Suspicious fleet officials backing off new truck purchase plans

| 12/26/2001
Don Schneider, president of Schneider National, the nation'slargest truckload carrier, dropped a bombshell on the truck manufacturing community when he announced he might purchase only a few model-year 2003 trucks. His reasoning was that there is too much uncertainty about new engines still in the process of being re-engineered to meet new, more stringent emissions standards. Schneider's remarks were made recently at the Transport Topics Management Outlook Forum. What uncertainties? The engines are reported to add $3,000 to $5,000 more than current comparable models while delivering three percent to five percent fewer miles per gallon. Most engine makers are using exhaust gas re-circulation (EGR) to manage combustion temperatures in order to control formation of oxides of nitrogen (NOx), a component of smog. The gas must be cooled before re-entering the engine. The EGR heat exchangers remove heat from the exhaust and release it near the radiator or in the engine compartment. In preliminary tests, trucks with early EGR systems had 200 degree F to 250 degreeF increases over current under-hood temperatures (reported at the SAE Truck and Bus meeting, November 2001). No one knows yet what effects these temperatures will have on seals, gaskets, hoses, belts, bearings and fluids. Schneider, along with Swift Transportation, Yellow Freight and other carriers, say they are expecting to fill their needs by extending the service life of their current trucks, and supplement them with purchases of low mileage used trucks. This could be devastating for both truck and engine builders if such drastically reduced purchases of new trucks become an industry trend. Schneider and Swift normally purchase around 4,000 tractors each,annually. All truck makers areoperating on thin margins, with Freightliner's losses expected to be $1.2 billion dollars, according to Bloomberg News. The news may not all be bad, however. While truck and enginemakers may have to survive on parts sales while they perfect their 2003 models, the shift in fleet purchasing may put a significant dent in used truck inventories, which have become a burden to manufacturers and dealers. Also, available capital may be used to purchase trailers. The emissions regulations were originally scheduled to take effect in March 2004, but were moved ahead 18 months as part of a an agreement between the EPA and the major engine manufacturers during the Clinton administration. The EPA claimed that the engine makers rigged their electronic engine control units (ECUs) to pass the EPA emissions test cycle, but to exceed allowable emissions during normal operations in order to deliver better fuel economy. The engine makers claimed they met all published standards and passed the tests developed by the EPA. They also claim that the EPA knew, or should have known, of any shortcomings in their test procedures, which were made public at numerous engineering meetings worldwide. Rather than face the EPA in a long, expensive court battle, the engine makers agreed to pay penalties and fund research, with total costs exceeding $1 billion. Advancing the date for the new standards was part of the agreement. The initial 2004 date was agreed upon as the earliest the engine makers could reasonably expect to develop, demonstrate, debug and deploy new technologies. Currently development is near completion, but demonstration and debugging are still in process, and may not be completed by the October deployment date. The statement by Schneider and others, and the effect their plans will have on the truck manufacturing community, may provide the basis for an appeal to the Bush administration to grant a compromise delay. An additional six to twelve months would allow far more development and field-testing to take place. On the other hand, the statements by Schneider and others may just be for leverage when negotiating price and service agreements with the truck and engine manufacturers. Time will tell. --by Paul Abelson, technical editor