Commercial vehicles: hard sums

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Fleet operators face an uphill task to control costs in the face of rising fuel prices. And the task is being made even more complex by the prospect of new emissions regulations coming into force in two years’ time…

Controlling costs is the single biggest problem for transport operators. Despite a 1p cut in fuel duty the price of diesel increased by 7 pence per litre in 2011, adding £3,284 to the annual operating cost of a typical 44 tonne articulated vehicle. Not surprisingly fuel campaigners are calling for more cuts in duty.

And these high costs are eroding margins. A 44 tonne tractor unit running an average 100,000 miles a year can expect to earn £150,000. But with the average transport company making a three per cent margin, it means that the truck is producing just £4,500 a year profit.

MAN chief executive Des Evans points out that operating costs are rising by five per cent a year. He says. “Can you get another five per cent from your customer? Operators need to look at the things over which they have control and make their own changes.”

For many, this has meant controlling budgets for new trucks. The UK market for trucks over six tonnes has averaged 44,500 units over the past 20 years, says Evans. However, between 2008 and 2011, the market has been 30 per cent lower than that, averaging 31,000 units a year.

Evans points out that this has implications, not just for manufacturers but also truck buyers – a point taken up by Tony Pain, marketing director of DAF, who says that depressed sales over the last four years, and deferred replacements, have resulted in pent up demand.

He adds that trucks bought in 2006, the last big year before the recession hit, and before requirements for digital tachographs came in, are fast approaching the end of their replacement cycles.

Fleet strategy

The consensus is that truck registrations in 2012 will be around the same as 2011, between 37,000 and 38,500. However, the arrival of Euro 6 is expected to slow down the market in 2014.

Pain believes that efficiency is a driving force behind leaner fleets. He says the current figure of 400,000 trucks on the road is 50,000 less than in 1950. “Trucks carry five times as many loads as in 1950. They are on the road twice as often and are better loaded. In the drive for efficiency trucks have also got bigger, and then there’s the move toward double decks.”

“A fully laden 44 tonne double deck is still the most efficient way of moving stuff,” says Pain, who also believes that the biggest developments in efficiency will continue to be “evolutionary, rather than revolutionary.”

A complicating factor is the prospect of the Euro 6 emissions legislation which comes into force in less that two years time. Should the strategy be to embrace the new equipment – or avoid it as long as possible?

Evans argues that truck buyers are not interested in Euro 6, which comes in from the start of 2014. He quotes a recent survey by Chevron of 500 vehicle buyers which showed that 88 per cent are either unaware of the arrival of the legislation or have made no plan to deal with it.

Euro 6 vehicles are likely to be more expensive – both in terms of capital cost and operating cost. The technology required to produce Euro 6 green credentials will put such strain on engine performance as to make fuel consumption significantly worse, according to Pain. This will not be passed on to the operator however. “To make up for reduced fuel efficiency there will be energy efficient tyres, aerodynamic bodies etc, but the net effect is that Euro 6 will be more expensive,” says Pain.

As yet there is little incentive to become an early adopter. Although there is potential for an incentive from the government to take on the Euro 6 early, there are questions about how persuasive it would be, especially if it does not run for the lifetime of the vehicle.

However, some are targeting the value of Euro 6’s environmental savings. Mercedes has put its money where its mouth is, and invested some two billion euros in developing its new Actros, to be available as Euro 6. Compared to the previous Actros, the new model consumes six to seven per cent less fuel in the Euro 5 variant, and three to four per cent less fuel, even in the Euro 6 variant.

MAN will have Euro 6 trucks available when they are required. But it is calculating that most truck buyers will prefer to try and extend their use of Euro 5 as long as possible. As a result it is building as many Euro 5 trucks before the change as possible. In the UK it has also set up MAN Rental which will also be a source of second hand Euro 5 vehicles even after Euro 6 comes in.

Pain agrees that Euro 5 will remain the most economical option, and foresees a boom in sales before the requirement kicks in: “If you can afford a brand new fleet on December 30th 2013, you’ll be a winner,” he says.

