By LESLIE EATON
HOUSTON -- Truck fleets are likely to make a major shift to
natural-gas fuels and away from diesel over the next decade,
with FedEx Corp. a likely adopter, said Frederick W. Smith,
chairman and CEO of the shipping company.
In an interview with The Wall Street Journal, Mr.
Smith said he expects between 5% and 30% of US long-distance
trucking to be fueled by compressed or liquefied natural gas
over 10 years, as the cost of the trucks declines and fueling
stations become more common.
"If you'd asked me three years ago, I'd have said this is
very tough, because the infrastructure wasn't there," he
But now, the company is testing four trucks -- two using
liquefied gas and two using compressed gas -- and if those work
well the company will look to moving more of its 90,000
motorized vehicles to the fuel, Mr. Smith said, adding, "We'd
be remiss if we didn't."
Whether the company will make "a big conversion or wait
until the economics make sense," he said, will depend in large
part on the cost of tractor-trailer trucks. Right now those
that use liquefied natural gas remain significantly above those
that use diesel, he said, at about $175,000 to $180,000 versus
about $105,000 for traditional models.
Though Memphis, Tenn.-based FedEx is famous for its planes,
the company's ground-delivery business has been growing
rapidly, Mr. Smith said, as jet-fuel costs soared from 67
cents/gal in 2001 to more than $3/gal today. Hundreds of
FedEx's lighter vehicles are now electric or hybrids.
The company has been working to make its fleet more energy
efficient, announcing earlier this week that fuel economy for
its fleet of vehicles around the globe has improved by 22% from
2005. It plans to hit a 30% reduction from 2005 levels by 2020.
Last year it announced a similar goal for aircraft
Exports of natural gas, which require federal approval, have
become a contentious issue in Washington. Mr. Smith said he
favored exporting liquefied natural gas and even oil, as they
would give the US a lever to get other countries to open their
"We have so much gas," he said, "it would be foolish and at
the end of the day penny-wise and pound-foolish not to
The company, which burns 1.5 billion gallons of diesel and
jet fuel a year delivering freight and packages to 220
countries, isn't seeing any effect on fuel prices from the US
energy boom. Mr. Smith said he doesn't expect to see a decline,
as prices will remain set by global markets.
The growth in the global economy is likely to remain slow,
he said. But the energy boom is contributing to economic
activity around the US, he said, especially in energy-heavy
areas such as Texas' Permian Basin and North Dakota's Bakken
"We are delivering a lot of stuff up there to the Bakken for
sure," he said.
Dow Jones Newswires