THE CHAOS OF THE 'MESSY MIDDLE'
In a recent article for Trimble, I looked back on my experiences in the transportation industry and summarized some of the major changes I experienced (see Maturation of Maintenance). After finalizing the article, I started thinking about what the future holds and thought I would share my thoughts on the coming changes, as I see it.
My first observation is the accelerating rate of change in our industry. I expect we will see more changes in technology in the next ten years than I saw in the previous fifty. The use of artificial intelligence (AI) will help us make sense of the mountains of data our vehicles are generating, to improve our operations. Automated vehicles, both passenger and commercial, will begin showing up on our nation’s highways. The use of diesel engines in our trucks will wane and alternative power sources will rise. All of this will happen, but the transition will be chaotic. As coined by Mike Roeth of NACFE, the next five years will be the “messy middle” and will require careful decision making to avoid going down a path that leads to a dead end. The State of California is a major contributor to the coming chaos and its recent actions will ensure that the next five years are “messy” for fleet operators in several ways.
In the Fall of 2020 two new regulations were adopted by the California Air Resource Board (CARB) which will significantly impact new heavy-duty vehicles starting as early as 2024. The one garnering most of the attention is CARB’s requirement, beginning in 2024, that 5% of all new Class 7-8 trucks sold in the state be zero-emission. At this time, the only vehicles that can meet the zero-emission requirement is battery electric vehicles (BEV) or hydrogen /electric vehicles. The regulation ramps up the requirement over time with 100% of all heavy-duty vehicles sold in the state to be zero-emission by 2045.
At first glance most fleets would not be concerned about this as they either do not operate in California or do not buy new trucks in the state. Unfortunately, the requirement for zero-emission vehicles will not be contained to California. Fifteen states (mostly Northeastern and Western) have signed a memo-of-understanding (MOU) to support the efforts of California and to “eradicate toxic diesel emissions by 2050” in their states. The other 2020 companion regulation to zero-emission vehicles is much more immediate and far-reaching in its impact on the industry.
In 2016, the EPA and NHTSA released new regulations (GHG Phase 2) to reduce greenhouse emissions in phases beginning in 2018 and again in 2021, 2024 and 2027. In the GHG Phase 2 regulations, nitrous oxide (NOx) emissions were left unchanged at the federal level. Upon reviewing the Phase 2 regulations, California petitioned the EPA to lower NOx levels beginning in 2024 which has been an ongoing debate with the Trump administration. Late last year California decided to go it alone and issued regulations to lower NOx emissions by 75% from current standards in 2024 and 90% by 2027. California will require a waiver from the EPA to create a more restrictive state standard and now with the Biden administration in place, this looks to be assured.
It will be expensive for the OEMs to meet the new standards and the price of a new truck will increase significantly at each change in NOx reduction levels. OEMs are also voicing concerns regarding the short time frame to engineer, develop and test reliable solutions to meet the lower California NOx emission regulations. Issues are also being voiced by OEMs and the ATA regarding two standards, a “California standard engine” and one for the rest of the country. With the “Green-New-Deal lobby” having Biden’s ear this may not be an issue as a lower federal NOx standard, matching California’s, could be issued later this year.
The next five years will be chaotic and messy. Contact Asset and Maintenance Insights, LLC for assistance in navigating the ‘messy middle’ at www.fleetami.com/contact