AMM.com Copying and distributing are prohibited without permission of the publisher
Email a friend
  • To include more than one recipient, please separate each email address with a semi-colon ';', to a maximum of 5


Long road ahead for LNG trucking: PLS

Keywords: Tags  PLS Logistics Services, Greg Burns, liquified natural gas, LNG, trucking, fuel costs, infrastructure, labor costs supply chain


HOUSTON — The trucking industry isn’t likely to significantly bolster natural gas demand in the near term, according to one industry executive.

Only about 6 percent of truckers plan to purchase equipment necessary to make their trucks run on liquefied natural gas (LNG), according to Greg Burns, president and chairman of PLS Logistics Services Inc.

Still, that’s up from a mere 1 percent last year, Burns said, citing data compiled in survey by the Cranberry Township, Pa.-based company. "The emphasis is ... more on potential than people jumping into the swimming pool," he said during a presentation about liquefied natural gas (LNG) technology and the transportation sector at AMM’s 6th annual Steel Tube and Pipe Conference in Houston. "The technology, in our opinion, is viable. ... But there is a ways to go."

The biggest obstacles to widespread adoption of LNG-powered trucks continue to be the cost of buying or retooling trucks to run on natural gas instead of diesel and concerns about limited LNG refueling infrastructure, Burns said.

In the company’s 2013 survey, 46 percent of respondents cited infrastructure as their primary obstacle to adopting LNG, down from 53 percent in last year’s survey. An additional 41 percent cited cost as the biggest hurdle, up from 24 percent last year.

It can cost more than $30,000 to retool a truck to run on LNG. That’s a big figure in a highly fragmented and "thinly capitalized" industry, Burns noted.

Another potential catch is that while a majority of trucking companies believe that LNG technology could be widely adopted, larger companies tend to be more bullish than the smaller platers that make up the heart of the trucking industry.

In addition, LNG adds weight to trucks, which reduces payload and revenue and decreases horsepower, he added.

And while truckers appear to be more closely exploring the possibility of adopting LNG, their customers—mostly companies moving heavy industrial commodities such as copper or steel coils—aren’t doing much to promote LNG themselves, Burns said. That might unwise, given that diesel costs are expected to continue to rise over the long term, he said.

Still, Burns took a positive view of the trend. As people realize that LNG filling infrastructure exists and continues to be built, "they are focusing on the dollars and cents of what these rigs cost," he said.

While it might not be possible to switch entire supply chains to LNG-powered trucks, "chunks" of the chain could be switched over as LNG infrastructure expands, Burns said. And any savings on fuel could be important, especially with both fuel and labor—the main costs in the trucking industry—showing no signs of easing in the near term, he said.

"It’s not if you’re going to be paying more for transportation; it’s how much more," Burns said.

Truck drivers are retiring from the industry at a faster pace than new drivers are entering it, in part because of compensation: The job pays between $40,000 and $50,000 on average, Burns said. "Those wages need to go up. And they are going to go up sharp and hard," he said, adding that inflationary fuel and labor costs are already "locked and loaded" and ready to hit the industry.


Have your say
  • All comments are subject to editorial review.
    All fields are compulsory.



Latest Pricing Trends

Poll

Are you stocking more inventory today than 18 months ago?

Yes
No


View previous results