The initial fleet focus centered on slow-fill technologies for return-to-home fleets. A waste disposal company would be a perfect example of this market. With the trucks parked overnight, a filling solution using a less expensive lower-pressure compressor and electrical off-peak hours notably reduced some of the more significant overhead costs with the fuel. While this remains a solid, established market, regional over-the-road type fleets linked to an established off-site fueling network using fast-fill technology is also an increasingly attractive market, and one more in line with a traditional fuel retailer or marketer.
“For us, since oil has dropped, we’ve actually never been busier,” Renz said. “We’re definitely looking at volume of gallons, selling more and more. The reason is that you’ve got the big dogs getting in the game. I think three years ago when oil was high, a lot of smaller, private fleets were making the move to CNG. But there was less volume. Now you have companies like Unilever and Anheuser-Busch.”
Renz noted that they are typically involved for the greener aspects—sustainability and a domestic fuel—but that when they commit to the fuel, they do so with a lot of volume. Even so, they do benefit financially when moving to CNG. “In the past everybody wanted a payback less than two years. For those who value sustainability, as long as they’re getting a three- to four-year payback, which we can still provide, they’re moving forward,” he said.
In fact, even a marginally supportive fuel price differential becomes more attractive to such high-volume fleets. “[When] you’re looking solely at the financials, those higher mileage applications really make the most sense in today’s environment,” said Scott Perry, Vice President of Supply Management and Global Fuel Products for the Fleet Management Solutions, business segment of Ryder Systems, Inc. Ryder has been very aggressive, and remains so, in providing CNG opportunities throughout its truck leasing program. “With that differential between diesel and natural gas being compressed with more fuel being utilized in those higher mileage operations, you’re generating more savings in return to offset that incremental premium for the vehicle.”
(See the Ryder endbar for more information on its CNG efforts).
One issue with CNG and fleet adoption (though hardly unique to CNG) is an aversion to trying something new.
“You’re asking someone to operate differently than they’re used to operating, and people get fired for doing something new if it’s not working out. Nobody gets fired for doing things the way they’ve always been done,” said Zimmerman. “So, you have to overcome that. We’ve got a growing number of case studies of industry peers. It doesn’t matter what industry you’re in—I’ve got a success story. You’ve got us. You’ve got an increasing number of mainline guys like the leasing companies—Pensky and Ryder—who are increasing their fleets. So there’s a lot of ways to help somebody get over that hurdle. But, it’s like the first time you jump off of the high dive. No matter how many people you saw do it before, you have to do it yourself.”
Zimmerman also noted that a number of fleets have safety concerns with compressed natural gas and fear potential explosions. He stressed that such concerns are grossly exaggerated. “You should see the way they test these things. They shoot basically armored rounds at highly-pressurized tanks of natural gas, and they don’t explode. Of course they puncture, but they don’t explode,” he said. “We’ve had rollover accidents and high-speed collisions where the most robust part of the truck was actually the CNG system.” He noted that the industry is also maturing, and that there is increasing training for firefighters and first responders to make situations involving CNG even safer.
Marketers Making the Move
For marketers to provide CNG as part of a more traditional station model, it’s useful to have customers in place to use that fuel. Similarly, fleets want to have a fueling infrastructure in place to serve their vehicles before they make the jump. This can represent a challenge for both groups—so who goes first?
“It can be a ‘chicken and the egg’ issue with selling CNG as the fleets are looking for the fueling infrastructure, and the companies providing the infrastructure needs fleets,” said Joel Hirschboeck, Superintendent of Commercial and Alternative Fuels at La Crosse, Wisconsin-based Kwik Trip. The company has been an aggressive marketer of CNG and a range of other alternative fuels for commercial customers, which is particularly exceptional given its strong convenience store roots. “We really did our best to eliminate that within our footprint. Right now we actively operate 32 CNG locations. There are another two being built. We’ve got every major corridor, and every major market covered in our operating markets. If you’re operating natural gas from a regional or even local perspective, there’s pretty darn good opportunity that you can get fuel, and do it successfully without having to really stretch, or run out of route or do unusual things that don’t fit your typical business model.”
Hirschboeck noted that one advantage of doing it that way is getting more fleet adaption through a limited testing phase. “Instead of having to get a fleet to commit to a 30-truck roll out, they can go with two or three trucks, or whatever they’re comfortable with,” he said. “They can get an understanding of the technology and the differences between the natural gas vehicle and a diesel vehicle. They can make the modifications to their shops, if that’s something that they’re planning to take part in, and make the modifications to their operations. Not that there’s anything majorly significant; it’s just a different way of thinking sometimes, and understanding what those differences are. Then transition further into natural gas on their typical trade cycles.”
(See the Kwik Trip endbar for more information on its CNG efforts.)
Helping put such a network in place can involve an existing diesel marketer working with its customers to determine interests and opportunities. Once enough interest is generated, and perhaps an anchor fleet is identified, the process can begin moving forward with greater assurances for both sides of the fueling equation.
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