Unbiased Report from Germany-based Firm
The Clean Freight Coalition (CFC), an alliance of truck transportation stakeholders, released a bombshell report last week estimating the cost of electrifying freight trucks will be $1 trillion –that’s with a “T” – in infrastructure costs. That doesn't include the purchase cost of actual trucks. Broken down in its largest segments, the trucking industry would need to spend upwards of $620 billion on chargers, site infrastructure and electric service upgrades.
Utilities would have to invest another $370 billion in upgrades to grid networks to meet the surge in demand of just commercial vehicles. The utilities' share of the financial burden is "nearly the equivalent of what was spent on the entire power distribution system over the past 15 years," said Dr. Wilfried Aulbur, senior partner of the German firm Roland Berger, which conducted the research and produced the report.
“An industry with a yearly turnover of about $800 billion and a profit margin around 5% cannot invest $620 billion without financial support or a significant increase in freight rates," Aulbur said.
The remainder of this article includes excerpts courtesy of the Clean Freight Coalition.
American Trucking Associations President and CEO Chris Spear pointed out the industry's commitment to zero emissions, having removed nearly 99% of all tail pipe emissions over the last 40 years. Spear has long advocated that the "mad dash to zero [emissions]" exposes the supply chain to "a $1 trillion unfunded mandate" that isn't included in the Biden administration's infrastructure funding plan and has "enormous consequences for the American consumer."
"Those costs [to electrify] are going to get passed on. There are going to be very, very high [freight] rates," Spear added. "Going all-in on electrification right now is going to be catastrophic to the economy and to what consumers pay."
The move to a new powertrain, Aulbur said, will require a new operating model for fleets.
"We don't have a business model that allows fleets to do this by themselves," he said. "You won't find fleets to buy electric trucks just to buy electric trucks. If it doesn't make money, there's no one that's going to invest in this technology."
Aulbur also has said the evolving business model to support investment would come with a "massive" increase in freight rates, but Spear said it won't be as simple as passing along costs to cover zero emission-related expenses. Despite some early successes by large fleets that have integrated electric trucks into parts of their operation, Spear said there has already been some pushback from fleet customers on the increased costs that support these same trucks.
Truckload Carriers Association President Jim Ward added that trucking has never shirked its responsibility to be good stewards of the environment but, like Spear, feared that the path to zero emissions through electrification mandates and date-specific benchmarks would be littered with unintended consequences.
"We're not here to say no," he said, " but we need to figure out what that path is going to be going forward. We're committed to a zero-emission future, but without jeopardizing the supply chain."
Every year, TAT (formerly called Truckers Against Trafficking) honors a member of the trucking, bus or energy industry, whose direct actions help save or improve the lives of those exploited or prevent human trafficking from taking place, with the Harriet Tubman Award
Bob Costello has indicated that the freight market has improved – but very slowly – since January. It must be said that ATA’s indices are dominated by contract freight as opposed to spot rates.
Now, however, with Republican control of both houses of Congress and the White House (and, some say, the Supreme Court) I am optimistic that trucking will get a fairer shake than it has during Biden’s term in office.