DC Velocity - January 2014

test, and test, and test.”
Shippers relying on natural gas fleets will need to be “sur-
gical,” in Murdock’s words, about how they segment their
freight and lanes. Dedicated moves, where a shipper com-
mits to a specific number of round-trip miles in return for
committed capacity, will have to reach specific mileage
thresholds for carriers to justify deploying a natural gas
vehicle. Private fleets, which operate round-trips on closed-
loop routes, may have an easier time of it than companies
like P&G, which will use a for-hire network operating over
irregular, one-way routes and could have difficulty coping
with a still-underdeveloped refueling infrastructure.

For its part, P&G is using the same “key performance indicators” (KPIs) to measure the performance of its natural gas operators as it does with its diesel-powered partners, according to Nancy Getter, who today heads the company’s natural gas program. Getter spoke at the Council of Supply Chain Management Professionals’ annual meeting in October but was unavailable to elaborate on P&G’s strategy.

Fuel-usage decisions will be based on the level of volume
density and miles driven, the type of truck move (whether
it be for-hire, private fleet, or dedicated), and how a ship-
per-carrier contract is constructed to align a shipper’s
objectives with a carrier’s need to achieve a suitable return
on its equipment investment. Most experts say longer-term
contracts will become the norm as carriers demand incen-
tives, in the form of committed traffic flows, to justify the
investment; another option is for a shipper to pay a higher
base rate to offset a carrier’s equipment costs, while agree-
ing to share in the fuel surcharge savings. No one projects a
scenario where shippers subsidize a carrier’s equipment
purchases.

LOOK BEFORE YOU LEAP

Experts caution shippers not to jump blindly into the natural gas pool with the belief that it is the panacea for all their energy-related challenges. Mueller of Breakthrough Fuel said shippers need a good dose of education on all aspects of natural gas transport and should begin with a pilot in order to gain real-world experience. Mueller says he’s seen projects start with little forethought and no transparency between the parties over cost structure, with predictably bad results.

Above all, it takes a commitment to natural gas from both sides, even if it means the chance of parting ways with core carriers not willing to make the leap. “You have to align with partners that have the passion for it and a long-term plan,” said Getter of P&G. Watne of General Mills added that “you don’t want to force carriers” to migrate to natural gas services if it is not something they want to do. ;

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