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Hybrid Musings

November 13, 2008

“You can’t buy what you can’t buy.”

Who said that? Samuel Goldwyn? Yogi Berra? It’s a good line. Actually, neither said it. But it does pertain to FedEx’s efforts to buy hybrid electric commercial vehicles in significant volumes. But, first some background.

In 2000 FedEx and Environmental Defense Fund collaborated on the leadership to bring commercial hybrid electric vehicles to use in business. FedEx intended to act as a launch customer and provide motivation for manufacturers to produce environmentally-clean, fuel-efficient vehicles. We said we had approximately 30,000 vehicles in applications for which hybrids could work – primarily urban, stop-and-go operations. And, we said we would like to buy hybrids on a normal purchasing schedule as one of our normal vehicle options.  But we realized that this relatively small number of vehicles for manufacturers was not large enough to motivate them for long term production. In order to do so, the technology would have to be non-proprietary – in other words, other companies with fleet vehicles could buy them, even our competitors. And, by our usage in revenue service, we could demonstrate the reliability of the technology that other companies would recognize (remember that FedEx has a money back guarantee on our services; so for us, the trucks have to work if we are going to use them).

And, we went even further. In early 2007 FedEx went to Congress and asked the United States Senate to pass legislation that would require commercial vehicles to improve in fuel economy. Incredibly at that time, no fuel efficiency standards existed for commercial trucks. Our reasoning was this would result in regulations that would both create a market for, and require the production of these fuel-efficient, environmentally-clean trucks. At the time, we were the only transportation company calling for these fuel economy standards. And, I can tell you that we surprised a few senators with the request. Subsequently, Congress did pass legislation in late 2007 that will ultimately result in fuel economy standards for commercial trucks – a first-ever requirement for energy efficiency improvements in these vehicles that travel the nation’s roads each and every day. I’m encouraged by that.

So, all of this worked to a degree. FedEx alone has put four different designs of hybrids in service from some great manufacturers, accumulating two million miles of revenue service by the spring of 2008 on three different continents using more than 170 hybrids – North America, Europe and Asia. In fact, our two million miles of service were used as justification for other orders in a May 2008 press release by one of the existing manufacturers. Now, more than 70 companies are testing, or plan to test, hybrids – utilities, beverage companies, transportation companies and others. But, to date, no manufacturer is yet producing hybrids in volumes that are considered full production and are cost competitive. The reality right now is that the numbers are slowly increasing, but prices remain too high for rapid market penetration.

But there is a solution. In April 2008, FedEx called upon the industry to produce clean, affordable and widely available hybrid electric vehicles. FedEx alone cannot subsidize development and commercialization costs because we don’t own or have sole usage of the technology, as mentioned previously. Doing so would not be a responsible use of our shareowner’s investments. So, this commercialization has to be a collaborative effort as we and Environmental Defense Fund originally envisioned – manufacturers, operators and the federal government – through development, incentives and regulation – working together to transform transportation.

One other point – since 2002, when we were first able to test a hybrid, we have had to replace more than 18,000 vehicles – many of which could have been, and we would have liked to have been hybrids. What a lost opportunity.

So, I started out this posting with a statement. Now, let me end it with a question:

“Why can’t we buy what we want to buy?”

Think about it…


Comments

    David James Trudell says:

    Hybrid engines are the wave of the future no argument here; however, one critical element that I contend is not being appropriately addressed is vehicle mass and resistance.

    No matter how efficient the drive train, vehicle mass and resistance are efficiency robbers…

    Thermoplastic composite materials designed by the Rocky Mountain Institute and incorporated into their ground-breaking Hypercar design highlighted the benefits of a hybrid-electric drive train, coupled with a chassis design and body panels made of thermoplastic composite materials.

    These thermoplastic composite materials are:
    1. 60% lighter and 600% stiffer than steel
    2. 30% lighter than aluminum
    3. 200% tougher than thermoset composites
    4. 500% stiffer than injection molded plastics
    5. 60% less scrap during production than sheet goods

    As a lay person, I contend that this type of technology could either be retro-fitted or custom built to replace a retiring fleet.

    The cost savings associated with higher fuel economy, enhancements to safety, weather-ability (no degradation of body panels or underpinning by road side debris or salt), and countless other benefits warrant some additional investigation.

    Thank you for creating this forum to present ideas and share common goals.

    Max says:

    I applaud Fedex for lobbying to get greater fuel standards.

    Let’s hope that the current economic situation and the proposed auto-industry bailout will not adversely effect the fight for higher fuel standards for both commercial and non-commercial vehicles. This bailout is a perfect way for the government to force companies to produce the more-efficient vehicles that they should have produced years ago.

    John W. Osborne says:

    Hybrids are the way to go. I currently own two Hybrids. A Toyota Prius and an electric bicycle that goes 30mph. I use the bicycle to commute to work 23 mi. round trip. I love them both.
    John Osborne
    LAX Aircraft Maint.

    Peter Sabin says:

    As an employee of FedEx, I endorse the goal of reducing our footprint.

    May I humbly suggest that there is something both symbolic and useful that can be done?

    Employees getting to work must consume resources. If FedEx top management endorsed working from home offices, consumption of resources could be reduced.

    Roberto Lozano says:

    I recently visited to Argentina and there is a significant of ground transportation moving with CNG, the modificationis not expensive and it cuts down carbon emissions by 60%. At the same time, the price of CNG is much lower in most of these countries. I believe it would be a good move by FedEx to diversify its fleets, set a budget for fleet modification in many Third World countries where hybrids will be slowly introduced. The ROI for conversion to CNG would be maximum two years, however the impact on the bottom line and profits could be significant.

    Manlee Chavez says:

    As a corporation FedEx has been the pioneer in several aspects of our industry. While being a “green,” company is becoming more popular with the general public. It makes me proud to know that FedEx has been at the forefront of reducing our carbon thumbprint.

    Specifically, the dedication and courage to seek ways to reduce carbon emissions by utilizing alternative sources of power; i.e. hybrid technology. This demonstrates that FedEx is once again ahead of the curve.

    While we still have plenty of ground to cover, companies with the positive brand influence such as FedEx are to be commended.

    Malcolm Swinbank says:

    low-cost flat-panel composites.

    Further to David Trudell’s comment above, getting new materials accepted by the mainstream automobile industry is extremely difficult.
    The use of low-cost flat-panel composites in vans and truck-trailers is a start, and further developments in the use of such composites could be usefully researched at little expense by a good university composites team, as in this example:

    http://www.tech.plym.ac.uk/sme/innovation/chassis.htm
    http://www.tech.plym.ac.uk/sme/chass.pdf

    A composite vehicle chassis would be unlikely to get industry acceptance in the near future, but a composite trailer chassis would much be easier to achieve and still offer significant weight-savings.
    Another possible application for FedEx would be in special re-usable containers for high value items such as Thrust Reversers, perhaps similar in construction to composite LD3s:

    http://www4.hydro.com/nordisk/en/products/nordisk_containers/half_width_lower_deck/ld3.html

    The cost-saving would be in much lighter empty containers, and in longer useful container life.

    Andrew says:

    As a coveted brand in the industry, I think there needs to be a bigger push by FedEx into the green technology market. Natural gas powered vehicles would be a great option. It provides cheap fuel, larger facilities could install filling stations, its clean an abundant. Only drawback are the size of the individual units fuel tanks would be larger, but I am sure there are companies are addressing this minor concern. FedEx should lead by being in the first in the market to do this.

    John Steele says:

    Well put FedEx is a pioneer in so many ways.

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