Southern Counties Express worked with ports, a fuel supplier and an equipment developer to implement LNG technology, offer a recruiting incentive and establish an environmentally friendly image.
About two-and-a-half years ago, Brian Griley heard something that would change his company’s direction significantly. The ports of Los Angeles and Long Beach held a meeting with executives of about 30 carriers serving the ports to discuss liquid natural gas (LNG) technology for heavy-duty trucks. Port officials and representatives of LNG fuel supplier Clean Energy and LNG engine developer Westport Innovations explained capabilities and environmental benefits.
Griley – president of Rancho Dominguez, Calif.-based Southern Counties Express – listened with some interest, but he says his peers mostly dismissed the idea out of hand, raising worries about fueling infrastructure, engine reliability and power, and so on. Most of the trucking executives knew that some local grocery fleets had used earlier LNG technology and had problems with it.
“No one listened to it with an open mind,” Griley says. “For an hour and a half, they just beat these guys up.”
But Griley sought out more information from the parties involved and quickly learned that Southern Counties could apply for grants from the ports covering about 80 percent of the purchase cost of LNG-powered trucks. The catch was the LNG trucks cost a little more than $200,000 each; indeed, one of the grant program’s goals was to spur demand and ultimately bring unit costs down. Also, for each truck the carrier bought, Southern Counties would have to destroy a pre-1989 diesel truck that already was serving the ports – either one the carrier already operated, or one that it obtained from another port operator. There were other strings attached, such as a requirement that the truck remain dedicated to port operations for at least seven years.
Lots of grant proposal writing and problem-solving discussions later, Southern Counties was poised last month to take delivery of its first of 50 LNG-powered Kenworth T800 trucks under the ports’ first grant – half of the whole grant program – for implementing the LNG technology. At $184,000 per truck, that’s $9.2 million for Southern Counties, which has approval for another 21 LNG trucks through a different grant subject to funding availability. And Southern Counties has worked to turn its environmental friendliness into an asset.
Finding the upside
Griley quickly saw the potential for recruiting drivers and growing Southern Counties. Drayage equipment is notoriously old and less than desirable; that’s one reason trucks have been such a focus of ports’ “green” campaigns.
“Owner-operators don’t have an opportunity to buy a new truck,” Griley notes. But with the grant funding in place, a driver could get a new truck, including maintenance and extended warranty, for a lease payment of about $500 a month. A few existing operators working for Southern Counties are interested in the new T800s, but Griley plans for a majority of them to go to new drivers so he can grow the operation to about 200 trucks from 160 today. “Our recruiters already have a waiting list of about 40 guys,” he says. But with such an attractive package, Griley plans to be very selective and methodical in leasing out the LNG trucks. “I want to know what their work habits are.”
Each LNG truck under the grant means that Southern Counties must scrap an old diesel-powered truck. But the carrier still can use the LNG trucks to grow its fleet because it can buy those trucks from other fleets and owner-operators – provided they currently serve the ports. Griley already has bought about a dozen trucks in preparation for the first deliveries of the LNG-powered T800s.
It’s possible that some trucks could come from drivers that jump to Southern Counties for the lease on a new truck, but there is no connection between the leases the carrier offers and the demolition-bound trucks it buys. In fact, Griley doubts that he will find many owner-operators who currently run such outdated equipment to be the type of driver he wants operating his trucks.
Another way Griley is trying to capitalize on the LNG trucks is by promoting Southern Counties’ environmental friendliness through branding and image. He is calling the LNG operation “The Green Fleet” and has adopted a logo, website (www.thegreenfleet.com) and other promotional materials. Griley wants to make Southern Counties’ commitment to the environment as clear and widely known as possible. In a supply chain that’s increasingly environmentally sensitive, these efforts could yield tangible benefits in terms of customer satisfaction and development.
Making it work
Even with the benefits that could flow from recruiting and brand image, the grants might not have been a big enough incentive to buy LNG trucks unless Griley could address some other important concerns. For example, there were hardly any public fueling stations in the area. And since Southern Counties would be an early adopter, it would have no good track record to judge the efficiency, reliability and durability of heavy-duty LNG trucks. So on-site maintenance would be highly desirable.
If Southern Counties were to operate its own fueling facilities or conduct its own LNG engine maintenance, however, the necessary capital and operating investments almost certainly would have trashed the economics of the deal. Ultimately, Griley resolved these challenges by negotiating “win-win” arrangements with both Clean Energy and Westport Innovations that ensured the cost-effective availability of both fuel and maintenance services.
Griley struck a deal with Clean Energy whereby the fuel supplier opened on Southern Counties property the area’s first public LNG fueling station dedicated to port trucking. The facility opened in December to much fanfare, including a ribbon-cutting ceremony that involved Los Angeles Mayor Antonio Villaraigosa.
The solution for maintenance was similar. Southern Counties leased its maintenance facility to Westport Innovations, which will perform LNG modifications and conduct maintenance there for Southern Counties as well as other truck owners.
In the end, Griley’s efforts showed the power of positive thinking. Rather than focusing on why LNG technology couldn’t work, he chose to figure out what he had to do to make it work.
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