Tuesday, January 16, 2007

Hybrids at UPS

It takes a lot of fuel to move 15 million packages a day.

“We spent over $2.1 billion on fuel last year,” said Mike Herr, the shipping giant's vice president of environmental affairs. “That equates to about 4.8 percent of our operating revenue expenditure.”

That’s one big reason UPS has been on a 20-year quest to cut that cost. This June, UPS turns a critical corner, when 50 new hybrid electric vehicles, or HEV's, hit the road.

FedEx, which has 18 HEV's, with 75 more to come, is looking at a 30 percent reduction.
If you figure they are paying $2.10 a gallon, that is a billion gallons of fuel each year. If they could reduce that by 30% that is a 300 million gallon and a $630 million savings.

It amazes me that with all that fuel, only 4.8% of their expenses is fuel (vs. over 30% for commercial airlines).
For UPS and other fleets that make frequent stops or get stuck in traffic, HEV's may just be the Holy Grail. That’s because each time an HEV brakes or idles, it generates power -- which cuts that vehicle's fuel consumption.
It always seemed to me that UPS and mail trucks would be ideal situations for hybrids. Whereas hybrids have little advantage at highway driving, when you are idling or stuck in stop and go traffic that are at their maximum benefit. I would expect that they would pay for themselves in no time.
“When you can demonstrate to them by spending $5,000 today, you'll save $20,000 over these next 8 months,” said company CEO Mark Clancy “That's when it begins to really get them to sit forward in their chair and take a hard look at us.”
What is that, like a 400% ROI? Yeah, I think they would take that.


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