Buying Time

By october 1, 2002, all new diesel engines must meet tougher emissions standards, a fact that has many in the industry – from owner-operators to the nation’s largest truckload carrier – worried.

Because the engines are being produced 14 months ahead of the original deadline, many industry observers fear they have not undergone adequate real-world testing. Experts also say lower emissions may come at a price: Fuel economy may be reduced by up to 5 percent, and the engines could cost as much as $5,000 more than current models.

“I was going to buy a new truck at the end of the year, but I will wait and let them get the bugs out and check out the fuel mileage,” says Howard Nichols, an owner-operator from Las Vegas. “As with anything new on the market, it’s going to have its share of problems, so I’m going to wait and see what happens.”

Don Schneider, president of Schneider National of Green Bay, Wis., shares Nichols’ concerns, calling the impending deadline “the biggest issue trucking has faced in more than 10 years.”

Engine makers agreed in 1998 to move up the deadline for producing diesels that meet reduced nitrogen-oxide level of 2.0 grams per horsepower-hour. The agreement came after the U.S. Environmental Protection Agency accused them of using devices that would enable engines to pass lab tests but then emit higher-level emissions on the highway. Cummins, Detroit Diesel, Mack and Volvo have said they plan to meet the deadline using cooled exhaust gas recirculation. Caterpillar, which has said it will not have emissions-compliant engines ready until 2003, is using a technology called ACERT, which it believes is a better long-term solution.

More than just engine technology is affected by the October deadline. Truck makers have been working feverishly to ensure their chassis designs can accommodate the new engines with little or no impact on performance.

The uncertainties have owner-operators studying their options. In fact, 48 percent of those responding to an eTrucker.com poll said they would pre-buy new trucks before October, buy used or extend their trade cycles until the new engines have a proven track record. Meanwhile, anxious truck and engine makers are holding their breath to see just how their customers respond.

Price and maintenance worries

“I don’t know what the hell I’m going to do this year,” says Keith Harring, owner of KL Harring Transportation and Warehousing of Bethel, Pa. “I’ve heard prices anywhere from $3,000 to $7,000 more.”

Nichols doesn’t think increased costs will be a concern. “With sales being so slow, I’m sure they will eat that price tag with an engine rebate,” he says.

But Peterbilt General Manager Nick Panza says prices will go up. “What we can’t tell the customer is how much,” he says.

Steve Keate, president of International Truck & Engine’s Truck Group, says he expects an increase of $3,000 to $5,000 in the delivery price. “We also anticipate some deterioration in fuel economy, on the order of 2 percent to 5 percent, depending on the application and engine.”

Maintenance costs pose additional concerns. “The interval you’re changing your oil at has to be smaller, and it’s going to be expensive to maintain the system,” Harring says.

But Cummins “doesn’t view such maintenance fears as a sky-is-falling-type issue,” says Martha Brooks, a Cummins vice president. The new Cummins engines will have unchanged durability and minimum maintenance increases, she says, citing oil change intervals of 25,000 miles with oil meeting the new CI-4 standard and fuel economy comparable to current products.

Other engine makers are also quick to allay fears. Detroit Diesel does not expect oil and filter change intervals to be affected by the new engines, says John Morelli, a vice president. Mack’s goal is to maintain its current oil change interval, and there will be no change in drain intervals with Volvo engines, according to the companies.

Ready or not?

Schneider said in December that he planned to buy used rather than risk buying trucks with unproven engines.

“We’re eight months away from implementation, and we’ve been unable to obtain any engines to evaluate,” says Steve Duley, who buys equipment for Schneider. “We have no internal data or experience on how they will operate.” Engine makers claim they have done testing, Duley says, “but as we’ve reviewed it, it’s quite limited and in different applications than we run.”

Owner-operator Tom Menzel, who owns Menzel Crane & Transport near Milwaukee, Wis., agrees. “I don’t think they’ve had enough real-world experience to ensure that the underhood temperatures aren’t going to cause degradation to the wiring or hoses,” he says.

Carl Tapp, director of maintenance for P.A.M. Transport of Tontitown, Ark., also has concerns about the new engines’ performance. “I know of no fleets that have tested it or even seen it,” Tapp says.

Such concerns are unfounded, Brooks says. “The industry hasn’t paid much attention,” she says. “Now that it’s upon us, there are some who are overreacting.”

“I don’t think they’ve had enough real-world experience.”

– Tom Menzel

Cummins will have engines available by October, Brooks says. “We are ready on time – in the nick of time, but on time,” she says. Cummins, which has applied for EPA certification of its new engines, began field testing them in late 1999; by October they will have undergone 115,000 hours of lab testing and 6.4 million miles of road testing, Brooks says.

Mack has also applied for certification, says Steve Homcha, a Mack executive vice president. Mack had a factory prototype of its new engine available in the first quarter of 2001 and planned to begin building engines in March 2002, given approval.

Detroit Diesel has put more than 3,000 EGR-equipped Series 50 engines into service since 2000, says Tom Friewald, vice president of marketing. “We recently provided fleet engines to one of our major customers,” he says. “Additional engines are being assembled for delivery to other customers.” The company will have emissions-compliant Series 50/60 engines ready in October, he says.

Despite its competitors’ confidence about meeting the deadline, Caterpillar remains skeptical. “2002 is tremendously uncertain for anything,” says John Amdall, Caterpillar’s director of product regulation.

