As UPS Expands, So Does its Commitment to Alternative Fueling
Written by Betsy Lillian
July 9, 2018
With a fleet of 119,000 ground vehicles, 2,500 operating facilities and 10.5 million customers served every day around the world, UPS is undergoing a transformation to boost its capacity even further. Most notably, the logistics giant is going big on sustainability while, at the same time, normalizing its use of alternative fuel technology.
As laid out in its newly released 2017 Corporate Sustainability Progress Report, the company’s environmental goals include as follows:
Cutting absolute greenhouse-gas (GHG) emissions 12% by 2025 in global ground operations;
Generating 25% of its electricity from renewable energy resources by 2025;
Growing alternative fuels (i.e., not conventional gasoline or diesel) to 40% of its total ground fuel by 2025; and
Purchasing 25% alt-fuel/advanced technology vehicles annually by 2020.
“Because of our size and scale, we know our commitments can shape markets, advance technologies and be a catalyst for infrastructure investments,” said David Abney, UPS’ chairman and CEO, when the company announced its sustainability goals in 2017.
A few weeks ago, UPS announced a huge rollout of compressed natural gas (CNG) vehicles and fueling in support of these sustainability goals: five new CNG stations and more than 700 new CNG vehicles, including 400 Freightliner and Kenworth semi-tractors and 330 TICO terminal trucks.
According to Mike Casteel, director of fleet procurement at UPS, the decision to deploy natural gas fueling has become “fairly routine” for the company, he tells NGT News.
Yes, it’s called an alternative fuel, Casteel explains, but because UPS has a long history of experience and training with natural gas fueling, “it’s become mainstream for us,” he says.
Indeed, the latest $130 million investment in CNG capacity follows recent UPS investments of $100 million in 2016 and $90 million in 2017. UPS first deployed CNG for a few package cars back in the ’80s, but 2012 marked the company’s efforts to kick CNG adoption into higher gear. Last year, the company used a whopping 77 million total gallon equivalents of natural gas in its ground fleet.
“For natural gas, we’ll look at every site that we go into, and as the fleet changes, we will deploy it when it makes sense to us,” explains Casteel, emphasizing that CNG is chosen “when the fleet is appropriate.”
“And long-term,” he adds, “it will be no different.”
Of course, it also depends on what makes sense financially, considering the up-and-down prices of diesel and conventional gasoline over the years. In 2017, 78.2% of the company’s purchased ground fuel was still gasoline and diesel, while the rest was an alternative fuel.
When Casteel spoke to NGT News in 2015, the cost gap between diesel and natural gas was tight, making it a little more difficult to figure out the viability of natural gas.
“In order to keep deploying natural gas, we have to continue to find higher-mile routes in order to generate the fuel savings that we need to justify the increased investment,” he said. “That’s what we’ve been doing.”
Now, Casteel echoes the same sentiment regarding the volatility of diesel and gas prices: The company determines “how well a fleet qualifies financially in a business case” by, for example, figuring out exactly where and how to adopt alternative fuels according to fleet size and mileage.
According to the company’s sustainability report, UPS now currently boasts a fleet of more than 5,200 natural gas vehicles that travel more than 1 million miles each business day around the world.
In turn, because UPS uses the vehicles so heavily, the majority of its CNG fueling stations are privately owned on company property.
“When we deploy a natural gas fleet, we typically deploy it at a maximum level,” Casteel says. “So, for security reasons, it would be difficult to accommodate other people.”
In fact, he says UPS will use a station nearly 24 hours a day – not a surprising feat considering the “e-commerce revolution” currently taking shape in the world, as UPS points out in its report.
The company’s five latest CNG stations will be situated in Goodyear, Ariz.; Plainfield, Ind.; Edgerton, Kan.; Fort Worth, Texas; and Arlington, Texas. Regarding the decision to locate the stations in these particular places, Casteel cites a “large number of Class 8 tractors that are going to be deployed there that run above-average miles.” These sites, he explains, have “the pressure and capacity that we needed.”
Although UPS is going big on CNG lately, don’t count out other types of alternative fuels, says Casteel.
Currently, UPS’ clean fleet totals roughly 9,100 ground vehicles as part of a “rolling laboratory” approach of testing out different types of alternative fueling, including CNG, liquefied natural gas (LNG), renewable natural gas (RNG), electric, hydraulic hybrid, electric hybrid, ethanol and propane autogas. Through the end of this year, UPS says it will have invested more than $1 billion in alt-fuel and advanced technology vehicles and fueling since 2008.
“We look at what becomes available,” says Casteel, adding that UPS then “follow[s] the evolution of the technology.”
In its sustainability report, UPS notes that “over the next decade and beyond,” the logistics industry is expected to “take a significant leap forward” in electrifying transportation. Interestingly, UPS actually tried out its first electric vehicle in 1934 and brought the technology into its fleet in 2001, as laid out in the company’s sustainability report from 2014.
Casteel points out that UPS is still “continuing to look at electric,” as well as RNG, “when the supply is available.”
On the RNG side, the company used more than 15 million gallons of RNG in 2017, making UPS the largest RNG consumer in the transportation sector, the company claims. This is thanks, in part, to two agreements announced last year: a five-year deal with AMP Americas for 1.5 million gallons of RNG/year from a dairy farm in Indiana, as well as a deal with Big Ox Energy to purchase 10 million gallons of RNG/year through 2024.
Indeed, regarding UPS’ overall alt-fuel revolution, Casteel points out the importance of “support[ing] the companies and the suppliers that are making this possible.” Specifically, UPS’ latest new CNG facilities will be built by TruStar Energy, which has been collaborating with UPS for several years.
In 2015, too, Casteel underscored the vital role alt-fuel stakeholders are playing in UPS’ transformation and the advancement of alternative fueling:
“You can’t control diesel and gas prices, but coming up with even better technology can absolutely make CNG more attractive,” he said. “Everyone has a stake in working toward a better tomorrow.”
UPS, touting natural gas as a “key building block” in slashing its GHG emissions, also notes a similar point in its sustainability goals:
“With these collaborations, we’re not only improving our own fleet operations – we’re helping move our industry forward.”