Is the cost saving potential of fuel-efficient technologies worth the up-front investment? Answering that critical question, based on real-world trials, is at the heart of a new study just released by Natural Resources Canada, entitled Results...
Is the cost saving potential of fuel-efficient technologies worth the up-front investment? Answering that critical question, based on real-world trials, is at the heart of a new study just released by Natural Resources Canada, entitled Results from the Road.
Commercial highway freight has the fastest growing energy demand of any economic sector in Canada. It’s responsible for nearly 10% of the country’s greenhouse gas emissions. Rising fuel costs are also placing downward pressure on profit margins as an increasing number of shippers push back on the magnitude of fuel surcharges and demand to know what carriers are doing to reduce their fuel consumption. So carriers need to improve on the fuel performance of their vehicles not only for the sake of the environment but also for their bottom lines. The challenge, as the Results from the Road study points out in its opening paragraph, is that achieving cost-saving initiatives requires up-front investment in new technology. And given that their goal is to save money, transport companies need reassurance that any investment they make is likely to deliver a positive return.
Towards that goal, Natural Resources Canada, back in September 2009, launched the SmartWay Certified Technology Fund (SCTF) to prove out the cost-saving potential of fuel-efficient technologies by helping freight companies purchase, install and test fuel-efficient tires and aerodynamic skirts in a variety of real-world driving conditions. The goal was to learn about the performance of energy-efficient devices and equipment in a variety of real-world operating conditions on as many vehicles as possible. Twelve companies qualified for up to $100,000 in funding and entered into contribution agreements which required them to collect and report fuel-usage data when using their new fuel-efficient technologies.
After a full year of pre-trial baseline fuel usage gathering followed by six months of trials, including both summer and winter driving conditions, Natural Resources is releasing the findings through the Results from the Road report. It says the results are clear: The more often companies use these fuel-efficient technologies, the more fuel they save. Key findings from the research project include: a 5% average reduction in fuel consumption; and an eight-month/110,000-km payback period.
After installation, fuel usage data was collected over two periods to satisfy the need to include both summer and winter driving conditions.
Data was collected from August to October 2010 and again from December 2010 to February 2011. (To supplement the fuel-usage data, participants were also required to administer surveys among drivers, maintenance staff and fleet managers directly involved in the project).
For the three-month summer/fall period from August to October 2010, usable data were collected from 371 tractors across the 12 qualifying companies. In the three-month winter period from December 2010 to February 2011, usable data were collected from 392 tractors.
According to the pre-trial baseline data, over the course of six months, these tractors drove more than 37 million kilometres while using nearly 15 million litres of fuel. That works out to an average fuel consumption of 39.7 L/100 km (5.92 mpg). During the six trial months in which the tractors were equipped with aerodynamic skirts and low rolling resistance tires, the same amount of fuel was used, but the total distance driven climbed to nearly 39 million kilometres, making the average fuel consumption 38.9 L/100 km (6.05 mpg).
“While this amounts to a 2% reduction in average fuel consumption during the trial period, it is not perfectly reflective of the fuel-saving potential of the SmartWay-certified technologies,” the report explains. “On average, the tractors pulled SCTF-equipped trailers only 33% of the time – meaning that for two-thirds of their trips, they were not experiencing the benefits that come from using the tires and skirts.”
The report stresses that the more often a tractor pulls a trailer equipped with fuel-saving technologies, the more closely the full potential of the equipment is achieved. For a more precise analysis of the data, the tractors were grouped into five “quintiles” according to how much time they spent pulling trailers equipped with fuel-saving technology. The study then focused on the 80-100% quintile – that is, the group of tractors that pulled SCTF-equipped trailers at all times. And that’s when the true potential of the fuel-efficient technologies shone through.
It was found that for both the summer/fall and winter trial periods, the high-usage group experienced a 5% reduction in average fuel consumption rates compared to the pre-trial baseline period. (The low-usage groups saw only a 2% reduction in fuel consumption – clear proof that greater fuel savings can be experienced by using SmartWay-certified technologies more often).
“Considering that the average commercial transport truck gets approximately 40 L/100 km (5.88 mpg), based on SCTF pre-trial baseline data, this 5% reduction in fuel consumption could save transportation companies two litres of fuel for every 100 kilometres travelled,” the report states.
The data were also analyzed to determine how many tractors recorded a noticeable improvement in their fuel efficiency. Of those in the 80-100% usage quintile, 71% reduced their fuel consumption. Of those that pulled SCTF-equipped trailers less than 80% of the time, only 51% noted fuel savings.
The report calculates payback on the initial investment to within eight months or 110,000 kilometres.
“As the price of fuel increases, this payback period will become even shorter,” it notes.
This is how the payback was worked out: To be SmartWay-certified, a trailer must include both an aerodynamic skirt and a set of fuel-efficient tires.
It costs approximately $2,300 to purchase and install the skirts and $10,800 to purchase 18 tires – for a total cost of $13,100. However, the report points out that tires need to be regarded as a “sunk cost” – something transportation companies must buy, regardless of type – and so the net equipment costs need only to consider the difference in cost between fuel-efficient and regular tires. Of the initial calculation, $10,260 (18 regular tires at $570 per tire) is a sunk cost, bringing the actual price of SmartWay upgrades to just $2,840.
The average truck has a fuel economy of approximately 39 L/100 km (6.03 mpg) and drives about 180,000 kilometres per year. Assuming a diesel fuel cost of $1.30 per litre, the average annual fuel cost is $91,260.
The study established that using SmartWay-certified technologies can cut fuel usage by 5%, bringing fuel consumption down to 37 L/100 km (6.34 mpg). At that rate, the annual fuel cost when using SmartWay-certified technology is $86,580 – amounting to an expected annual fuel savings of $4,680. So the initial investment of $2,840 will be repaid in 0.6 years (just over seven months).
It should be noted that if all tires were installed immediately (in other words, all at once, regardless of the condition of the existing tires), the total equipment costs would increase by $540 to $3,380. This increases the payback period to about eight-and-one-half months, “still making tire replacement an affordable and sensible choice,” according to the report.
To learn more about SmartWay-verified technologies – or how to adopt these energy-efficient technologies in your company’s fleet – contact Natural Resources Canada’s FleetSmart program online at www.fleetsmart.nrcan.gc.ca or by telephone at 613-960-7427.