MONTREAL- One company in the financial services arena and another in the energy business have teamed up to facilitate the trucking industry’s adoption in Canada of liquefied natural gas (LNG) powered vehicles.
Under an agreement, GE Capital Canada and Shell Canada Products will work together to reduce monthly payments for truck fleets that lease natural gas vehicles (NGVs).
GE Capital has been providing wholesale and retail financing to the country’s commercial trucking sector for 35 years.
Specifically, fleets owners can sign natural gas fueling contracts with Shell and, separately, secure leases for LNG vehicles with GE Capital. The agreement covers equipment that will purchase fuel from Shell’s facilities.
In and interview with Today’s Trucking, Veronique Hache, strategic initiative leader, natural gas, with GE Capital, said the company is offering the same service for natural gas powered trucks that it has for diesel powered ones for many years, but this new program is way to offset the higher costs of the alternatively fueled equipment.
“Our goal is to try and get as close as possible as you would get on a monthly payment on a diesel tractor to make sure the truck operator gets access to savings that’s coming from [natural gas] fuel right from day one,” she said.
Hache said the reduction in lease payments is based on the financial strength of the customer and their consumption of the fuel under contract they sign with Shell. In other words, one fleet could see a smaller or greater reduction in their lease payments compared to another of the same size.
While this new program is not restricted to fleets of a certain size, GE Capital said it is more likely to appeal to a fleet with at least 100 trucks. However, it noted it could be used by fleets half this size to help increase their number of trucks in service, while also achieving savings in fuel costs.
When asked why a fleet might want to consider switching to natural gas, especially in light of diesel prices being down from a year ago and many analysts expecting oil prices, which affect the cost of diesel, aren’t headed back above the US$100 mark anytime soon, Hache said it’s a matter of hedging your bets.
“First of all fuel is your number one cost. I think we can look at natural gas as a way to diversify your risk portfolio so, depending on your company’s culture, do you want to be on one source of fuel and be at the mercy of the volatility of diesel prices. Second, with this agreement, we have ways to secure the gap between the diesel and the natural gas pricing for the long term, and then with the help of Shell and this program, regardless of where the price of diesel is, we are tying to achieve a savings in the worse case scenarios, for example, that will be sufficient in the long term,” she said.
To participate in the program there are no restrictions on what kinds of make or models of natural gas trucks that can be leased, though they must be Class 8, nor is there a minimum amount of LNG that has to be purchased.
While it’s too early to tell what how much interest there has been in the program, since it was just announced, GE said so far most has come from private fleets rather than for-hire trucking. However, Niocolas Lessard, vice president of sales at GE Capital Canada, said the rollout was also customer driven.
“The reason we created this was from client feedback who were asking us to help them reduce their energy costs and make their fleets more efficient,” he said.
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