ABBOTSFORD, B.C. — As Vedder Transport president Fred Zweep sees it, the company’s recent order for 50 liquefied natural gas (LNG)-powered Peterbilt Model 386s is only the tip of the iceberg. Already, the fleet is bidding on a job that would require the purchase of an additional 25 LNG-powered trucks and through a partnership with natural gas supplier Terasen Gas, Vedder will not only consume gas – but supply it as well.
In subsequent phases of Vedder’s foray into the world of natural gas-powered transportation, the fleet will build and operate commercial cardlocks, retailing gas to other carriers, making natural gas-powered trucks more viable for fleets operating in the Lower Mainland of B.C. and eventually into Alberta. Zweep is quick to credit Claude Robert, chair and CEO of Robert Transport for “instilling the vision” of a Canadian transportation network that’s fueled by natural gas. Robert ordered 180 LNG-powered trucks last fall.
Truck News executive editor James Menzies caught up with Zweep to learn what was behind Vedder’s move to natural gas and what the future may hold for this promising alternative fuel.
TN: As a mid-sized trucking company, Vedder may seem an unlikely pioneer when it comes to natural gas. What prompted the company to be an early adopter?
Zweep: I think there were a number of reasons. One of them is that on the food grade side of our business, we serve the agricultural industry and they’re forever asking what we are doing to become greener as an organization. When we did our research on LNG technology, it certainly told us we’d be a pioneer – which makes us nervous, by the way – but at the same time it would also put us at the forefront with our customers.
One of our largest clients is the B.C. Milk Marketing Board and we are probably the largest milk hauler in all of Canada. We pick up 1.4 million litres of milk every 24 hours, going on and off the farms locally here in B.C., so it certainly provides us with the opportunity to reduce our carbon footprint in excess of about 27% and it puts us at the forefront of being a leader. I believe we will be cleanest agricultural transporter in the world.
TN: Are your customers willing to pay a premium for that?
Zweep: When we looked at it from a financial perspective, one of the reasons why you want to invest in the technology is the opportunity to be able to balance your fuel management program.
Having lived through when Wall Street ran up the barrel of oil to $120-$140, and paying $1.35-$1.45 per litre (for diesel), we were looking at ways how can we manage that more prudently. We have an abundance of natural gas, not only in Canada, but particularly here in B.C. In the northeastern part of our province, we have a 100-year find of shale gas that once goes it through the fracking process will be available to us. Looking at countries around the world, although we may view them as oil barons, you look at Dubai; Dubai operates the majority of its transport infrastructure on natural gas and exports their oil. So when we took a look at that, it gave us an opportunity to say: ‘You know what, we may be able to manage our exposure to the significant fluctuations and what happened with the barrel of oil (in 2008).’
TN: What kinds of savings do you expect to see over the life of the vehicles?
Zweep: Over a 20-year history, there has always been a spread between natural gas and diesel. When you break it out to a distillate litre cost, there has never been a convergence. When oil was $120-$140 per barrel and we were paying $1.35-$1.45 per litre at the pump, natural gas was at its peak as well and there was still a significant spread between diesel and the equivalent in natural gas.
TN: Can you describe the duty cycles these natural gas trucks will be performing under?
Zweep: The equipment is going to be broken into three business units. Twenty-five are going to be bulk milk hauling in B.C. in super-train applications with a 140,000-lb GVW.
Ten of the vehicles will be utilized in a flatdeck, short-haul super-train operation in B.C. and the Pacific Northwest and that will also be in a 140,000-lb GVW.
Then, we’ll be operating the remaining 15 units in the Lower Mainland in an 80,000- to 105,000-lb GVW.
The 50 units are all return-to-base pieces of equipment. They go out and return to base every 12-14 hours. Some of the equipment we’ll be double-shifting. In conjunction with the purchase, we have developed a relationship with Terasen Gas to build a commercial cardlock for natural gas on our property here in Abbotsford.
TN: Who will fuel the trucks? Will the drivers be trained on fueling the equipment?
Zweep: With our vision of having a retail commercial cardlock operation, we’ll have that manned 24 hours a day.
TN: The weights you described are quite heavy. Has natural gas been tested at those GVWs?
Zweep: Yes, they have. Back in 2006 the equipment was operated by Challenger on a garbage haul. They would take 140,000 lbs and go to Michigan every day. They were quite impressed with it. The technology is not the issue; it’s the distribution and the fueling network that’s the challenge with LNG.
TN: First Robert, and now Vedder. You both made significant investments in LNG-powered trucks and it seems Peterbilt is winning the majority of the business here in Canada. Why is that? Have you always been a Pete guy or is there something about Peterbilt that makes them appealing from a natural gas perspective?
Zweep: When we did our due diligence, I spent five months with our CEO Larry Wiebe travelling through North America learning as much as we could about the technology, who has adopted the technology and the pros and cons of the technology.
We visited over 17 different transportation organizations and probably half a dozen retail commercial cardlocks in the US and we found ourselves in some interesting places.
What we found was there are three ingredients to success in transitioning from a traditional diesel fleet to an LNG fleet. It’s a triangle of success. You need to have two suppliers and a willing participant to implement the technology.
As the transporter, we’re the willing participant. Then, you require a very good dealer network because the dealer has to take on the responsibility of maintaining the technology and they have to educate themselves on the technology so they understand it when it comes into their shop.
