Global logistics specialist UPS has emerged as a leading proponent of natural gas – both CNG and LNG – for its fleet of delivery vehicles. It operates one of the largest private fleets of CNG-powered vehicles in the US and its LNG fleet isn’t far behind. The company is adding 700 new LNG-powered tractors by the end of this year. Mike Casteel, Director of Fleet for UPS, is a strong supporter of the fuel, but most notably only within certain circumstances. He spoke to Megatrends on the combination of factors that make natural gas an ideal fuel choice for fleets.
Ingredients for success
“Where we have been able to deploy natural gas, we have had a combination of circumstances that are in place,” he explains. “The fleet profile has to be conducive to natural gas deployment. We have to have some economy of scale, large numbers of vehicles that run relatively high miles. The objective here is to use a lot of fuel to displace a lot of traditional fuel.”
The key is for natural gas use to save more money than the initial upfront investment required. These initial costs include setting up a natural gas fuelling island on company property – and the cost of setting up a natural gas station is relatively high compared to establishing a diesel island, he notes.
As for relying on a public natural gas fuelling network instead, Casteel does not view this as a viable option. “The only way to do this is to control our own fuel infrastructure. It’s time and access to the station,” he explains. The company can’t take a risk of something delaying a journey that means it can’t get access to the fuel it needs. “Operationally it’s not practical,” he concludes.
UPS has made a significant investment in its own fuelling network, and operates seven or eight CNG stations and a similar number of LNG stations, with about five more LNG locations to begin operation by September.
Then there is the initial cost of the vehicle, though Casteel observes that this is coming down. “To convert a vehicle to use CNG from a gasoline engine, if you can do it in scale, the cost is not that high,” he says.
It is only when these factors all work together that Casteel sees natural gas as the right choice: “When those combinations of things come together, it will work. But as large as our fleet is, there is a limited number of locations where we can make all of that come together and use enough or displace enough fuel to save enough money to pay for the upfront investment.”
Alternatives
UPS has been testing numerous types of powertrain options in its fleets, including biomethane diesel, propane, ethanol, battery electric and hydraulic hybrid in addition to CNG and LNG. But among all these alternatives, Casteel concludes: “Very little today can compete with natural gas on a large-scale deployment.” For hybrid vehicles, he notes that these typically use some portion of fossil fuel. For all-electric vehicles, “the battery technology in place today remains prohibitively expensive in how it relates to our duty cycle. We have a lot of stops and starts per day, and we carry a lot of weight, so full electric is difficult for us to deploy.” On top of that, the source of the energy used to power the EV is in many cases a fossil fuel. “Add the whole thing together and today, large-scale deployment of natural gas is the only thing we can make work on that scale.”
