Veteran observers of the logistics industry say that new emissions-compliant diesel engines mandated for production starting October 1, 2002, could cripple the trucking industry.
Robert Delaney, vice-president of Cass Information Systems, and logistics consultant Rosalyn Wilson warn in their annual State of Logistics report that the implications of the new engines are huge. They say the trucking industry — which carries 82% of all freight in the United States and represents 50% of all US logistics costs — can ill afford the engine-related costs at a time of rising operational expenses and falling freight volumes.
“EPA (the Environmental Protection Agency) originally estimated that compliance costs with the new engine standard would be $320 million,” Wilson said. “They now acknowledge that compliance costs will approach $2 billion — an increase by a factor of six.” An increase in fuel costs per mile of two cents is likely, as is a base cost increase of at least $1,500 per engine unit, she said. But the wild card in all of this, Wilson says, is engine performance and reliability.
“There is a report that Werner Transportation inspected the new EPA standard engine after 200,000 miles of operation, and it resembled a five-year old engine after one million miles of operation,” she said. “The EPA has definitely understated the costs of the new standard.”
Wilson says the new engines are being introduced at a time of economic turmoil in trucking. She says carriers have seen freight volumes drop between 5 and 10%, depending on market segment, while costs of fuel and insurance have climbed.