The much-discussed Greenhouse Gas (GHG) Phase 2 rulemaking was finalized on August 16, published in the Federal Register on October 25, and takes effect on December 27.
In addition to retaining the vehicle and engine categories covered in the Phase 1 program, the Phase 2 standards include fuel efficiency and GHG emission standards for trailers used in combination with tractors.
Randy Mullett, who heads Mullett Strategies LLC and worked as part of a leadership group with the Environmental Protection Agency (EPA) on both Phase 1 and 2, said there were two reasons for the emphasis on trailers this time:
Randy Mullett, Mullett Strategies LLC
• The EPA and National Highway Traffic Safety Administration (NHTSA) were able to “increase the final rule’s fleet average by 0.5 mpg. Over the entire tractor-trailer fleet by 2027, seven billion gallons of diesel will be saved and 100 million metric tons of CO2 avoided—and that’s the equivalent of taking all vehicles in California off the road for a year.”
• “Trailers are pretty easy relative to power units, especially the way they have locked this into just four areas: aero, tires, weight, and air pressure tire systems. A lot of them have already been used. And relative to what OEMs and engine manufacturers have to do with tractors, this is pretty simple stuff.”
He said he donned his pseudo-trailer-dealer hat and pondered a question: “What would I be most concerned about?”
“It’s not compliance, because the manufacturers are the ones that have to comply,” he said. “Whatever they put out for you to sell will be in compliance with this rule.”
So here are his concerns for trailer dealers:
• Profit margins and growth. “I think, what does this do to my profit margins and potential growth? Will it keep you from buying trailers?”
• Cost increases. “What kind will I see and have to deal with?”
• Lack of customer choice. “Will I be less able to sell to my customers because I’m not able to provide the right kind of choices anymore?”
• Pre-buy and cliff cycles every three years. “Will we see it? What does that do to my inventories and cash flow?”
• Revenue streams (new, used, add-ons, maintenance). “If I was paying a bunch of money in my shops and in my sales office selling add-on technology for fuel economy now, that’s profitable. Now there will be a certain amount to retrofit, but going forward, that revenue stream shifts to manufacturers from dealers.”
• Complexity of maintenance and warranties. “All these systems are now control systems and are maintained in a certain way and warrantied for five years. So all of a sudden you have all these things to deal with that you didn’t have to think about much before.”
• Holding the bag when ROI is not there. “Who’s left holding the bag with the customer when you don’t get the ROI out of these things that EPA assumes you’re going to get? Let me give you a few examples. Con-way Truckload was a huge adopter of every new fuel-saving technology to come out. They did all kinds of stuff with weight reduction and were the first national fleet with aero equipment. In a decade, Con-way improved fuel economy with all that stuff by 12%. This rule assumes that in the next 10 years, you’re going to do 34%. So Con-way was early adopters and averaged 1.2% a year over those 10 years. EPA assumes you’re going to average 3.4%. It’s a huge stretch for tractors and trailers. Second, when EPA figured these rules, they made assumptions about the penetration rates of the new technology. The biggest one was assumptions about the speed that the units would be running. For 53-foot vans, they assumed 86% of the miles would be run at 65 mph, another 90% at 55 mph. That’s not realistic.”
So what can be done?
• Remember that much of this is based on politics, not practice. “So who ends up in the White House can impact this going forward. It’s a long-term rule. A lot of it is to satisfy a lot of different constituencies, not necessarily the users or sellers or manufacturers of the equipment.”
• Pay close attention to EPA’s yearly “reviews” of rule progress. “That’s the chance to tell your story. Make sure they really do know the practical effects of this rule on your businesses and your customers.”
• Be an active participant. “Volume matters. People are stronger in groups. The NTDA is a big group and can have a big influence. Use NTDA resources to join together. Participate in broad coalitions and talk to your DC representatives.”
Glen Kedzie, American Trucking Associations
In his presentation, “Understanding Impacts of the Phase 2 Greenhouse Gas Final Rule,” Glen Kedzie, vice president of the Energy & Environmental Counsel of the American Trucking Associations (ATA), gave the breakdown of various configurations and their costs and fuel-consumption improvements:
• Long box dry and refrigerated vans of more than 50 feet with full aerodynamics: Incremental cost increase of $716 in 2018, $1081 in 2021, $1204 in 2024, and $1370 in 2027, with fuel-consumption improvements of 2%, 5%, 7%, and 9% respectively.
• Short box dry and refrigerated vans 50 feet or less with full aero: $339, $772, $1171, and $1204, with fuel savings of 1%, 2%, 4%, and 6%.
• Long box vans of over 50 feet with partial aero: $1441, $1337, $1251, and $1196, with fuel savings of 2%, 3%, 3% and 3%.
• Short box vans of 50 feet or less with partial aero: $514, $957, $894, and $855, with fuel savings of 1%, 3%, 3%, and 3%.
• Non-aero long box van of over 50 feet, with tires and tire-pressure systems only: $461, $438, $405, and $382, with fuel savings of 2%, 3%, 3%, and 3%.
• Non-aero short box van of 50 feet or less and tire-pressure systems only: $231, $219, $202, and $191, with fuel savings of 1%, 2%, 2%, and 2%.
• Non-box trailers with tires and tire-pressure systems only: $448, $412, $383, and $354, with fuel savings of 1%, 2%, 2%, and 2%. ♦