For Central Freight Lines, natural gas was a natural choice as an alternative fuel. “We’re a Texas carrier, so we have a significant concentration of customers in the oil and gas business,” said Don Orr, the trucking company’s president and CEO.
The Waco, Texas-based less-than-truckload carrier began testing 15 tractors powered by compressed natural gas earlier this year in Houston in line-haul and pickup and delivery operations, and plans to add more CNG trucks to its fleet.
“We’re going to start in Fort Worth in the fall,” Orr said. “If everything goes in the right direction, we’ll be looking at adding more trucks in the first quarter” of 2013.
Central Freight Lines is on the cutting edge of trucking’s efforts to make alternative fuels less an alternative and more a replacement for diesel. The market for CNG and liquefied natural gas is expanding from local operations such as waste hauling, construction fleets and, in Southern California, drayage to regional trucking. That includes private and dedicated fleets and for-hire carriers such as Central Freight.
Fuel savings are the main factor driving conversion to CNG, LNG or in some cases electric trucks, but those savings aren’t always easy to calculate or achieve. “We are seeing a savings, but I wouldn’t want to say that what we’ve seen so far is adequate,” Orr said. The LTL trucking company’s initial projected savings from powering some trucks with CNG were based on a $3.85-per-gallon diesel price, he said. For the week ending July 16, the average diesel retail price on the Gulf Coast was $3.62, according to the U.S. Energy Information Administration.
Still, that’s more than $1.50 per gallon above what Central Freight Lines pays partner Clean Energy Fuels for CNG — about $2 per gallon, Orr said. But there’s more to the equation than a straight commodity-to-commodity price comparison.
There’s the higher cost of equipment, lower fuel efficiency, and where and how you fuel vehicles. “We’re still worried about where the road taxes on CNG are going to end up,” Orr said. Even at a $1-per-gallon price differential, “considering the cost difference and the mileage you get on a truck, it stretches out the payback a long time,” Orr said. Central Freight’s initial target was 39 months.
“We’re going to have to do some fine-tuning,” Orr said, especially in line-haul operations, to get the savings the company anticipated. “This is one of the deals where early adopters can pay an extreme penalty if they don’t watch themselves.”
For one, there’s no market for used CNG trucks, he said. “These vehicles may be worth nothing in five years, because the technology may have changed so much. We’re still in the early stages” of natural gas fuel adoption, he said. “We’re taking all the risk on the resale of the truck.”
Despite those caveats, Orr is pleased with his company’s progress. “It’s not for everybody. But in LTL, there’s a real opportunity for CNG,” he said. One plus is the stability of natural gas prices. “There’s less surprise than (with) diesel.”
There’s also less infrastructure — there are only about 1,000 CNG fueling stations across the U.S., and only half of those are open to the public. But Central Freight uses a Clean Energy Fuels CNG station near its Houston terminal to fill its trucks.
“There’s a tipping point where having our own station will take place,” Orr said. “We’re working with several partners and looking at how to build stations and whether we should seek credits or help from municipalities.”