Assessment of Fuel Economy Technologies for Medium and Heavy ...

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consumption. This set of technologies includes all alternative 1 technologies plus continued streamlining of the cab, a reshaped trailer, boat tail, full skirting of the cab and trailer, tractortrailer gap fairing, very low resistance tires, bottoming cycle, parallel hybrid system, and road speed governors set to 60 mph. The technology improves fuel economy from 5.59 to 9.10 mpg at a cost of $71,630 per vehicle. Accounting for the reduced fuel cost and increased capital cost, the net per-mile operating cost will be reduced to $1.61, $0.43 of which are fuel-oil related costs, down from $0.70 in the base case, and $0.35 of which are truck and trailer payments, up from $0.21 in the base case. The total national operating cost is $230 billion (142,706 vehicle-miles * $1.61/mile). The elasticity ranges are the same as those employed in the alternative 1 analysis. Findings: The impact of the three potential rebound effects on the alternatives are described below: The first rebound effect – truck VMT increase Before accounting for the rebound effect, the fuel economy improvements of alternatives 1 and 2 will reduce fuel consumption from 25,500 million gallons to 21,000 and 15,700 million gallons, respectively. This represents a reduction of 4,500 - 9,800 million gallons of fuel. Class 8 long-haul demand will increase (rebound) by 3.2 - 9.5 billion VMT for alternative 1 and 5.0 - 15.0 billion VMT for alternative 2, based on the projected net decrease in operating costs associated with fuel efficiency improvements of $0.08 and $0.12 cents per mile, respectively. The VMT increase will cause a rebound in fuel use. The rebound for alternative 1 will reduce the total fuel savings from 4,500 million gallons to 3,100 to 4,000 million gallons. Put another way, the rebound effect for Class 8 vehicle travel will range from 11 to 31 percent if the technologies in alternative 1 are implemented. The rebound for alternative 2 will reduce the total fuel savings from 9,800 million gallons to 8,200 to 9,300 million gallons, depending on the elasticity. This will cause a rebound ranging from 5 to 16 percent. The rebound effect varies depending on the elasticity and the cost-effectiveness of the technology. If the technology is more cost-effective, then there will be a larger rebound effect because the cost of trucking will come down to a larger degree, increasing the total growth in demand for trucking. Alternative 2 shows a lower rebound effect (on a percentage basis) than alternative 1 because alternative 1 deploys the most cost-effective technologies, with diminishing returns gained from the technologies deployed under alternative 2. The second rebound effect: diversion from rail Some of the increased truck travel will be diverted from rail. With truck per-mile operating costs dropping from $1.73 in the base case to $1.65 and $1.61 in alternatives 1 and 2, shippers will shift 28.7 to 48.4 billion ton-miles from rail carriers to truck carriers in alternative 1 and 45.4 to 76.5 billion ton-miles from rail shippers in alternative 2. The shift from rail to truck will reduce rail fuel consumption by 66 to 111 million gallons for alternative 1 and 104 to 176 million gallons for alternative 2. Considering truck fuel savings, the truck rebound effect, and the rail fuel savings for alternative 1 together, the fuel reductions of 4,500 million gallons will drop to 3,200 to 4,100 - 8 -
million gallons, for a combined rebound effect of about 9 to 30 percent (compared to 11-31 percent without rail fuel savings). Considering the same for alternative 2, the fuel reductions of 9,800 million gallons will drop to 8,300 to 9,500 million gallons, for a combined rebound effect of 3 to 15 percent (compared to 5-16 percent without rail fuel savings). The third rebound effect: utilization reduction Trucking is a cost-competitive business and profits are historically razor-thin. While trucking companies work diligently to reduce operating costs out of competitive necessity, continued cost increases force fleet owners to continue to look for ways to reduce operating costs. The relief that comes from decreased operating cost (4 percent in alternative 1 and 7 percent in alternative 2) is not likely to create a significant change in utilization optimization. However, there is no evidence in the literature to quantify the degree to which trucking companies maximize the utilization of their equipment or to describe how this might change with total truck operating costs. (iii) Vehicle Class Shifting Key Question: If regulations or new technologies change the relative costs and performance characteristics of various classes of medium and heavy vehicles, will some buyers choose larger or smaller vehicles than they would have before the change Background: Past regulations have had an impact on the choice of vehicle characteristics. Prior to deregulation of the trucking industry, 4-axle trucks were common. After deregulation, most carriers shifted to 5-axle trucks since these trucks could carry more freight and therefore operate more economically, given weight per axle restrictions. To induce class-shifting, truck fuel economy regulations would need to significantly increase the cost (or decrease the performance) of one class of truck relative to another. The specific nature of a vehicle class-shifting effect will therefore depend upon how the regulations are structured. A ―class-neutral‖ regulation could be conceived that does not lead to any shifts. There is little or no literature that describes the cross-class mode shift between truck types based on cost. The potential for class-shifting appears limited, however, because most equipment is chosen to fit the physical requirements of a particular shipment, not because of changes in fuel price. A shipper will hire carriers to minimize total logistics cost and the carrier will deliver a service at the minimum possible cost (to maximize their profits). The shipment could be longhaul (more than 500 miles, the one-day round-trip distance), short-haul (less than 500 miles), a drayage shipment between an intermodal facility and the final destination, or a local shipment between a regional warehouse and a grocery store. Shippers and carriers will give additional consideration to whether the commodity is high-value and time-sensitive or low-value and less time sensitive, whether the commodity will weigh-out or cube-out, and the labor cost. Other vocational medium- and heavy-duty truck owners have very specific carrying and sizing needs (e.g. dump trucks, garbage trucks, buses, and utility trucks). A shipper and carrier will examine the set of requirements, negotiate a rate, and choose the optimal truck for the shipment. Shifting between trucks and truck classes is complicated, but it is possible to conceive of some examples where certain policies would create cases where a truck from one class might become fungible with a truck from another class. - 9 -
Page 1 and 2: Assessment of Fuel Economy Technolo
Page 3 and 4: no effect on congestion as a result
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Page 17 and 18: Table 1 Historical and Recent Long-
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Page 25: Figure A-1 Vehicle Passenger Car Eq

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