Refrigerated trailer fleets will soon be impacted by U.S. Environmental Protection Agency (EPA) Tier 4 Final emissions standards for transport refrigeration unit (TRU) diesel engines. The new standards, which take effect January 1, 2013 will affect operations and budgets.

For reefer engines, the new regulations require reductions of as much as 90 percent in particulate matter (PM) and 30 percent in nitrogen oxide (NOx) compared to interim standards that have applied to these units since 2008. The new EPA requirements do not affect trailers that are now in service.

The challenge that refrigeration unit manufacturers are now preparing to meet is in some ways greater than that for truck engine emissions standards. For on-highway diesels, new emission rules were phased in over a seven-year period while standards for TRU engines require most of the emissions reduction targets to be met at once.
To meet the new standards, TRU manufacturers will begin using emissions control technologies similar to those now found on tractor engines. To meet Tier 4 Final standards, manufacturers are also looking into technologies that could include electronic controls, turbochargers, catalytic converters, exhaust recirculation devices and diesel particulate filters.

The implementation of EPA Tier 4 Final emissions standards for TRUs could have several effects on refrigerated fleets. In addition to considering the expected higher cost of the new units when planning budgets, fleets will need to train drivers and technicians to operate and maintain the new refrigeration equipment.

Trailer manufacturers and their refrigeration unit suppliers are geared up to help customers navigate the uncharted territory that will come with the new TRU designs. Plans calls for providing driver and technician training and for making maintenance resources available.

Manufacturers are also prepared to ramp up production and schedule orders for new refrigerated trailers so their customers will have the equipment they need to meet freight hauling demand over the next several years. The pending EPA Tier 4 Final TRU regulations are one of several factors that are now causing an increase in demand for new refrigerated trailers.

Refrigerated trailer operators and their suppliers can also look back on their success in meeting California Air Resources Board (CARB) regulations for TRUs, and use that experience as a model for preparing to meet the new EPA Tier 4 Final regulations with minimal disruption to their business.

CARB regulations required refrigerated carriers operating in California to replace or upgrade refrigeration units that were more than seven years old, unless certain electric standby protocols were in place. Many fleets were able to comply with these requirements and avoid replacing reefers by working with manufacturers to update TRU engines or install diesel particulate filters.

The upcoming Tier 4 Final EPA regulations for TRUs are a new incentive for refrigerated fleets and manufacturers to work together to adopt technologies that will meet the standards and provide effective performance. Working in partnership with experienced trailer and refrigeration unit suppliers, the process of adopting these new technologies will not only be more efficient, but will help achieve cost, operational and environ- mental protection goals.

Almost 18 years after the North American Free Trade Agreement (NAFTA) was signed, U.S. and Mexican officials have found a way to begin allowing each country’s trucks to haul freight on the other’s highways. For motor carriers and suppliers of vehicles, parts and services, the border opening is the begin- ning of a new era that will lead to growth and success.

There is no doubt that NAFTA has increased trade volume between the U.S., Canada and Mexico, and that trucking companies have been primary beneficiaries of that activity. Mexico is the third largest trading partner of the U.S. after Canada and China, and represents the second largest export market for U.S. goods. Trucks transport 80 percent of the value of U.S.-Mexico trade and 65 percent of the value of U.S.-Canada trade.

Arguments against cross-border trucking between the U.S. and Mexico are countered by facts. For example, the Federal Motor Carrier Safety Administration indi- cates that Mexican trucks are as safe as U.S. trucks and that their drivers are gen- erally safer than U.S. drivers. Between 2004 and 2008, a 21 percent vehicle out- of-service rate for Mexican trucks was actually slightly lower than that for U.S. trucks (22 percent).

Mexican truck drivers performed even better, posting out-of-service rates of one percent in the same period compared to seven percent for U.S. drivers. Today, Mexican drivers involved in cross-border trucking operations have to pass safety reviews, drug tests and assessments of their English-language skills. Mexico has the authority to demand similar measures from U.S. truck drivers.

