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American Shipper

U.S. government unveils next-level fuel standards for trucks

The Obama administration is ratcheting up fuel efficiency and greenhouse gas emission standards for heavy duty commercial vehicles.



U.S. Department of Energy’s infographic illustrating how SuperTruck is making heavy duty vehicles more efficient
Source: Energy Department

    The U.S. Environmental Protection Agency (EPA) and the National Highway Traffic Safety Administration (NHTSA) on Tuesday released new rules for fuel efficiency and greenhouse gas emissions in heavy-and-medium-duty trucks that are scheduled to begin in 2018.
   It’s the second phase of tougher standards for commercial vehicles that could reduce some operating costs, with savings potentially passed along to shippers.
   The Obama administration previously implemented fuel efficiency and greenhouse emission standards for heavy duty trucks made between model years 2014 and 2018.
   The new standards intend to achieve up to 25 percent lower carbon emissions and fuel consumption than in 2017 (the end of Phase One) and are 10 percent tighter for greenhouse gas than in the initial proposal. The moves are part of a broader administration effort to reduce emissions across most industries to meet global commitments for combatting climate change.
   Trucks are the dominant mode of freight transportation in the United States and a major source of carbon pollution and fuel consumption, second only to automobiles in the transportation sector. Freight movement accounts for about 10 percent of U.S. greenhouse gases.
   The engine standards phase in beginning in 2021 and will ramp up through 2027.
   The agencies are also issuing efficiency standards for trailers for the first time, beginning in 2018. Aerodynamic devices, light weight construction and self-inflating tires can significantly reduce total fuel consumption by tractor-trailers, they said.
   The administration said the new fuel standards are expected to lower carbon dioxide emissions by about 1.1 billion tons, while saving truckers 2 billion barrels of oil and $170 billion in fuel costs. Regulators estimate the program will result in up to $230 billion in net benefits to society over the lifetime of vehicles sold during the period, including health savings and energy security gains.
   The regulations will result in higher capital outlays for fleet owners, but the additional cost of a new truck will be recouped through lower fuel consumption within two to four years, the agencies said.
   The rulemaking estimates that tractor-trailers with the fuel-saving technologies will cost about $13,500 more than vehicles today, but some industry officials say the government’s estimate doesn’t take into account the higher costs of maintenance, warranties and out-of-service time.
   The standards allow flexibility manufacturers to use various technology types to achieve compliance and meet customer needs, including improved transmissions, engine combustion optimization, aerodynamic improvements, idle reduction technologies and low-rolling resistance tires.
   Extensive input from truck makers and other interested parties was gathered to improve the rule since it was first proposed two years ago.
   The rules require a 5 percent improvement in fuel efficiency for tractor engines by 2027, which the Administration said is technically feasible.
   To ensure a smooth transition, the engine standards are designed with substantial lead times, a gradual phase-in over the course of nine years, and expanded emissions credit flexibilities that allow manufacturers to tailor their own phase-in schedule, the administration said.
   The EPA and NHTSA coordinated the rulemaking with the California Air Resources Board to ensure the standards could also be adopted by that state, which has the strictest emissions requirements in the nations, and allows manufacturers to build a single fleet of vehicles and engines for the U.S. market.
   The agencies also worked with the industry to set standards that vary by vehicle weight, cab type and other factors.
   The American Trucking Associations expressed cautious optimism that the Obama administration’s fuel-economy standards would achieve their targets and that the 10-year phase-in period would not cause excessive disruption to motor carriers and manufacturers. The trade association said the new rules incorporate its desire for adequate lead-time for technology development, national harmonization of standards and manufacturing flexibility.
   “While efficiency milestones for vehicles, engines and trailers have all been slightly increased over the agencies’ initial proposal, we are encouraged that they addressed several important issues in the final rule including undertaking annual rule assessments, not accelerating compliance timelines from those originally proposed and refining emissions modeling based on industry data,” Glenn Kedzie, the ATA’s vice president of energy and environmental counsel, said in a statement. “However, while the potential for real cost savings and environmental benefits under this rule are there – fleets will ultimately determine the success or failure of this rule based on their comfort level purchasing these new technologies.”
   The second round of heavy-duty truck fuel standards will have less impact on the trucking industry than the first one, and truck and component manufacturers should be able to meet the standards through currently available technology, Michael Baudendistel, a transportation equity analyst at Stifel, said in a note to clients.
   There could be a surge of orders for 2019 and 2020 model year trucks ahead of the 2021 standard to save on purchase costs. But motor carriers could be tempted by the projected fuel savings to go ahead and buy the new trucks, although such a decision will likely be influenced by the price of diesel fuel. At the current average of about $2.30 per gallon, versus above $4 in recent years, “the economics are generally not as compelling as they once were,” Baudendistel said. “The bigger question, in our view, remains reliability, as many fleets saw significant deterioration in reliability following implementation of recent emissions standards. And, of course, a pre-buy is also generally a reflection of current economic conditions and fleets’ ability to pull-forward spending; if market conditions are not strong enough in 2019-2020, any impact of a pre-buy is likely to be minimal.”
   Shippers could benefit from the rules in a couple of ways. Many retailers and other businesses increasingly are interested in showing customers that they are good environmental stewards and one way to do that is to demonstrate that their supply chains have a low carbon footprint. They also might see lower fuel surcharges if the fuel economy of their transportation providers is better.
   The average fuel economy for a large tractor-trailer fleet today is between 6 miles per gallon (MPG) and 7 MPG, but remains below 6 MPG for all over-the-road trucks because smaller companies tend to defer adoption of expensive technologies, according to the Federal Highway Administration and industry surveys.
   The long-term standards gives manufacturers the certainty they need to make investments and scale production in new engines, powertrains and other technologies, supporters of the rule say.
   Across-the-board, adoption of new technologies could bring average U.S. fleet efficiency to about 9 MPG, Mike Roeth, executive director of the North American Council for Freight Efficiency, said in a recent virtual presentation hosted by Stifel.
   Meanwhile, the Department of Energy’s “Super Truck” program has resulted in manufacturers achieving fuel efficiency of about 11 MGP in test vehicles.


This Class 8 tractor-trailer, which is a demonstration vehicle that is part of the Energy Department’s SuperTruck initiative, reaches more than 10 MPG under real world driving conditions.
Source: Energy Department

   PepsiCo, Walmart, General Mills, Stonyfield Farms, Patagonia and Ben & Jerry’s were among a group of truck users that pushed for higher fuel standards.
   “Today’s clean truck standards are a big win for America’s efforts to address climate change, reduce oil use and strengthen our economy,” Environmental Defense Fund President Fred Krupp said. “EPA and DOT have created rigorous and common sense standards that will reduce climate pollution, protect public health, make us more energy independent, and save money for both truckers and consumers. With today’s announcement, we will cover a lot of ground in our journey toward a safer, healthier clean energy future.”
   Increased efficiency will provide savings across the supply chain, Jason Mathers, the EDF’s director of supply chain, wrote in a recent blog.
   “We support a strong Phase 2 rule that will drive innovation in truck technologies to viable solutions at a pace that ensures technologies will have the intended triple bottom line outcomes without unintended consequences,” Tracy Rosser, senior vice president at Walmart, was quoted saying on EDF’s website.

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