UPS Invests Heavily in Alternative Fueling Solutions

Fleet executive shares UPS vehicle and energy strategy at FUELS2019.

May 24, 2019

DALLAS–UPS announced an agreement with Clean Energy Fuels Corp. this week to purchase 170 million gallon equivalents of renewable natural gas (RNG) through 2026 and reduce greenhouse gas (GHG) emissions by more than one million metric tons, a significant investment for UPS’s diverse fleet of 80,000 compressed natural gas, hybrid electric, battery electric, liquified natural gas, hydraulic hybrid, composite diesel, ethanol and propane delivery trucks and vehicles.

Mike Casteel, UPS director of fleet procurement, shared at FUELS2019 the company’s new commitment to use RNG—the largest commitment by any company in the United States to date—but also the long-term goals and strategies for UPS within the alternative fueling and vehicles market.

For the past 12 years, Casteel has been instrumental in advancing fleet procurement responsibilities for UPS in the United States and Canada, as well as alternative fuel experiments and deployments. “There has to be a return on investment,” he said, noting that sustainability is also an important consideration from an environmental and economic standpoint.

UPS has used more than 28 million gallons of RNG in its ground fleet since 2014, and RNG is a key part of UPS’s strategy to increase alternative fuel consumption to 40% of total ground fuel purchases by 2025, supporting the company’s efforts to reduce GHG emissions of its ground fleet 12% by 2025.

“Since RNG is supported by existing national infrastructure used to transport natural gas, it’s a winning solution that will help UPS to reach our ambitious sustainability goals. At the same time, we hope our unprecedented seven-year commitment serves as a catalyst for wider adoption of RNG by other companies,” Casteel said.

Investing in natural gas at UPS continues to prove successful. Casteel noted the truck performance is positive, and that costs to maintain vehicles are measurably equivalent to diesel-powered trucks. Investments in electric also are proving successful for vehicles that serve urban environments. He suggested EVs are efficient options for shorter ranges in urban markets, such as the 65- to 100-mile routes. UPS’s ability to electrify fleets is a strong indicator to other transportation leaders that EV technology is viable and scalable. For rural routes, UPS relies heavily on propane, which has a great emissions profile and lower-energy content. 

“We can be a trendsetter,” said Casteel in respect to adopting alternative fuel and energy sources and reducing the environmental impact, which is also positive for the UPS brand. 

Amid long-term lack of clarity around the Renewable Fuel Standard and low carbon fuel standards, Casteel suggested that UPS will continue to invest, noting that growth options and going to market strategies are not driven by government regulations that don’t have an established sunset provision.

Moving forward, home delivery is growing among consumers. Casteel noted that the rise of single-package delivery could drive UPS’s electrification strategy with smaller vehicles making more frequent stops.

The fact that UPS has invested in so many different types of alternative vehicle technologies is also a strong indicator of the importance of ensuring that all types of cleaner fueling options have a place in the market.