Six days ago, President Obama set a new initiative in motion his second phase to raise the standards for and improve the fuel efficiency for trucks. Today I am going to analyze how this initiative can affect dumpster rental costs. Now I do want to mention that this post is neutral. I do not want to profess politics or ideologies. My attempt is to take a practical look at what he said, what I think it will do to the trucking industry in general and what impact that may have on pricing.
What makes me qualified to blog on this post? Nothing. I profess to have no degree in Economics nor am I an expert in such things. What I can pass to you is my experience and knowledge and give you some brain-food to chew on and make your own opinion. The best opinions are the ones we make ourselves based on our own lives.
My sources for this article are the USA Today report of the rollout of the plan and a 2012 JDPower & Associates press release on the impact of the rollout of the Phase I standards . I chose these sources to obtain the “meat” of his new initiative and those previously set in place. All facts here came from there. Ok, I hope that satisfies references (I am a garbage man after all). Please remember that numbers can mislead and look at the number, the source, think and decide for yourself how true you think it is.
Ok, Phase II of the plan calls for the EPA to set new fuel efficiency standards for heavy trucks;
- “The president ordered the Environmental Protection Agency and Transportation Department’s National Highway Traffic Safety Administration to develop and issue new fuel-efficiency and greenhouse gas standards by March 31, 2016.”*Now the president has touted the need for this (in his own words) “ambitious” timeline because the need to cut greenhouse gasses is becoming a necessity. He further stated that;
- “Although heavy-duty vehicles account for just 4% of registered vehicles on the road in the USA, they account for approximately 25% of road-fuel use and greenhouse gas emissions coming from the transportation sector.”*The President also touted this as a way to break foreign oil independence. I’m not going to even touch on this subject. I’m 45 years old and I can’t remember a President in my lifetime who hasn’t touted that at one point or another, but nothing changes. I’m going with reality, not “politi-speak”.
Now Phase I rolled out in 2011 and in that initiative, garbage trucks were required to achieve a 10% reduction in fuel use and greenhouse gas emissions. Phase I applies to all garbage trucks from model year 2014 through 2018. We are in our first year of applicability and we do have some early results. The initial satisfaction surveys of new truck owners was astounding.
- “quality of Class 8 trucks that are one model year old has decreased, with problem levels rising 9 percent”**
- “ overall quality decline is attributed to a higher rate of engine- and fuel-related problems, which have increased by 14 percent from 2011”**
- “The most problematic engine and fuel problems are driven by technology that is designed to reduce emissions from heavy-duty truck engines.”**
- “Emission-related technology results in a high rate of problems…”**
The JDPower press release also interestingly references the fact that the 2007 Emissions Standards experienced similar problem rates. The release also notes that European heavy trucks have consistently been operating on higher efficiency standards than American heavy trucks and that those engine manufacturers see less incidences of problems than American engines.
Boring factual stuff aside, here is how I can apply the last 3 rounds of EPA standard changes. My newest truck is a 2005 thereby just missing the rollout of the 2007 standards by one year (whew). My truck has run fine aside from the occasional surprise repair, and the engine performs well. My colleagues who bought 2006 and newer models were not so lucky. There wasn’t one particular problem they all complained of, but the general theme was that they were problems that were like ghosts. No one could figure it out.
Mechanics were left baffled and fixing things that they weren’t even sure were broken, sending the truck back out and telling people to bring it back if it broke again. This translated into very large amounts of down time for trucks. The container prices for these companies had to be raised to cover down time, lost business and even repair costs for operators who chose to repair their own equipment. This has held true for every new standard rollout and has been pretty consistent in size. The problem lies with the timeline for this initiative.
The other initiatives had 3 years for technology to catch up to the standard and they were not able to perform. The trucks failed. In fact the “word on the street”, if you were, in 2005 was that certain heavy duty engine manufacturers knew that their engines could not hold up under the new standards and that they could not meet the deadline.
These manufacturers instead chose to send the engines out knowing they would be returning in large numbers with catastrophic failures which in many cases would require a complete new engine. Is this true? Who knows. What I do know is that I seem to have the last year where engines were reliable. If we try to press this “ambitious” effort into just 2 years, this could be a trucking disaster. If it is, expect costs to rise sharply in everything from milk, to eggs to rolloff dumpsters. Also, smaller companies can’t withstand the strain of losing a truck for weeks for an engine swap. Many will fail thus leading to unemployment and all the things that brings.
I applaud the effort and the idea. Hopefully it can be achieved in a way that is both cost effective and practical. As an owner, I would love to see my fuel consumption reduced. I just don’t want it reduced because my truck is in a repair shop. When the standards take effect, the world isn’t going to end. We are Americans and we get stuff done. Just ask the first monkey we launched into space….
Be safe, be well and most of all BE HAPPY!
* USATODAY: Announcement concerning medium and heavy-duty trucks follows State of the Union pledge.
**JDPower & Associates Press Release