SPECIAL REPORT: OOIDA says 2010 engine standard needs hard look

| 11/19/2008

Wednesday, Nov. 19, 2008 – The Owner-Operator Independent Drivers Association is calling on the federal government to rethink the looming deadline for the rollout of the 2010 emission standard for heavy-duty engines.

Since the Environmental Protection Agency started ratcheting down emission standards on heavy-duty engines, the pre-buy phenomena has been something the truck makers could pretty much bank on.

That is until 2009 and 2010.

A study released by NERA Economic Consulting concludes that the customer responses to the 2007 engines, which led to pre-buy sales before and low-buy sales when the standard went into effect, will be repeated with the looming 2010 standards.

That is if the weak economy and lack of available credit don’t tank the sales all together.

Adding insult to injury, the trucking industry has become increasingly wary of new technologies as they are developed to meet the ever-tightening emission standards.

The authors of the study, David Harrison Jr., Ph.D., and Mark LeBel, point out that all of this will actually decrease the environmental benefits and cost-effectiveness of the 2010 regulation.

The study was an update of one conducted in 2005 in anticipation of the 2007 engine standard.

The Association would like the administration and Congress to push for a restructured timeline, phasing in the new standard to allow ample breathing room and to build confidence within the trucking industry. This would provide time to prove the worthiness of new engines, give the economy an opportunity to recover, and explore new fuel alternatives.

“With record-high diesel fuel prices earlier this year, trucking businesses have already faced insurmountable challenges trying to stay on the road,” said Todd Spencer, executive vice president of OOIDA.

“It’s the worst possible time for the trucking industry to take on a high-stakes gamble with no known level of reliability of the technologies or return on investment.”

The Association has been dedicated to a cleaner environment and is a committed affiliate partner in the SmartWay Transport Partnership.

However, the Association has reviewed recent news reports showing that sales and production of diesel engines and trucks have begun to slow dramatically. Manufacturers are laying off workers and closing production lines in anticipation of lower sales. Fleets, both small and large, are signaling that they will hold on to existing, older equipment, instead of making purchases of newer technology.

“While the Congress and administration continue to address our economic crisis by focusing their attention on the Big Three automakers after bailing out Wall Street ventures gone bad, the engine that drives the trucking industry is headed for a dangerous cliff looming just ahead,” Spencer said.

In 2010, truck engines will be required to comply with more stringent emission standards for nitrogen oxide. Various technologies are being developed and tested by engine and truck manufacturers to meet these standards.

Among other things, the study concluded:

  • Trucks that meet the new standard will have substantially higher purchase prices.
  • Trucks that meet the standard will entail technological uncertainties from the perspective of the customer (including uncertain increases in operating and maintenance costs).
  • The net result of these customer reactions (pre-buy and low-buy) to the 2010 standards would be reduced environmental benefits and less cost-effective standards.

According to the report, costs of trucks coming off the assembly line, in complying with 2010 emission standards, will run between $7,000 and $10,000 more per vehicle. This is nearly $21,000 more per truck higher than in 2004. Furthermore, there will be an additional weight of between 300 and 500 pounds for some models utilizing new technology. Maintenance and operational costs will be substantially higher than current model engines.

Rather than push forward with the 2010 standard, the Association officials point out that restructuring the implementation deadline could provide opportunities to find ways to benefit the industry and the environment in one fell swoop – instead of suffering unintended consequences.

“With more time, the solutions will become much clearer and environmentally much cleaner,” Spencer said. “Otherwise, there will be a delay in the intended environmental benefit because there is a disincentive to purchasing the new technology. Truckers and fleets are simply going to hold onto their equipment for a longer period of time, if they are able to hold onto it at all.”

To read the NERA study, click here.

– By Jami Jones, senior editor