Scania reckons the fuel economy of its Euro 6 truck is the same as its Euro 5, and has made fleet management technology the cornerstone of recent developments. Martin Hay, Scania’s truck sales director says: “Our latest innovation is Scania Active Prediction.. [which]employs satellite navigation technology to read the topography of the road ahead and adjusts the cruise control accordingly to deliver the greatest possible fuel economy.”

Scania, which is now delivering Euro 6 trucks, has welcome the recent decision by the German government to provide subsidies for operators to move to Euro 6. There could also be a more favourable toll for Euro 6 vehicles on German motorways.

One operator at least has already been persuaded by Euro 6’s environmental savings. Norbert Dentressangle has taken delivery of the first road tractor to meet the Euro 6 standards. The new Mercedes-Benz Actros has a Blue Tec 6 engine, which reduces particle emissions by 50 per cent and nitrogen oxide emissions by 77 per cent.

But there are alternatives to going down the Euro 6 route. Volvo Trucks reckons liquefied natural gas is a viable lower-carbon alternative to diesel for heavy-duty long-haul trucks, and is working to establish “blue corridors” with strategically placed filling stations across Europe to make the fuel more widely available.

Scania is convinced that bio-fuels have potential, and that they will eventually be able to give substantial net reductions in carbon dioxide emissions compared to fossil fuels, without competing directly with food production or threatening biodiversity. 

It has gone over to bio-ethanol powered vehicles for its internal logistics. It reckons this will reduce CO2 emissions from its own goods transport at its Södertälje factory in Sweden by 70 per cent.

Waitrose has bought into the savings on offer from Mercedes-Benz’s low-emission Atego BlueTec Hybrid trucks. It has a Euro 5/EEV diesel engine and an electric motor, reducing fuel consumption by around 15 per cent.

Fuel focus

Mercedes has also come up with an aerodynamic “aero trailer “which it reckons cuts wind resistance by 18 per cent and fuel consumption by nearly five per cent.

Last year Iveco came up with a scheme that guarantees a four per cent improvement in fuel economy with its Ecostralis tractor unit for three years or 400,000 km. Eley Transport South East has invested in two Ecostralis six by two mid-lift tractor units. The “Active Space Super3” tractor units have an EEV-rated Cursor 10 engine featuring revised engine mapping, as well as low rolling resistance tyres, a higher gearing and an 85 km/h speed limiter to reduce fuel consumption while maintaining performance.

It’s hardly surprising that many of the most marketable innovations are those focused of fuel efficiency. Des Evans says road tests have shown MAN’s TGX tractor to be 14 per cent more fuel efficient that its competitors. A truck doing 100,000 miles a year at an average of 8mpg with diesel costing 1.14 per litre would go through £64,000 worth of fuel a year. 14 per cent less, for example, would be £56,000 – a saving of some £8,000. Not insignificant if the truck is only producing a profit of £4,500 a year. 

Mercedes says: “A more efficient vehicle is a more cost-effective vehicle. But vehicles are only as efficient as the person they are being driven by. And the more advanced the vehicle, the more advanced the driving skills required.”

All the major manufacturers now offer some form of driver training to help achieve their advertised rates of fuel efficiency. And as driver CPC regulations will require drivers to continue training, it is in operators’ interests to ensure fuel efficiency is on the agenda.

The outlook for operators may look tough, but the range of technologies and services being offered by manufacturers means that there are ways to take control.

Statistics: Truck demand continues to rise

Demand for trucks rose for the 17th consecutive month in February, according to figures from the Society of Motor Manufacturers and Traders. It means that for the rolling year to February 2012, the market for trucks over six tonnes, at 38,931, was up 33 per cent up on the previous year.

And it is in the rigid sector that growth has been strongest in recent months. The market for trucks over 6 tonnes in the first two months of 2012 was 80 per cent up on 2011. That compares to a rise of only 3.2 per cent for artics.

DAF is the clear market leader followed by Mercedes. MAN, which had a strong year in 2011 has slipped back slightly in the first couple of months of 2012 opening the way for Scania to take the third slot.

In contrast to the truck market, van registrations have fallen in recent months. Nevertheless, the market is still ten per cent up on a rolling year basis.

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