‘Usership’ helping operators avoid bumpy journey on the road to zero 

17.06.21

Greener commercial vehicles are already hitting the roads and plans to phase out of the sale of new diesel HGVs have been laid.

With technological developments gathering momentum and the sector’s journey on the road to zero emissions picking up pace, operator concerns about alternative-fuelled commercial vehicles are growing.  

Prime among these are uncertainties over cost – both acquisition and operating – making it difficult to build a compelling long-term business case for greener vehicles.  

There is an understandable fear of making big, costly mistakes. The alternative fuel landscape is moving so quickly that, even if they make the right decision today, there’s every likelihood that the assets they choose will be obsolete just a few years down the line. 

Regulations are confidently forecast to continue to change and tighten rapidly, while technologies will, without doubt, also develop and improve at a swift pace. 

None of us can predict exactly where road transport will be in five or 10-years’ time, but the fact is that change is coming, and probably even more than we’ve experienced over the past 50 years. 

In the current transient environment, and with HGVs having relatively long lifespans, it’s unlikely a move to zero-emission vehicles can be made in a single, quantum leap. For most, it will be a journey of smaller steps over a number of years. 

The key is to embrace change and use it to build a strong, competitive and sustainable business. I suggest moving to a ‘usership’ model in which rentals, leasing and contract hire take the strain out of acquisition, operation and renewals.

Rather than continuing to own assets, operators should: 

  • Check, through trials, if alternative-fuelled vehicles are operationally and commercially viable for them. 

  • Mitigate against having obsolete and low-value assets in years to come. 

  • Guard against financial and operational risk. 

Rather than resist change, build on the best options for success and growth. Shape your business around those advantages and capitalise on the opportunities they bring. 

The background to this demand for change is complex.

Road transport has recently accounted for more than half of oil demand in the UK and relies on petrol and diesel to meet around 98% of its energy needs. In 2018, demand for diesel had increased in 17 of the previous 19 years. 

However, in its 2018 Road to Zero strategy, the UK government made a commitment to cleaner air by drastically reducing greenhouse gas emissions and pollutants from HGVs. 

In July, 2019, it went further, setting a target to bring all greenhouse gas emissions to net-zero by 2050. Last November its Ten Point Plan for a Green Industrial Revolution included the start of a consultation process to phase out the sale of new diesel HGVs.  

The pace of change is picking up rapidly. 

The government’s strategy is already encouraging the development of alternative fuels, more fuel-efficient design and enhanced technology for zero-emission vehicles. 

Electricity, though widely expected to become the primary power in road transport, has one of the biggest barriers to adoption due to the weight of batteries. Electric tractor units can be up to 30% heavier than diesel equivalents, producing a negative impact on payload and, thereby, on operating costs and profitability.  

The key factors are sustainability and suitability. Electric vehicles might suit urban and back-to-base operations, but the low-polluting gasses such as biomethane, CNG, LNG and hydrogen (all currently seen as transitional alternatives in the journey to zero-emissions) might provide viable alternatives for long distance and trunking operations. 

Operator interest in fossil-free and low-emission alternatives is, surprising, still relatively low. It will grow, inevitably, and will do so on the back of legislation and vehicle manufacturers’ battles for competitive performance and economical advantage, alongside operators’ growing understanding and confidence. 

However, while bigger operators might be able to finance moves in the direction of alternative-fuelled vehicles (often as part of Corporate Social Responsibility plans), investing in greener vehicles is beyond the resources of most smaller businesses: and could stay that way for the foreseeable future. 

On top of these considerations, other concerns and uncertainties impact alternative-fuelled vehicle considerations:  

  • National Grid capacities and stability of supply.

  • Lack of gas refuelling and electric charging points.

  • Inconsistent interfaces between vehicles and filling stations.

  • Journey range. 

  • Limited choice.

  • Alternative fuels’ price stability compared with diesel.

  • Economic viability in ‘real-world’ operating environment.

  • Uncertain tax regime.

  • Higher purchase and operating costs.

  • Changes in working practices.

So, as things stand at the moment, operators face understandable uncertainty. 

Do you stick with diesel for the time being or venture into gas or electric vehicles? What will become the dominant fuel? How will residual values hold up? Will alternative-fuelled vehicles have second or third lives? 

The alternative fuel picture is moving so quickly the likelihood is that, whatever decision operators make, they could have obsolete assets on their hands a few years down the line. 

So, how do you find out whether alternative-fuelled vehicles are viable for your business needs: mitigating against risk resulting from a wrong decision? And, crucially, how do you do so cost-effectively? 

A risk-free solution is ‘usership’ in the shape of rental, leasing or contract hire; ditching high capital investment demands of owning your fleet. Usership transfers the risk of getting the answers to vehicle selection wrong, to your vehicle provider.  

In essence, you can economically ‘Try Before You Buy’ – though the experience of known budgeted costs as part of a business model, means fewer and fewer operators now move back to the high-investment route of owning vehicles. 

It does, of course, demand a supplier who can offer a wide range of vehicles and variants from the top manufacturers, and who can get you the right vehicles at the right time for your work. As many or as few as you need, with flexibility to shift up and down against demand as you go along. 

These are requirements that we at Dawsongroup truck and trailer can deliver. 

As early adopters of greener technologies, we’ve invested in fuel-efficient design in modern trailer aerodynamics, new technology in direct drive and low and zero global warming refrigerant systems, and alternative-fuelled LNG and CNG vehicles. 

Our approach delivers that ‘Try Before You Buy’ option, giving rental, leasing and contract hire customers easy access to emerging technologies. Backed up by our expertise and support, you can compare key factors such as costs, operational performance and ease of refuelling in everyday operational environments. 

In a fast-moving sector that could yet take a few years to settle, alternative-fuelled heavy commercial vehicles are still in early stages of development. There is uncertainty in the market, with huge potential for operators to make costly mistakes. 

However, fleet operators can ease their journey towards zero emissions by trialling the new technologies first, opting for the flexibility of rental, lease or contract hire ‘usership’ and working with a progressive vehicle supplier to protect their capital and mitigate against future risk.

John Fletcher, Managing Director

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