Interstate is going green, again!

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Interstate Distributor Co. made history in August as the first national freight carrier in the Pacific Northwest to go “green,” purchasing 20 Liquefied Natural Gas (LNG) tractors for regional trips along the Interstate 5 corridor out of the company’s yards in Tacoma, Wash. and Fontana, Calif.

“It’s exciting, but this is more of an exploratory test – a beginning,” said CFO James Reed. “We want to try these out and make sure we understand how to work them into our fleet. Right now, we’re viewing it as more of a learning experience than a long-term strategy. If the market continues to move in this direction, we’ll be ahead of the game.”

The trucks – 10 LNG-fueled Kenworth T680 day cabs based in Fontana and 10 52-inch regional sleepers in Tacoma – are more expensive than traditional diesel tractors – between $40,000 and $80,000 more, depending on the vehicle – but the company expects the LNG tractors to pay for themselves in two years.

“(CEO Marc Rogers) feels very passionately that Interstate should be a leader on the green front, a nod to our roots in the Pacific Northwest and the culture of Interstate,” says Reed.

Reed said Interstate jumped at the opportunity to engage in an ongoing, national conversation on building a natural gas fueling infrastructure. The Port of Tacoma approved a lease in August for plans by Puget Sound Energy to build a $275 million LNG facility at the Port to supply Totem Ocean Trailer Express, another Saltchuk company, with LNG to fuel its two Orca-class cargo ships.

“The PSE site should help inasmuch as its presence will provide a local supply point,” Reed said. “The largest portion of our LNG cost is getting to the fuel. With our nearest supply point upward of five hours away, this will lower that cost significantly.”

Meanwhile, Blu LNG, based in Salt Lake City, operates a national network of LNG fueling stations, including one in Sumner, Wash. And while more stations are under construction, the company’s aggressive growth strategy has been slowed while it waits for more fleets to make the conversion to LNG.

Reed said another option is to use Clean Energy Fuels Corp., a California-based company that built and supplied 27 natural gas fueling stations during the first six months of 2014, nine of which were placed along highways. Clean Energy has offered Interstate a temporary mobile fueling station, or “harpoon,” that it will maintain and keep full on Interstate’s yard.

“There are some real challenges there,” Reed said. “Especially in the Northwest, the availability of fueling stations is not widespread. California has much more substantial fueling options.”

Meanwhile, Reed said customer demand has been mixed.

“There are some customers that you’d think would be highly motivated by it, but they’re not,” Reed said, “and then there are some for whom you become a preferred vendor if you have a natural gas fleet.”

Reed said, personally, he is proud of the direction Interstate is headed. A native of Port Orchard, Wash., Reed has an MBA in corporate finance from Brigham Young University.

“When I left there, I went straight to Intel and then to other large, multi-national organizations. While I loved the experience, having this local connection is very important to me. Transportation is such an essential part of our economy – it’s not exportable. I think our goal is to do something meaningful and stay true to our company’s unique culture.”

Updated 12.15.14

Posted by intd on December 2, 2014 | Categories: News.