March 5 (Bloomberg) -- United Parcel Service Inc. said it will spend $70 million to buy 1,000 delivery trucks powered by propane and build 50 fueling stations as it expands one of the largest private alternative-energy fleets in the U.S.
The trucks will replace gasoline- and diesel-powered vehicles in rural areas of Louisiana and Oklahoma, with future expansion to other states, according to plans the Atlanta-based company will make public later today. Propane is cheaper and burns cleaner than those traditional fuels.
The propane trucks will expand by 32 percent the company’s global fleet of 3,150 alternative-fuel and advanced-technology vehicles, which includes electric, hybrid electric and compressed and liquefied natural gas models. UPS operates more than 96,000 vehicles to deliver small packages.
“Propane is less volatile than gasoline or diesel, it’s nontoxic and is a clean-burning fuel, which is what got us very interested,” Chief Operating Officer David Abney said in an interview. “It’s really ideal for rural areas and locations where we have smaller fleets.”
Propane costs about $1.25 to $1.50 a gallon less than gasoline or diesel and gets similar mileage, Abney said. UPS may consider expanding its U.S. propane-vehicle fleet, in part depending on the expense for fueling stations, he said.
The company already operates about 900 propane-fueled vehicles in Canada.
The trucks are being built by Daimler AG’s Freightliner unit at a plant in Gaffney, South Carolina. Production will begin by mid-2014 and be completed early next year, UPS said.
The new vehicles are expected to travel more than 25 million miles (40 million kilometers) and displace about 3.5 million gallons (13.3 million liters) of gasoline and diesel a year, the company said. UPS decided to order the trucks after testing 20 this past winter in Gainesville, Georgia.
“The opportunity to road-test new propane vehicles and fueling equipment with one of the most sophisticated fleets in the country is a major milestone for the propane industry,” said Roy Willis, chief executive officer of the Propane Education & Research Council. The Washington-based group joined with UPS and equipment makers to get U.S. Environmental Protection Agency certifications for the project.
The group helped develop the vehicles’ engine, fuel platform and chassis, along with CleanFuel USA of Georgetown, Texas, and Powertrain Integration of Madison Heights, Michigan.
The use of alternative-fuel and new technology vehicles is part of UPS’s effort to reduce emissions and dependence on fossil fuels while improving efficiency.
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