Moore on Pricing: Time to turn up the CNG distribution network

The announcement by “big brown” that they’re adding 1,400 more compressed natural gas (CNG) powered trucks to their fleet should be interpreted by others as a signal to start getting in gear on alternative fleet fuel system reviews. 

The business case for conversion appears to be solid, at least with new equipment. The performance trials are finished and the mechanics work, and the only concern seems to be a lack of gas infrastructure. This is where collaboration between shippers with fleets and carriers comes in. 

There are many operational improvement opportunities that are common to carriers and private fleet operators. These include reducing driver turnover, improving mileage efficiency, optimizing routing, and automating administrative tasks. Each of these can be achieved internally through investment with compelling business cases.

Making natural gas available at multiple remote locations is difficult for any size fleet owner, and in order to build out the needed gas distribution system, we’ll all have to be very patient or very creative. 

To get the natural gas infrastructure up and running, the country will need a high density of users in major and minor markets—just like gasoline. As each person evaluates their investment in natural gas powertrains, they have to study their origin-destination network and try to match travel lanes with locations where they can either fill up for a return trip or limit themselves to short trips. 

Historically, shippers and carriers have kept their own counsel when it came to their own fleet operations investments. Indeed, each company seeks margin improvement by investing in their own technological opportunities. Like the other items listed above, the ROI for new fuel systems at their own locations can be very straightforward, but finding and establishing remote natural gas filling stations is a challenge for all but the largest fleet operators. 

The Department of Energy reports there are over 800 public natural gas stations open in the continental U.S. compared to 168,000 gasoline stations. Keep in mind, this number does not include private fleet stations. So, when investigating a potential for alternate fueling, fleet operators need to have an open mind and look for alternate locations—including shippers sharing locations with each other and with carriers. 

Your inquiry could be the one that tips the scale for a decision to put in a new station in year area. Those companies that provide gas distribution systems are tracking who is buying storage and dispensing equipment and may be able to help. Once the potential partner is identified, a conversation about collaboration can be initiated. 

All parties should be open to the potential for encouraging natural gas usage in order to create the density needed to bring investment by gas distribution companies into markets that fleet operations are in now—or could be in the future. Temporary sharing and coordination will enable demonstrations of the economic benefits for alternate fuels.

When investigating conversion to natural gas powertrains, private fleet operators can check for existing and planned distribution stations—but don’t stop there. Look for private shipper and carrier operations to collaborate with while the national infrastructure is being built. This is one area where networking really can help establish a new energy network.