More Efficient Trucks Will Improve the Bottom Line

Here in the United States, the Environmental Protection Agency and the Department of Transportation will unveil new fuel efficiency and greenhouse gas standards for big trucks soon, according to the New York Times. At first glance, many companies might conclude that these new polices do not impact them. They’d be mistaken. In fact, they would be overlooking an enormous opportunity to cut costs while delivering real-world progress on sustainability.

Impact-of-fuel-efficiency-updated-5-15-low-rezThe fact is that nearly every company in the United States is reliant on heavy trucks, which move 70% of U.S. freight. Brands and manufacturers use trucks to bring in supplies and ship out final products. Retailers and grocers count on trucks to keep the shelves stocked. Technology companies need trucks to deliver the hardware that powers their online services. Even Major League Baseball has turned its dependence on trucking into a quasi-holiday.

More efficient trucks matter to all business because they will cut supply chain costs. Last year, American businesses spent $657 billion dollars on trucking services. A lot of that money went to pay for fuel – the top cost for trucking, accounting for nearly 40% of all costs.

EDF and Ceres teamed up with MJ Bradley and Associates to assess how strong heavy truck fuel efficiency standards would benefit businesses that rely on trucking. In an update of analysis originally produced last year, we found that companies could see freight rates fall nearly 7% as owners of tractor-trailer units see their costs fall by $0.21/mile. Given that class 8 trucks logged nearly 170 billion miles last year, that $0.21 per mile savings, for example, equates to $34 billion dollars less in annual freight costs.

The magnitude of the savings in this update was consistent with our findings from last year; however, there are important changes in the underlying cost structure. In this new analysis we modeled significantly lower future U.S. diesel prices, in light of new fuel cost projections by the Energy Information Administration. We also updated the cost of more efficient equipment based on recent analysis by the International Council on Clean Transportation.

These savings add up for large shippers. A big consumer goods company, for example, could save over $10 million a year in 2030 by using trucking companies with newer trucks. As an added kicker, these trucks also would help meet the supply chain sustainability targets that leading brands are increasingly setting.

So, while your company may not own or make big trucks, cleaner, more efficient trucks hold a big opportunity for its triple bottom line.

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