Cross border trucking is also expected to relieve congestion at crossings. Previously, a shipment traveling across the border required three drivers and three tractors

for a single freight movement— a U.S. motor carrier to transport freight in the U.S., trucks to move freight across the border to warehouses or yards, and a Mexican motor carrier to haul freight within Mexico. That activity was estimat- ed to add as much as five percent to the cost of goods.

Achieving NAFTA’s original intention of eliminating barriers to trade between the U.S., Canada and Mexico is dependent on the flow of freight between the three countries. Opening cross-border operations for motor carriers has already had a measurable and highly favorable effect on trucking companies serving shippers on both sides of the U.S.- Canadian border. Applying the same approach to cross-border trucking between the U.S. and Mexico will only further enhance the growth and success of trucking companies, and the suppliers that meet their needs.

The first U.S. fuel efficiency and greenhouse gas emissions standards for trucks, buses and other heavy-duty vehicles were formally announced in early August. The U.S. Department of Transportation (DOT) and the U.S. Environmental Protection Agency (EPA) developed the standards with input from the trucking industry.

Under the joint DOT/EPA program, trucks and buses built from 2014 through 2018 will meet a range of fuel efficiency and emissions reduction targets specifically outlined for three major categories of vehicles. Included in this program are tractors, vocational trucks and buses, and heavy-duty pickups and vans. Within each of the categories, more specific targets are based on the design and purpose of the vehicles.

In particular, most tractor-trailer combinations will be required to achieve up to approximately a 20 percent reduction in fuel consumption and greenhouse gas emissions by model year 2018, saving up to four gallons of fuel for every 100 miles traveled.

Vocational vehicles, including delivery trucks, buses and garbage trucks, will be required to reduce fuel consumption and greenhouse gas emissions by approximately 10 percent by model year 2018. These trucks could save an average of one gallon of fuel for every 100 miles traveled.

For heavy-duty pickup trucks and vans, separate standards will govern gasoline and diesel models. These vehicles will be required to achieve up to approximately a 15 percent reduction in fuel consumption and greenhouse gas emissions by model year 2018, saving one gallon of fuel for every 100 miles traveled.

The new standards rely on the use of offthe-shelf technologies. According to DOT/EPA estimates, technology upgrades for a tractor could result in net savings of $73,000 from reduced fuel costs over the truck’s useful life.

The use of existing solutions is one reason that the trucking industry has supported the new standards. Announcing its approval of the new federal regulations, the Heavy Duty Fuel Efficiency Leadership Group, an organization of some of the largest U.S. fleets, engine manufacturers and technology suppliers, cited the use of existing technology for commercial vehicles. It also noted that the regulations provide incentives for the development and deployment of innovative technologies, including waste heat recovery and hybrid power systems.

In April 2010, the group committed to work to help establish the new standards. “ The regulation largely meets the principles that we outlined over a year ago,” the group said in a statement. “ We are pleased that the agencies listened and responded with a regulation that will preserve the ability to build and acquire vehicles needed to perform the diverse work in our economy while returning fuel cost reduction benefits in a reasonable timeframe.”

Industry participation in the development of the new standards has gone a long way toward generating support for the fuel efficiency and emissions reduction initiative. That spirit of cooperation is a model to follow in the future.

Through May of this year, orders for new Class 8 trucks in North America stood more than 165 percent above the level they attained during the same period in 2010. In April alone, a five-year high was recorded, and while May orders fell from that lofty mark, they still jumped 85 percent compared with the same month one year before.

Needless to say, pointing to healthy order and production levels for Class 8 trucks this year, industry analysts are optimistic. Boosting their outlook even higher are recent announcements by truck makers that they are adding employees and shifts, and expanding production to meet the higher level of demand.

Growth in commercial vehicle sales is not limited to power units. Orders for trailers have also been on an upward swing. This year, March orders across the industry were 21 percent higher than in February and 33 percent above January. Trailer shipments in the first quarter of 2011 were up 109 percent compared to the same quarter in 2010.

