Fleet Management News & Business Info | Commercial Carrier Journal
Issue link: http://read.uberflip.com/i/815349
commercial carrier journal | april 2017 21 approach now." Fleets are drawn to the fuel-efficiency carrot and beaten with the FET stick. Vieth proposes rewarding new truck buyers by eliminating the FET as an offset to buying more efficient trucks that are better for the environment – using the carrot to encourage good behavior. But lawmakers likely aren't willing to give up such a chunk of money, so Vieth proposes replacing the FET with a boost – about 12 cents – in diesel taxes. More fuel-efficient trucks will use less fuel and pay less of the increased tax. e trucks most penalized will be the ones getting less mpg (the stick) and should be encouraged to upgrade (the carrot, again), which will drag that national mpg average up from around 6. EPA freight efficiency targets for new trucks are all well and good, but given the average age of the truck population, it could be almost 2027 before the majority of trucks on the road are even EPA 2017-compliant. If the goal is to get more fu- el-efficient trucks on the road, heaping taxes on them that are greater than the savings they may generate isn't the way to go about it. One simple step How to immediately boost your fuel economy by 14 percent W ant to pick up a quick double-digit boost in fuel economy? Buy a new truck. Kenny Vieth, ACT Research presi- dent and senior analyst, says that about one-third of all active trucks in the United States got an average of 7.5 mpg at the end of last year, while nearly half got between 6 and 6.3. "If I buy a new truck today, it's going to have about 14 percent better fuel economy than the average truck in the fleet," Vieth says. "Fuel economy should be something that incents people to want to buy new trucks." e fuel economy numbers of more than half the truck population are significantly lower than what today's trucks can achieve, but low freight rates and taxes associated with buying new equipment make upgrading a far less enticing proposition. e American Trucking Associations' Truck Tonnage Index showed growth of 1 percent in 2015 and only 0.1 percent last year. "We went seven quarters with virtually no freight growth," Vieth says. Freight growth was hindered by low rates, driven down by too many trucks fighting over too little cargo. Vieth says that by the end of 2015, there were about 100,000 too many trucks on the road – about 6 percent more trucks than were needed. Fuel economy numbers and the truck population aren't the only figures to swell. Truck prices have grown by about $30,000 since the U.S. Environmental Protection Agency's 2004 particulate matter standards, which Vieth says means an additional $3,600 in federal excise taxes and another $2,000 in added state tax. at's not exactly an incentive to buy more efficient equipment. With diesel below $3 per gallon, there's no great reason to pile on an extra 12 percent of the purchase price in taxes when you're actually saving money trudging along at 6 mpg. If you can make a business case that buying a new truck can save you $12,000 annually in diesel, that's attractive. But if you're paying about that much in taxes alone, adding a full year of payments just to cover tax isn't going to look too great in your ROI calculator. Vieth says that to encourage adoption of fuel-efficient trucks, a "car- rot-based approach is needed. We kind of have a carrot-and-stick-based PRODUCT REVIEWS, OEM & SUPPLIER NEWS, AND EQUIPMENT MANAGEMENT TRENDS BY JASON CANNON JASON CANNON is Equipment Editor of Commercial Carrier Journal. E-mail jcannon@randallreilly.com or call (205) 248-1175. BUY A NEW TRUCK: That's a quick way to pick up a double-digit boost in fuel economy. NOT SO ENTICING: Low freight rates and taxes both taint the lure of buying new equipment. POLITICALLY INCORRECT: Lawmakers likely aren't willing to give up FET money. With diesel below $3 per gallon, there's no great reason to pile on an extra 12 percent of the purchase price in taxes to buy newer, more fuel-efficient equipment.