UPS on Tuesday said it planned to invest about $50 million to build nine more liquefied natural gas fueling stations for its heavy-duty trucks, in addition to four facilities announced in April that are expected to be operational by the end of 2014.
Atlanta-based UPS in April also said it would buy 700 natural gas vehicles, bringing its worldwide fleet to more than 1,000. UPS' only self-owned LNG fueling station is in Ontario, Calif., but it currently uses public access stations in Phoenix, Las Vegas and Beaver and Salt Lake City, Utah. The world's largest package delivery company also operates a heavy-freight trucking division and says LNG tractors will displace more than 24 million gallons of diesel fuel annually.
Natural gas doesn't produce as much greenhouse gas or other pollutants as diesel when burned and prices are expected to come down as new development techniques unlock vast supplies of domestic gas.
"The natural gas industry needs companies to commit to using natural gas to help establish a reliable alternative to traditional fuel, and that is just what UPS is doing," David Abney, UPS chief operating officer, said in a statement. "The UPS strategy is both environmentally friendly and economically viable. LNG is becoming more readily available, plus it's more insulated from market volatilities than diesel fuel."
The expansion will include on-site fueling stations in Florida, Illinois, Indiana, Mississippi, Ohio, Pennsylvania and Texas. Construction is already underway at the previously announced UPS facilities in Knoxville and Nashville, Tenn. Ground has yet to be broken for another site in Dallas. The four stations scheduled to open next year will cost more than $18 million.
UPS has contracted with Maryland-based GP Strategies to build the facilities and with various providers, including Pivotal LNG, to supply natural gas to the stations, spokeswoman Susan Rosenberg said.
Pivotal said in April that it will supply an average of 500,000 gallons of LNG fuel per month to the fueling stations, which UPS will own and operate, over the course of its 10-year contract.
LNG is one of many alternative fuels being used or tested by UPS for its diverse fleet of planes and trucks. It's goal is to reach 1 billion miles driven by its alternative fuel and advanced technology fleet by 2017.
UPS said it recently began a pilot program testing propane vehicles in Gainesville, Ga., and over the past year has deployed 20 biomethane vehicles in the United Kingdom. It also operates about 1,000 compressed natural gas vehicles and will begin a pilot program testing CNG tractors early next year.
Other trucking companies are also investing in LNG tractors to varying degrees, but the scaling up of UPS's LNG fleet is expected to signal to those taking a wait-and-see approach that the giant transportation company has determined the fuel is viable from an operational and economic standpoint.
Company officials have previously stated LNG doesn't compromise the tractor's capabilities, fuel economy or drivability.
UPS continues to take advantage of state and federal grants promoting emission reduction technologies when possible, Rosenberg said.
In related news, AMP Americas said it has struck a deal with two dairy cooperatives to convert a portion of their diesel fleets to CNG-powered tractors and build seven public fueling stations by early next year servicing routes in Texas.
Initially 40 Class 8 tractors will be converted.
Experts say CNG is more suitable for urban, regular route-environments than long-haul runs.