UPS is the Green Truck Leader - But the Market Is Stalled

Last Updated Apr 6, 2010 7:01 PM EDT

United Parcel Service (UPS) is adding 200 hybrid-electric delivery trucks to the 50 that are already wearing the company's familiar brown livery.

It's a start, but to really make a dent in fuel use and greenhouse gas emissions (as well as sustain a budding industry), much larger orders--tens of thousands--are needed. And while companies are quick to send out a press release every time they buy a greenish vehicle, in fact, the green truck fleet is still small.

Why? Economics.

"Hybrid trucks are significantly more expensive," said a spokesman for UPS, who asked not to be identified. "And development of hybrid systems is expensive, too." The price difference between a conventional and an electric truck is at least $10,000 (the difference is less with hybrids). The operating costs of the latter, though, are much less -- and that gap would narrow if there is climate-change legislation. UPS says its 200 new trucks, in two different sizes from Workhorse Custom Chassis and Freightliner (with hybrid power by the Eaton Corporation) will reduce fuel consumption by 176,000 gallons a year compared to standard diesel, and cut annual greenhouse gas emissions by 1,786 metric tons.

UPS has moved faster than just about anyone. Of the almost 90,000 trucks in its fleet, 20,000 are low-emission and alternative-fuel vehicles (both hybrid and natural gas). Most other companies have small test fleets.

  • In 2008, Coca-Cola helped jump-start the business by ordering 120 hybrid trucks from Eaton. Coke said then that the vehicles cut emissions 32 percent and fuel consumption by 37 percent.
  • The U.S. Postal Service has contracted with Bright Automotive to retrofit a standard USPS "Long Life Vehicle" to electric drive, and then place it into one-year service around Washington, D.C. Bright, which does not have a vehicle in production yet, is seeking funding to manufacture its plug-in hybrid delivery van, the Idea.
  • FedEx has paired with the Environmental Defense Fund on hybrid trucks, and claims the cleaner vehicles emit 96 percent less particulate emissions (soot); 65 percent less smog-causing nitrogen oxide (NOx) emissions, as compared to a 1999 FedEx Express baseline W700 truck); and are 57 percent more fuel efficient.
  • AT&T, which has a fleet of 77,000 vehicles, has just ordered two electric Transit Connects, made by Ford. The Transit Connect was shown to the press at the New York International Auto Show last week, and I was able to take a ride with Chief Engineer Lisa Drake. I liked it. The Connect was quiet, responsive--and capable of hauling a huge payload. Best Buy is also looking at the Connect, thought Ford has yet to announce a price.
And there's the rub. If the Connect (or the Idea or any other electric) costs a lot more than a conventional van, companies will hesitate to pay the price, even if there could be savings over the life of the vehicle. But prices will never come down until there is enough of a market to provide economies of scale.

In February, FedEx head Frederick W. Smith appeared at a Senate hearing in his capacity as a charter member of the Electrification Coalition (an advocacy group that also includes Nissan). Citing figures from the Electric Power Research Institute, he estimated that a conventional car uses 400 gallons of gas per year, a hybrid 300 and a plug-in hybrid just 160. "The reduction in U.S. oil consumption is really dramatic [with hybrids]," he said, and operating costs are less.

But FedEx is almost certain to fall short of its own goals. The company said in 2003 that it could replace its entire fleet of 30,000 medium-duty trucks in 10 years. Three years shy of that date, it has only 1,800 alternative-fuel vehicles on the road. It recently announced a new initiative with electric battery trucks, but still no huge fleet-replacing orders.

Until the happy talk is replaced with orders, there won't be enough green vehicles to cause a traffic jam, much less spark a transportation revolution.