And then the third participant has to be the supplier of the technology, in this case it’s Westport. What we found in all the locations we went to was (if there were problems), one of the three didn’t work. What we found in our research was, where LNG was slow to get out of the gate it was because an organization didn’t put the resources forth in terms of training and education of the fleet or the dealer didn’t put forth the effort in training and bringing their technicians up to speed. The constant we always found was Westport’s desire to make the technology work and to educate people.
The technology is durable, it’s bearable and it functions well. Will there be hiccups? Yeah, we’re pretty sure there will be. But if you have a relationship – it’s no different than you do with your diesel equipment suppliers – you will find common ground and work through those things. But you have to have a triangle of relationships. When something didn’t work in the US, one of those three or two of those three didn’t work.
To answer your question, why Peterbilt? We’ve been a very large user of Peterbilt, but in our fleet what we found was Peterbilt and its sister company Kenworth, although both owned by Paccar, have different philosophies.
Peterbilt is a one-truck/one-build mentality. When building a truck for you, it’s very much like an owner/operator, so a fleet like ours or like Robert, we’re an oddity to them. We’re
going to buy more than one vehicle from them but their culture is around that owner/operator model so it’s a one-truck/one-sale mentality, so every truck they sell is extremely important to them right down to the detail.
It’s nothing against Kenworth, but they’re more of a mass producer, so we found with the culture within Peterbilt they would pay particular attention to what our needs and desires were going to be when we bring this equipment into the fleet, and it has proven to be true.
Peterbilt Pacific in B.C. took it upon themselves – without us asking they contacted Westport and they went down and spent time with Peterbilt’s engineering team in Denton, Texas to educate themselves on what LNG was going to be and whether it was something they wanted to invest their dealership in.
Why are we taking this leap of faith? We do believe in the technology. We are so traditional in our thinking in this industry. We have to be open-minded or we will never progress. There are a number of great fleets throughout Canada that have phenomenal entrepreneurs and interesting engineering minds who at one time or another have taken a leap of faith from a trailing perspective or tractor perspective. Although we’re nervous, we’re nervous because we’re pioneers and it’s out of our typical realm.
Sometimes the stars do line up for you and they’ve lined up for us. It’s a Richmond-based technology so if we have an issue, we only have to drive 40 miles and we are face-to-face (with Westport), our dealer is two blocks from our property and we sit on 36 acres of prime property here in the Fraser Valley in the Lower Mainland of B.C. and we have a terrific parcel of land we can develop into a commercial retail cardlock operation.
TN: Your vision then, is to be not only a consumer of natural gas but also a retailer?
Zweep: Yes, as other fleets come on-board, they have the opportunity to come use that facility because it’s a joint venture between us and Terasen Gas.
TN: Is Terasen also assisting you with the purchase of the equipment in any way?
Zweep: Yes, they have an energy efficiency program that allows for them to provide funding to entice people to transition to LNG technology.
TN: Are your drivers and mechanics nervous about the switch or are they excited about it?
Zweep: They’re excited about it for a couple of reasons, and this is where one of the stars lined up. Where this equipment is being deployed, traditionally it’s going to locations that are longstanding establishments that aren’t necessarily conducive for the type of equipment we take on and off their properties.
With the Peterbilt 386 set-back axle (SBA), we’ve been able to purchase a tool for our driving fleet that will enable them to have more versatility getting on and off our clients’ properties that we visit every day. In the demonstrations we had on our property, (drivers loved) the quietness of the engine. The tractor is so quiet. We spoke to people in the US who told us they felt half as tired at the end of their shift because they didn’t have that noise level bothering them.
TN: How’s the torque?
Zweep: The truck will still run on diesel, that’s what creates the ignition. The natural gas creates the energy to keep the piston moving but it still does have that diesel.
The only performance difference we found was at lift-off from a dead stop, you’re going to have a slight hesitation for a split second.
In North America, we love having horsepower and we want to get from zero to 60 very quickly and a diesel engine is built that way, as soon as you press the accelerator you have response immediately whereas with natural gas you’ll have a slight hesitation.
Drivers also found, because the engines were so quiet, they realized they actually learned how to operate a diesel tractor initially by observing the tach and over time it was by ear. What they found in our test cycles was that our drivers were overrevving the equipment substantially because it was so quiet. They’d look down and realize they need to shift at 1,450 rpm and they’re sitting at 1,800-1,900, so that’s going to be one of the challenges we have. We’ve laid out the groundwork, we have a training module in place and we have the resources in place to train the folks who will be driving them.
We are going to implement the equipment over a period of time where all 50 of those vehicles will be up and running before Dec. 31, 2011.
TN: You’re obviously a big believer in natural gas. Do you foresee a day when it will be practical for linehaul applications in North America or will it always be a regional solution?
Zweep: We’re bidding on an opportunity here for quite a significant haul, the tender was released yesterday and the requirement is that you will have approximately 25 vehicles in a 140,000-lb GVW configuration and the requirement is that you’ll be LNG.
It’s going to take time, there’s no question about it. We’re excited about it, we’ve done our due diligence and put a tremendous amount of time, effort and resources into looking at the technology and understanding the infrastructure and the restraints of the infrastructure.
We look at it in three phases. Phase one is what we’re doing today with the acquisition of these 50 vehicles. For Phase two, we operate a significant fleet of equipment that operates between B.C. and Alberta and we’re committed to, within the next three years, to build our own cardlock operations to fuel LNG vehicles to go up and over the mountains. The third phase will be to build our own infrastructure for the operations we serve in Alberta.
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