Ryder to Lease Natural Gas Tractors - Analyst Blog
March 12 2013 - 1:50PM
Zacks
Ryder System Inc. (R), one of the leading
providers of integrated logistics and transportation solutions has
entered its first-ever lease contracts for supplying natural gas
leased vehicles. The company has entered a full-service lease
agreement for providing 23 compressed natural gas tractors to
Louisiana-based Eagle Distributing of Shreveport, Inc.
Eagle Distributing of Shreveport would replace almost the entire
diesel-powered delivery fleet with Ryder’s natural gas vehicles. In
addition, Ryder will also offer maintenance services for all 23
tractors through its Shreveport service center, which is
established in accordance with the standards set for natural gas
servicing facilities.
Eagle expects the new fleet of natural gas vehicles will curb
greenhouse gas emissions by approximately 24%, and bring it down
from 878 tons to 670 tons.
Ryder has pioneered several such initiatives that promote the
utility of alternative fuel vehicles. The SANBAG (San Bernardino
Associated Governments) project is one such. Under this project,
Ryder collaborated with Southern California Association of
Governments Clean Cities Coalition, to provide 87 heavy-duty
natural gas trucks to customers.
Under the SANBAG project, Ryder received total of 202 natural
gas vehicles, worth $38.7 million and marked the largest commercial
natural gas truck project in North America.
In September 2011, Ryder first launched its “Flex-to-Green” lease
offering to support sustainable transportation, or eco-friendly
transportation for private fleet operators. This lease offering
involves incorporation of fuel-efficient vehicles into their fleets
including liquid natural gas and hybrid vehicles. The deal provides
the customers with an opportunity to convert their conventional
vehicles to new fuel-efficient ones as per their preference.
Besides Eagle Distributing of Shreveport, Inc, large freight
transportation companies like FedEx Corporation
(FDX) has also shown strong interest in promoting fuel-efficient
vehicles. Last week the company set new fuel efficiency goal by
reducing aircraft carbon emissions to 30% by 2020 besides meeting
at least 30% of its jet fuel requirements through alternative fuels
by 2030.
We believe that the growing environmental awareness among
corporate houses like Ryder stems from the stringent actions taken
by the regulatory authorities to restrain environmental
pollution.
The U.S. federal and state governments as well as regulatory bodies
like the U.S. Department of Transportation (DOT) and National
Highway Traffic Safety Administration (NHTSA), as well as the U.S.
Environmental Protection Agency (EPA) have taken several measures
to curb global warming.
One of these key measures remains the establishment of the
National Program in 2009 – an agreement between the federal
government, state regulators, and the auto industry. The national
program, also a two-phased program, constituted standards to
establish improved fuel efficiency across a 30 years span,
involving the first-ever global warming pollution standards for
light-duty vehicles.
The key highlights of the first phase (2012-2016) will set the
global warming pollution standards of 250 grams per mile, on
average, for year 2016 model vehicles. In addition, NHTSA requires
fuel efficiency standards of an average of 34.1 miles per gallon in
a new vehicle. Cumulatively, these measures are expected to
translate to 23% improvement in new vehicle pollution standards. It
would represent an average annual improvement of 5% by 2016.
Going forward, the phase II (2017–2025) of the National Program
covers standards on light vehicles, finalized by the EPA and DOT in
Aug 2012. These standards require reduction in green house gas
emission by cars and light trucks to 163 grams per mile in 2025
that would lead to fuel efficiency of 54.5 miles per gallon.
Consequently, we believe that Ryder’s step toward promoting
environment-friendly vehicles is significant in exercising these
standards. This will not only result in a cleaner environment but
also lower average consumer expenses on fuel, accounting for $140
billion in 2030 as per research data.
Ryder, which operates with other similar players like
Trinity Industries Inc. (TRN) has a Zacks Rank #2
(Buy).
Other Stocks
American Railcar Industries, Inc. (ARII), with a
Zacks Rank #1 (Strong Buy) is another stock in this sector, which
we believe in worth considering.
AMER RAILCAR (ARII): Free Stock Analysis Report
FEDEX CORP (FDX): Free Stock Analysis Report
RYDER SYS (R): Free Stock Analysis Report
TRINITY INDS IN (TRN): Free Stock Analysis Report
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