UPS Invests in Propane for U.S. Delivery Fleet

Continuing its focus on sustainability and fuel efficiency, UPS announced this week that it intends to make a $70 million investment to purchase 1,000 propane package delivery trucks, as well as install fueling stations at 50 of its locations.

Company officials said that this propane package delivery fleet will replace gasoline- and diesel-fueled vehicles primarily used in rural parts of Louisiana and Oklahoma. UPS said these vehicles can travel up to 200 miles on a single tank of propane and that operations will kick off by the middle of this year and be completed in early 2014.

UPS Director of Public Relations Susan Rosenberg told Logistics Magazine that UPS uses a “rolling laboratory” approach and is constantly testing different fuel sources and technologies that apply to its broad range of route characteristics.

“We benefit from propane autogas’ wide availability as a result of increased natural gas production in the U.S.,” she said. “It’s an economical, lower-cost fuel, and we think it will stay that way for a while. There’s easy transport to have more accessibility across the country. The cost of the vehicle conversion continues to become more affordable, though the propane package car still is on average $10,000 more than its former version for either diesel or gasoline. Compressed natural gas (CNG) requires different types of storage and volume that wouldn’t be as appropriate for a rural, smaller UPS facility.”

Related: Saddle Creek leverages Compressed Natural Gas (CNG) to Support your Corporate Sustainability Goals

She noted that UPS had success with propane in Canada for a while, but the quality autograde propane wasn’t as available across the U.S until the more recent increase in natural gas production in the U.S.

“We’ve been looking at it for several years, but we started working with PERC (Propane Education & Research Council) and the equipment manufacturers to secure EPA and California Air Resources Board certification last year,” she said. “Propane package trucks have a 200-mile range with no route limitations. We began our road tests with 20 vehicles last fall in Georgia. We always know we’re going to have a certain number of vehicles that have reached their useful life and will need replacement. Then we can look holistically at the fleet for effective utilization.”

When asked how the “rolling laboratory” for testing different fuel sources works, Rosenberg said as an example it can compare performance, maintenance, emissions, driver feedback on routes with different terrain and climate variation; longer distance vs. the stop/start of urban delivery.  And chassis, powertrain, fuel source vendors may work with UPS, along with the EPA or the Department of Energy to test their prototypes in action vs. test tracks.  This type of testing, she said, verifies more limited range for electric and Hybrid Electric.

As for next steps with this initiative, UPS has not yet defined the specific construction onsite needs for fueling and bid the work out, and Rosenberg said that UPS expects vehicles to begin arriving by mid-summer with the deployment in Louisiana and Oklahoma to follow. More locations will be defined in the coming months as additional fueling capability is built out and more vehicles arrive. Other states being added are contingent on tax incentives and grants factoring into the UPS deployment strategy and operational needs and locations where UPS had no onsite fueling capabilities and could benefit from them being added.

When asked what the biggest aspects of this initiative are for shippers, Rosenberg cited how UPS is holding the line on its fuel and operations costs, which helps customers.

“We will have our own direct fueling onsite for predictable supply, access and time savings,” she said. “We’re being responsible to seek clean-burning fuel.”

This initiative is the most recent in a series of sustainability-related moves UPS has made in recent months.

In October, the company announced it will invest roughly $50 million to build another nine liquefied natural gas (LNG) fueling stations, and last April it it rolled out its plan to purchase roughly 700 LNG vehicles and build four refueling stations by the end of 2014. When these stations are up and running, which UPS expects by the end of 2014, UPS will have 13 LNG stations.

For more information on UPS’s sustainability initiatives, review the company’s 2012 Corporate Sustainability Report. The upcoming 2013 report is to be released mid-year.