Orders for trailers grew for 18 consecutive months through the first quarter of this year, and were almost double the level seen at the same point in 2010. Looking ahead, order backlogs have continued to grow, setting the stage for solid performance in the remainder of 2011 and potentially throughout 2012.

While all trailer segments are on the upswing, dry van orders and sales are leading the charge. This is attributable
directly to ongoing growth in demand for freight-carrying capacity in truckload markets. Currently, especially during the traditionally heavy summer shipping season, demand for freight-carrying capacity remains strong, leading many carriers to report being very close to, if not at, capacity.

Demand is also starting to surge for hauls of construction materials, traditionally handled on platform trailers. In the aftermath of the very severe 2011 winter, many long-planned building projects are only now able to proceed. It is a good possibility, therefore, that capacity in those markets will tighten even further this summer.

For tractors especially, some growth in orders is the result of pent up demand for replacement of aging fleets. In many cases, and especially in over-the-road markets, the economic decline caused carriers to keep vehicles in service longer than originally anticipated.

Other challenges to be addressed by fleets include fuel costs, which have soared in the past six months. Additionally, trucking companies are concerned about the costs of complying with recent government regulations related to the Hours of Service regulations and the effect of new safety compliance and reporting requirements. Not to be overlooked is the need to recruit, hire and train a steady supply of quality drivers.

In reality, freight tonnage, truck and trailer sales have all been growing for more than a year, serving as they always have as a leading indicator of economic growth and pointing to a more profitable and successful future.

The trucking industry, while impacted greatly by the economy, has also been a long-time leading economic indicator. As the economy begins to grow, carriers are called on in advance to haul more freight needed to fill a depleted supply chain, from raw materials used in manufacturing to finished goods stocked at distribution centers and on store shelves. That, in turn, leads to a rise in trucking-related jobs and growth in sales of trucks, tractors and trailers.

That scenario is precisely what has been happening for the past few months. Truck tonnage grew 8 percent in January 2011 from a year earlier, boosted largely by growth in the manufacturing sector. That month, the American Trucking Associations’ tonnage index rose to its highest level since January 2008, improving for the 14th consecutive month.

In December 2010, truck tonnage rose 4.2 percent from a year ago, also to its highest level in more than two years, and gained 2.2 percent over November. For all of 2010, tonnage increased 5.7 percent compared with the previous year.

Ending a prolonged decline, Class 8 vehicle registrations for the last quarter of 2010 increased slightly from the same period one year earlier, in the process reversing four straight quarters of year-over-year declines. The number of new commercial trailers registered in the U.S. last year represented a 42 percent increase over 2009.

Orders for new Class 8 trucks in North America more than doubled in December from the same month in 2009, and jumped again in January of this year, increasing 25 percent over the pace set in January 2010. In February, new Class 8 truck orders in North America jumped more than 200 percent over the same month last year.

Heavy-duty Class 8 commercial vehicle net orders did drop slightly between January and February of this year. However, while order volume is down between the two months, over the previous four months net order volume on an annualized basis is positive, indicating a trend toward sales growth over the longer term for heavy-duty trucks.

Other good news is coming from the jobs sector. In February, preliminary estimates by the U.S. Department of Labor’s Bureau of Labor Statistics (BLS) show that for-hire trucking companies added 11,200 jobs. Unadjusted, the increase in trucking jobs represents the largest one-month surge since December 1990.

Likewise, according to the preliminary BLS figures payroll employment at for-hire trucking companies in February, which includes new hires and positions filled with replacements, increased 3.1 percent year-over-year.

Since the beginning of March 2010, when the number of trucking jobs hit bottom, carriers have added 39,000 jobs. Furthermore, the BLS numbers reflect all payroll employment in for-hire trucking, but don’t include jobs in other industry segments, such as truck drivers for private fleets or figures for express delivery companies.

All things considered, recent increases in truck tonnage, commercial vehicle orders and sales, and trucking employment are signs that the industry is climbing out of the recession. Fueling optimism in trucking, this growth can also be seen as an indicator that the North American economy is growing again at last.