UPS (NYSE: UPS) plans to purchase approximately 700 liquefied natural gas (LNG) vehicles and build four refueling stations by the end of 2014. Once completed, the LNG private fleet will be one of the most extensive in the U.S.
"LNG will be a viable alternative transportation fuel for UPS in the next decade as a bridge between traditional fossil fuels and emerging renewable alternative fuels and technologies that are not quite ready for broad-based long-term commercial deployment," said Scott Davis, UPS Chairman and CEO.
UPS has been operating natural gas vehicles for more than a decade. With natural gas prices 30-40 percent lower than imported petroleum and U.S. production gearing up, the logistics company is investing more aggressively in the natural gas infrastructure necessary to make it part of the UPS delivery network here. Beyond favorable fuel cost and domestic resource access, the industry cites 25 percent less CO2 emissions.
Worldwide UPS has more than 1,000 natural gas vehicles on the road today. UPS's alternative fuel and advanced technology fleet of more than 2,600 vehicles also includes a wide array of low-emissions vehicles, including all-electrics, electric hybrids, hydraulic hybrids, propane, compressed natural gas and biomethane. Since 2000, the fleet powered by alternative fuels and technologies has driven more than 295 million miles.
New UPS-built fueling stations in Knoxville, Nashville and Memphis, Tenn., and Dallas, Texas, will serve its heavy-weight rigs traveling into adjacent states. With the addition of accessible LNG fueling stations, UPS also will add LNG trucks on routes from Dallas, Houston and San Antonio to further extend territory.
An initial investment of more than $18 million to build fueling stations will be supported by the purchase of these 700 LNG tractors and continued expansion of the natural gas fleet in the U.S. UPS already operates 112 LNG tractor trailers from fueling stations in Las Vegas, Nev.; Phoenix, Ariz., and Beaver and Salt Lake City, Utah, and has its own LNG fueling station on its property in Ontario, Calif.
"Public-private partnerships and legislative action can remove disincentives from fuel taxes on natural gas as well as offset the higher incremental costs of the vehicles to create the favorable conditions for companies like UPS and others to broaden deployment," Davis added.
As a global sustainability pioneer, UPS was a founding Interstate Clean Transportation Corridor (ICTC) fleet partner, a group that established publicly accessible LNG fueling stations in California, Las Vegas, and Utah. The ICTC steering committee includes eight government and regulatory agencies at the local, state and national levels.
"When other shipping and logistics companies are talking about possibilities, we are putting alternative fueled vehicles on the highway," said Davis. "LNG is a good alternative to petroleum-based fuel for long-haul delivery fleets as it is abundant and produces reduced emissions at less cost. At UPS, we are helping to knock down some of the biggest hurdles to broad market acceptance of LNG in commercial transportation by continuing to establish vehicle demand, fuel and maintenance infrastructures.