Should Fleets Fear Regulation?

Dedicated Transportation, Engine Technology, Fleet Management, Leasing, Safety & Environment, Sustainability
August 8, 2017

Two urgent causes, environmental sustainability and highway safety, are driving the U.S. government to regulate trucking and transport at a seemingly unprecedented pace.“We’re in a period marked by close scrutiny of the transport of goods and of the greenhouse gases this activity produces—along with its other impacts,” says Scott Perry, Vice President of Supply Management and Global Fuel Products at Ryder System, Inc. “This will continue, but as an industry, we have what we need to make big upgrades, and, going forward, to tell a positive story about performance and accountability.”

A flurry of abbreviations and acronyms pepper news coverage of this trend: EPA and DOT need no introduction, but the FMCSA (Federal Motor Carrier Safety Administration) and its SMS (Safety Measurement System), which supports improved CSA (Compliance, Safety and Accountability), are big pieces of the regulatory puzzle, as is the NHTSA (National Highway Traffic Safety Administration) and its CAFE (Corporate Average Fuel Economy) standards.

It is from this phalanx of capital letters that ever-stricter rules have emerged, strongly affecting the movement of goods and materials that American commerce demands.

But not all regulatory initiatives are created equal. According to Perry, the EPA’s 2014 greenhouse gas (GHG) certification requirement “was the first fiscally positive phase of regulation” for the industry. “It carried a lower price tag than earlier compliance, and it focused mostly on improving fuel economy,” he explains. “Following the 2014 guidelines, you could actually book a return on investment, so it received a more favorable response.”

That was Phase 1 of the ongoing EPA mandate that fleet vehicles become significantly more energy-efficient. Phase 2 of the proposed plan, scheduled to take effect in 2018, requires manufacturers to deploy numerous technologies to produce vehicles with far smaller environmental footprints. This phase places a focus on new vehicle designs—automated transmissions, faster axle ratios, aerodynamic enhancements, and the like—upgrades that could increase investments by up to $12,000 per large truck over the regulatory period.

Fleet operators will face a need for larger capital investments as a result. In order to remain profitable, they will be pursuing all reasonable means of increasing freight efficiency and exploiting sophisticated fuel options.

Taking the Complexity Out of Compliance

The pace of activity in transport regulation has made proactive planning a must. “Ryder, along with its customers, must be well positioned to pioneer new innovation in the name of sustainability,” says Perry, “as opposed to sitting still until the mandates are pushed upon us.”

The typical fleet operation takes pride in high safety standards, but the Department of Transportation’s FMCSA division has a quantified monitoring system, the “CSA score,” that awards zero points for good intentions. Instead, CSA scoring is all about holding carriers and drivers responsible for out-of-service and safety-related violations.

Ryder, as the market’s leading fleet service provider, has built safety solutions to take the complexity out of compliance. Customers are supported by compliance specialists at Ryder, who can help upgrade the accuracy and effectiveness of log auditing, drug and alcohol testing and driver qualification processes on the client’s behalf. Automated functions augment the value of the system; these include nitty-gritty services like advance electronic notification of expiring documents.

When a fleet operation optimizes its CSA ratings, it satisfies regulators, but it also improves its standing with potential partners and customers. Perry cites the concept of “platooning”—optimally configuring multiple trucks in a line together on a long haul—which is enabled by vehicle telematics, forward-looking radar, lane departure systems, instrumentation, wireless communications and other integrated technologies that combine to make trucking “smart.”

Take the example of a four-unit platoon. In the not-too-distant future, the leading rig will dictate the group’s speed and direction, while trucks two, three and four—which traditionally get worse fuel mileage because their drivers are forced to react to the lead—automatically steer, accelerate and brake in a closely spaced convoy that maintains a safe operating distance while improving the aerodynamics of the group.

With such a telematics system in place, the trailing drivers won’t have to react to traffic conditions in front of them—they will know exactly what the lead driver is experiencing. Once deployed, these semiautonomous platoons will cut emissions and fuel consumption. But for the concept to work, it will require that all trucks in a fleet share the same cutting-edge technology. Such enhancements will give inclusion in the platoon higher value, and CSA ratings could potentially help determine who’s in and who’s out.

“The vehicle that was going to be truck No. 3 in that platoon might not be allowed in because of, say, a low CSA score in the area of maintenance,” Perry explains. In his estimation, carriers with better scores generally will align with more shippers to get more contracts.

To Fuel Efficiency and Beyond

GHG Phase 2, as it’s called, lacks the simplicity of Phase 1, moving on from fairly straightforward engine and emissions system upgrades to a much broader assessment of vehicle use, design and construction. “For the upcoming initiative,” says Perry, “EPA has identified about 25 separate technologies that could contribute to the necessary outcome.” That ambitious goal is a 24 percent improvement in miles-per-gallon performance for each heavy tractor.

Companies are attempting to determine the best path to this goal for their businesses, as they study commercially available technologies that can be utilized off the shelf. This is not necessarily a case of needing to invent new equipment or technology, but rather of trying to shrewdly deploy what’s available. “In doing this, you are necessarily stacking and compounding to incrementally achieve the goal, and there’s no blueprint to follow,” says Perry.

The industry has been able to review and respond to the 1,300-page document, which is expected to be released as law this July. The new rules will affect trucks, tractors and trailers—categories where regulators feel big GHG improvements can be achieved most expeditiously. Trailer aerodynamics are getting close attention, and will need to represent an area of significant progress. “After that, the next tier would involve tires—their physical properties and efficiency,” Perry expects. “Advanced composites are also being looked at to achieve weight reduction.”

The Power of Relationships

For Ryder, the company’s longstanding relationships with manufacturers are beneficial in today’s dynamic regulatory environment. Experience and purchasing power also help the 84-year-old company put its positive stamp on the many regulation-driven transitions occurring within fleet operations. “These regulations center on new-vehicle purchase,” says Perry. “It’s on the manufacturers to produce a set of products that will comply. At Ryder, we have visibility into their product development process, and are already involved in validating proof-of-concept products.”

As regulations pile up, smaller players are struggling to comply and not lose competitive viability—a repeat of the industry contraction, mostly skewed to smaller fleets, that occurred in 2008—2010. Not surprisingly, barriers to entry are higher than in times past. Still, a smaller player, if they choose to partner with Ryder, might enjoy interesting options.

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