Fleets backing off new truck purchase plans?
...there is too much uncertainty about new engines still in the process of being re-engineered to meet new, more stringent emissions standards.

by Paul Abelson, technical editor

Don Schneider, president of Schneider National, the nation’s largest truckload carrier, dropped a bomb-shell on the truck manufacturing community when he announced he might purchase only a few model-year 2003 trucks. His reasoning was there is too much uncertainty about new engines still in the process of being re-engineered to meet new, more stringent emissions standards. Schneider’s remarks were made recently at the Transport Topics Management Outlook Forum.

What uncertainties? The engines are reported to cost $3,000 to $5,000 more than current comparable models while delivering 3 to 5 percent fewer miles per gallon. Most enginemakers are using exhaust gas recirculation (EGR) to manage combustion temperatures in order to control formation of oxides of nitrogen (NOx), a component of smog. The gas must be cooled before re-entering the engine. The EGR heat exchangers remove heat from the exhaust and release it near the radiator or in the engine compartment. In preliminary tests, trucks with early EGR systems had 200 degree Fahrenheit to 250 F increases over current under-hood temperatures (reported at the SAE Truck and Bus meeting, November 2001). No one knows yet what effects these temperatures will have on seals, gaskets, hoses, belts, bearings and fluids.

Schneider, along with Swift Transportation, Yellow Freight and other carriers, say they are expecting to fill their needs by extending the service life of their current trucks, and supplement them with purchases of low mileage used trucks. This could be devastating for both truck and engine builders if such drastically reduced purchases of new trucks become an industry trend. Schneider and Swift normally purchase around 4,000 tractors each, annually. All truckmakers are operating on thin margins, with Freightliner’s losses expected to be $1.2 billion in 2001, according to Bloomberg News.

The news may not be all bad, however. While truck and enginemakers may have to survive on parts sales while they perfect their 2003 models, the shift in fleet purchasing may put a significant dent in used truck inventories, which have become a burden to manufacturers and dealers. Also, available capital may be used to purchase trailers.

The emissions regulations originally were scheduled to take effect in 2004, but were moved ahead 15 months as part of an agreement between the EPA and the major engine manufacturers during the Clinton administration. The EPA claimed the enginemakers rigged their electronic engine control units (ECUs) to pass the EPA emissions test cycle, but to exceed allowable emissions during normal operations in order to deliver better fuel economy. The enginemakers claimed they met all published standards and passed the tests developed by the EPA. They also claim the EPA knew, or should have known, of any shortcomings in their test procedures, which were made public at numerous engineering meetings worldwide. Rather than face the EPA in a long, expensive court battle, the enginemakers agreed to pay penalties and fund research, with total costs exceeding $1 billion. Advancing the date for the new standards was part of the agreement.

The initial 2004 date was agreed upon as the earliest the enginemakers reasonably could expect to develop, demonstrate, debug and deploy new technologies. Currently, development is near completion, but demonstration and debugging are still in process, and may not be completed by the October deployment date.

The statement by Schneider and others, and the effect their plans will have on the truck manufacturing community, may provide the basis for an appeal to the Bush administration to grant a compromise delay. An additional six to 12 months would allow far more development and field-testing to take place.

On the other hand, the statements by Schneider and others just may be for leverage when negotiating price and service agreements with the truck and engine manufacturers. Time will tell.