The formula for business success traditionally involves a pioneering spirit and partnerships that help bring that vision to life. It rarely involves partnering with a customer. However, transportation leader Dillon Transport, Inc. took this unique route to begin its conversion to the use of alternative fuels. The result is a collaborative partnership that has converted fleets in several states to Liquefied Natural Gas (LNG) and Compressed Natural Gas (CNG), and opened numerous fueling stations to the public.
Today, Dillon Transport has significantly grown its alternative fuel fleet and reduced its operating costs. It is a nationally recognized innovator in using alternative fuels in the trucking industry, a position that has helped to attract new, long-term customers who appreciate these green choices. And according to vice president Charles Musgrove, the company is helping to create the national infrastructure that is contributing to America’s increasing energy independence.
Taking Business Partnerships to New Levels
The transformation was more than five years in the making, when Dillon president Jeff Dillon began studying the impact alternative fuel use could make on the trucking industry and on his business in particular. He sought out additional information about LNG from Clean Energy, the largest provider of natural gas fuel for transportation in North America. In 2011, Dillon visited Clean Energy’s LNG fueling station near the port in Long Beach, Calif. This particular station, along with a smaller LNG station near the Long Beach airport, served truck fleets in the region.
“Clean Energy is dedicated to building America’s Natural Gas Highway by building a network of natural gas truck fueling stations along the interstate highway system,” explained Musgrove. “They were a natural partner for us, so we committed to the natural gas highway concept.”
At the same time, Dillon customer Owens Corning was undertaking an ambitious project to reduce its energy intensity. Part of that commitment included significantly reducing fuel costs by 2020. So in late 2011, Owens Corning joined with Dillon and Clean Energy to transfer a total of 17 trucks to natural gas that carry inbound raw materials to its processing plant in Medina, Ohio, fueling at an expanding network of public stations in the state. Dillon is also using LNG-powered trucks to service Owens Corning’s Irving, Texas, plant.
Clean Fuels Ohio was also working with Clean Energy on several other projects, and contributed grant funding for the project. “We were thrilled to be able to work with Clean Fuels on this project,” Musgrove said. “It gave us an attractive package that appealed to Owens Corning.”
Conversion to natural gas depends on the vehicles’ duty cycles, existence of supporting fueling infrastructure and proximity to both the fleet base and delivery destinations. “As we approached converting to LNG and CNG, we had to consider the application of the vehicles,” said Musgrove. “Because natural gas use has to be consistent, it was the perfect choice for trucks running consistent routes on a daily basis. In the Owens Corning Ohio situation, we run four trips a day locally, for a total of 250 miles per round trip. LNG and CNG became the best choice for us, and our drivers have really taken to the operation.”
By the end of 2013, Dillon was running 17 LNG-fueled trucks with Owens Corning’s Ohio operation, and 20 with Owens Corning’s Texas plant. Dillon also operates 50 compressed natural gas (CNG) trucks in Florida that support another customer.
Infrastructure Partnering
For Dillon, a large deciding factor in the decision to run natural gas trucks was the existence of public stations nearby. Musgrove said that every infrastructure project they’ve been involved with has been either public or third party stations. “We wanted these operations to be public fueling stations, so other trucking companies and the public can use them,” he said. “The local station is already being used by both.”
After some initial hesitance, drivers have been pleased with the conversion, particularly the quieter operation and the lack of diesel fuel smell. “Some of the drivers were concerned about the safety of fueling with natural gas, but seeing it in operation convinced them it was safe,” Musgrove said. He added that many trucking companies considering LNG and CNG are waiting to convert until they have a variety of engines from which to choose. The industry is responding by designing and manufacturing an increasingly wider range of engine sizes, including a new 12 Liter, 425 horsepower offering that was released in mid 2013. “The 9 Liter was a little undersized for our loads, but the 12 Liter will be perfect for us,” he said. “There is a 15L available, but it’s a diesel combination, and we want to stay strictly with the natural gas engines.”
For Dillon, conversion to natural gas has resulted in positive paybacks on many levels. Economically, Musgrove said the savings in fuel costs have resulted in a one-year payback. “Conversion requires a big initial investment - $40,000 to $50,000 per truck. But because we’re saving $1.00 to $1.50 per gallon on fuel, we’re saving $40,000 a the year on each truck in fuel savings alone,” he said.
In conversations with other fleets, Musgrove said most fleets were interested in how the natural gas engines were working, particularly in economic terms.
Sustainability as a Sales Strategy
Most impressive, though, are the conversations he is having with his prospective customers. “Sustainability is a big issue for most businesses,” he said. “Most have already done a lot of work to reduce waste and improve the environment – taking the low-hanging fruit off the tree. Now they’re looking at their supply chain, to see what opportunities they can bring to the table. Natural gas can make a big impact, without a big investment.
“Today, we’re getting phone calls from new customers saying, ‘Take all you want of our new business, as long as it’s natural gas.’ We’re definitely pioneers in this industry.”
