Tax fly?

The province of British Columbia has taken the bold step of introducing a carbon tax. Stéphane Dion, the leader of the Federal Liberal Party in Canada is contemplating making a federally mandated carbon tax a centerpiece of his election plan. While the details of this plan have yet to be introduced, it has already been met with negative press (e.g. “suicidal at the polls,” and “unerring instinct for his own jugular”). The fact is that this policy enjoys popular support from 61 percent of Canadians. The tax will likely penalize the consumption of greenhouse gases. However, coupling this tax with incentives to buy hybrid and fuel efficient cars and reductions in income taxes may be saleable to the Canadian electorate.

Clearly we have a long way to go to bring the monster of rapidly rising fuel costs and global warming under control. But we have to start somewhere. Encouraging energy conservation, providing incentives for the purchase of hybrid vehicles, creating greater incentives for research and development and implementation of alternate fuels (that do not reduce the availability of food supplies), allowing heavier trucks on North America’s roads and a federally mandated carbon tax in the United States and Canada may collectively be steps in the right direction.