Among truck makers, Volvo and Mack say they are confident they will have trucks with 2002-compliant engines ready by the deadline because they have their own, captive engine lines. “We’ve geared for it. We’ve planned for it. We’ve allocated resources,” says Volvo spokesman Randy Bolinger. “We think we have an advantage by being able to design the engine and chassis together.”

International’s Keate is equally confident. International has spent “tens of millions of dollars to create a smooth transition,” he says. “We will be in an excellent position to meet all the requirements.” The process has included road tests to ensure the prevention of cooling problems, he reports.

International will offer Cummins and Caterpillar engines, but will no longer offer Detroit Diesels as of October because “it didn’t make any sense to invest that much into a company controlled by a competitor,” Keate says. Detroit Diesel is owned by Freightliner parent DaimlerChrysler.

Other truck makers remain cautious about commenting on a situation over which they do not have complete control. “We have to wait until the engine manufacturers provide us with more detailed info about what their solutions are going to be,” says Kenworth spokesman Jeff Parietti.

“We will be prepared to install the engines that the engine manufacturers have available on that date,” says Peterbilt’s Panza. “We’re giving our customers the most consistent information that we can, but we don’t have final details from engine manufacturers.”

“We are just testing engines as they become available,” says Michael von Mayenburg, a Freightliner senior vice president. He suggests truckers give the new EGR-equipped engines a try. “This is a fence, and there’s no going around it,” he says. “Sooner or later, we’ll all have to jump over.”

Studying their options

Concerns about the new engines have left many in trucking looking for options. “We can’t afford to take risks,” Schneider’s Duley says. “That leaves us with either keep our old trucks and run them longer or buy used. We’ll probably do some of both.”

Duley says his company will probably also buy a small number of trucks with the new engines so it can evaluate them. Beyond that, “we will buy as many trucks as we can between now and October to make sure we’re positioned,” he says.

Menzel recently ordered a new Cat-powered Freightliner Argosy “to avoid the new engines,” he says. “I want to be positioned for the rebound of the economy. In order to do that, I need to take action now, not stand on the sidelines waiting to see what will happen.”

The upside to such market concerns is that many truckers are buying up some of the used truck surplus, says Eddie Walker, president of the Used Truck Association and co-owner of Best Used Trucks of Fort Worth, Texas.

“I’ve got some customers who have given me a standing order: Give me two or three trucks a month – the latest model you’ve got – because I want to stick with these old engines until I see what they’re doing with the numbers,” Walker says. Consequently, late model, low mileage, owner-operator-style trucks are becoming increasingly hard to find, and prices for such trucks are rising.

Buying used is the route John Benning, an owner-operator from Flat Rock, N.C., plans to take. “I do need to get a new truck, but it’s not going to be a new one,” he says. “I’d like to wait and see.”

Walker says other carriers are ordering new trucks with the current model engine before October. After October, “The new truck buying process will slow down until the new engines prove themselves,” he says.

Tapp says P.A.M. Transport is ordering 500 trucks – all before October. “I’m confident Detroit, Cat and Cummins will build decent equipment,” he says. “I just don’t want to be the first one to buy it.”

Aaron Huff, Sean Kelley, Paul Richards and Avery Vise contributed to this article.


Should the Environmental Protection Agency push back the October deadline for lower emission-engines?

IS A DELAY ON THE WAY?

Should the Environmental Protection Agency push back the October deadline for lower emission-engines? The nation’s largest truckload carrier thinks so.

“The wisest thing would be for the EPA to back off until we can test the engines,” says Don Schneider, president of Schneider National of Green Bay, Wis.

“We’ve met with the EPA, met with groups of fleets and manufacturers, and written a number of letters to other fleets, suppliers and state trucking associations, trying to educate the industry on just what the risks are,” says Steve Duley, Schneider director of equipment purchasing and disposal.

Schneider points out that since carriers will probably keep existing trucks or buy used to avoid the new engines, the level of emissions may actually increase. “The environment doesn’t win, the industry suffers from more negative purchase cycles and fleets will suffer from running old equipment,” Duley says.

But industry observers say a delay is unlikely, especially since the deadline was set in a consent decree to which all affected engine makers – Caterpillar, Cummins, Detroit Diesel, Mack and Volvo – agreed. Furthermore, all but Caterpillar have said they will be ready by the deadline.

To further complicate matters, the decision to relax the decree is not completely up to EPA. The final decision would come from a federal judge.

Congressional involvement is another possibility. A provision in an appropriations bill could bar EPA from enforcing the decree much as a similar move blocked the hours-of-service rewrite almost two years ago. Don’t look forward to a congressional hearing, however. Such a forum would open the door to additional testimony from environmentalists and others who have a stake in holding fast to the deadline.

Wisconsin owner-operator Tom Menzel is reminded of the antilock brake debacle of the 1970s, when the National Highway Traffic Safety Administration, led by Ralph Nader protégé Joan Claybrook, mandated the devices for heavy trucks before they were ready, causing needless turmoil and expense and undercutting safety.

A delay “would be in the best interest of all parties involved – engine makers, EPA, fleets and owner-operators,” Menzel says. Otherwise, “we’re going to end up with another Joan Claybrook situation here.”

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