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How to Help Hybrid Trucks Go Mainstream

March 8, 2010

I’m writing this as I return from a recent CALSTART board meeting where I have assumed the role of chairman after five years of service as a board member. CALSTART is North America’s leading consortium dedicated to the growth of a clean transportation technologies industry. Having the opportunity to offer time and expertise to an organization such as CALSTART is representative of the overall approach at FedEx to reach out into the communities we service. I’ve always been grateful to represent a company that recognizes the benefits of contributing to our communities beyond the basics of the services we provide.

Innovation in transportation technology is a critical part of CALSTART’s mission and it is a core strategy at FedEx. We supported engineering of the first hybrid delivery vehicles and now have the largest fleet of Hybrid parcel delivery vehicles in the world. Recently these hybrid vehicles logged more than five million miles in daily service to our customers — the equivalent of 200 trips around the earth. We also continue to grow our alternative energy vehicle fleet. This month FedEx placed into service the first two diesel-electric hybrid trucks ever in Hong Kong. I hope you will agree with me that this technology works and is ready for adoption in commercial fleets. But innovation, even when the technology is validated by five million miles, does not yet mean the technology can stand on its own in the marketplace.

It’s an old saying that if you build a better mousetrap people will beat a path to your door. However, if that better mousetrap costs two or three times what the existing trap costs, the better technology might not have a great chance of being adopted. We find ourselves in this space with hybrid trucks. While hybrid cars are pretty commonplace today, it’s not so much with hybrid trucks.

The FedEx Hybrid trucks aren’t demonstration vehicles that are transported from auto show to auto show, but work horses providing reliable service in an environmentally sustainable way. We have proven that the technology works, but it’s not getting proportionate traction due to the cost. Hybrid truck technology is too expensive to become mainstream as the return on investment is too long, and hybrid trucks are too expensive because not enough fleets are buying them. Is this an intractable problem? I don’t think so. Even the better, i.e. expensive, “mousetrap” may need some help from time to time in a recession-battered market. The help hybrids need today to go mainstream is:

  • Regulations that understand the technology. Trucks are regulated in a different way than cars are regulated. While hybrid car emissions are measured by what comes out of the tailpipe, hybrid truck emissions are measured by the emissions from the engine, even if the engine doesn’t run 30percent of the time the vehicle is on the road.
  • Incentives you can plan on. I think that we have been successful in understanding the current incentive funding environment and how to best work with local, state and federal jurisdictions to capitalize on the availability of current incentives and tax credits. After all, our stockholders would be disappointed if we didn’t. However, incentives must be something companies can plan around. Like most large companies we have a capital budgeting cycle and don’t go out and buy equipment because it might be “on sale”, or have an incentive available. To truly stimulate and allow business to plan for and make these investments, we need cost projections that can be reliably forecasted and planned on as being available.
  • Don’t let best get in the way of better. Hybrid technology works today and will reduce fuel consumption today. It is ready for prime time. If we have future stimulus funding, some should go towards technology like hybrid trucks that don’t need more research and development and do provide real environmental impact improvements. In the hybrid market, incentive funding directed towards better technology will help deployment to build economies of scale.

Our hybrid technology grew from a goal to have a vehicle which would both reduce emissions and reduce our vehicle fuel consumption. Today hybrids directly support a goal of improving our vehicle fuel efficiency by 20 percent by 2020. FedEx is supporting further innovation with ten state-of-the-art zero-emission electric vehicles in the UK and more soon to come soon. But we should not overlook today’s technology for tomorrow’s promise. With the right support we’ll see fleets large and small adopting hybrid truck technology and our five million miles will be looked back upon as a nice first step.

I’ve always found it interesting that one of the last, and the largest, new sailing ships, the Thomas W. Lawson, was built in 1902, 83 years after the first steamship crossed the Atlantic in 1819. I hope we don’t have to wait 83 years to see hybrid trucks become mainstream and eclipse today’s internal combustion engines.

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