New survey shows fleets see natural gas as fuel alternative but with hesitations

Aug. 27, 2012
Slightly over half (51.4%) of the carriers surveyed in a recent study are considering natural gas (NG) fueled trucks when new trucks are purchased, but these carriers do see hurdles

Slightly over half (51.4%) of the carriers surveyed in a recent study are considering natural gas (NG) fueled trucks when new trucks are purchased, but these carriers do see hurdles. The survey was conducted by Transport Capital Partners (TCP) and ACT Research to better understand how carriers view 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,” says Richard Mikes, TCP partner and survey leader.

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

While carriers are potentially interested in natural gas as a fuel alternative, three-fourths of carriers would need a payback in only one to two 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,” says 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 says. “TCP has experience assisting carriers in such scenarios of equipment life cycle options.”

Almost half of the carriers surveyed would require a commercial natural gas fueling station to be within 100 miles of their operations, and for those carriers considering natural gas, liquefied natural gas was preferred over compressed natural gas (CNG) by 38% to 28%. CNG is more preferred by the larger carriers, however.

Carriers are still learning about natural gas 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%) report their knowledge as “average” or “above average”.

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