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UPS makes $450m investment in gas-powered trucks

Atlanta-based freight transportation and logistics bellwether UPS announced today that, from 2020-2022, it will buy more than 6,000 natural gas-powered trucks, in a $450 million investment geared towards expanding its alternative fuel and advanced technology fleet and supporting infrastructure.

UPS officials said this vehicles will feature compressed natural gas (CNG) fuel systems through an agreement with Agility Fuel Systems, a unit of Hexagon Composites, adding as work towards reducing UPS’s carbon footprint and also have a positive influence on CNG market growth throughout the country. They also noted that expanding the UPS CNG fleet adds increased capacity for expanded renewable natural gas (RNG) usage, too.

“UPS continues to expand and improve our smart logistics network by implementing new technologies and creating a highly flexible, data-driven, and sustainable network,” said Juan Perez, chief information and engineering officer, UPS, in a statement. “That is why we intend for 25 percent of our vehicles purchased in 2020 to run on alternative fuels.”

The driver for today’s announcement stems from UPS’s stated sustainability goal that by 2020, a quarter of its new vehicles purchased annually will run on alternative fuel or advanced technology, a company spokesperson told LM.

“This goal was part of a broader sustainability commitment to reduce UPS’s carbon footprint,” the spokesperson said. “This 6000+ plan over the next 3 years will help us achieve that goal. Also, this announcement continues to expand our portfolio. By making a larger multi-year commitment we were able to provide economies of scale to the vehicle and component suppliers, reducing their production costs and resulting in lower costs for UPS. Efforts like this prove that environmental sustainability can also be economically sustainable, both of which are necessary for long-term success in addressing our sustainability goals.”

Customer input, the spokesperson noted, also played a role in this investment, with more and more of its customers asking about and often requiring UPS to comment and report on its fleet sustainability efforts.

“Because we are a large transportation company, energy use is a necessary part of operating our business,” she said. “UPS is by far leading the freight and delivery industry with regard to alternative fuel adoption. We believe commitments such as this address many of our customers’ concerns about the impact of transportation on the environment and steps UPS is taking to address not only our own impact, but [also] how we are in some ways also paving the way for others to lessen their impact as well.”

Leveraging natural gas usage serves as a major advantage, from a UPS perspective, as it is a lower cost fuel, coupled with the fuel savings allowing for this type of investment in higher-cost trucks and related infrastructure, UPS said.

“We do not necessarily view this effort as a competitive advantage, but, as more and more shipping customers start to request or demand fleet or energy actions, which reduce the environmental impact of shipping goods, UPS will be well-positioned to address those concerns through this and other sustainability-related actions,” the spokesperson said.

UPS’s Sustainability Goals are noted below:

  • in 2016, it established new sustainability goals, with its most ambitious goal being to reduce emissions by 12% across its global ground operations by 2025. This means that even as its business grows and package volume increases, its emissions must decrease; and

  • multiple targets to reach 12% emissions reduction goal, including: by 2020, a quarter of new UPS vehicles purchased annually will run on alternative fuel or advanced technology; by 2025, UPS will source 40% of all ground fuel from lower-carbon sources; and by 2025, 25% of our total electricity will come from renewable sources

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