SPECIAL REPORT 1/3. Road transport costs have risen dramatically over the last year, driven by the soaring prices, that of diesel but especially that of gas. A trend that is reshuffling the cards of energy transition.
Road hauliers are struggling for air. The sharp rise in energy costs over the year put their industry under immense pressure. In its latest short-term survey on the "Economic Outlook and Costs of Road Transport", published on 19 October 2022, the CNR (National Road Committee) indicates an overall increase in costs over one year of 17.2% in France for long-distance diesel transport and 16.8% for regional transport. The increase is even more violent for those who opted to run on gas, reaching +47.9% for LNG (long-distance) transport and +47.0% for CNG (regional) transport.
A Feeling of Betrayal for Gas Pioneers
This increase is mainly driven by the rise in fuel prices. The CNR indicates a year-on-year increase of 46.3% in professional diesel fuel (September 2021/ September 2022), but more importantly a rise of 147.2% for NGV (August 2021 / August 2022), excluding an exceptional State aid of 0.15 euros/l for diesel and 0.21 euros/kg for gas.
The shock is all the more severe given that the development of gas truck fleets has so far been one of the few tangible alternatives that comply with the European Commission's decarbonisation objectives of road transport under the Green Deal. The surge in gas prices is severely penalising those who have accepted to play the energy transition game by starting to diversify their fleets, despite the additional costs.
This situation is widely observed throughout Europe. In Germany, the trade association BGL has sounded the alarm. “The companies most at risk of insolvency are those that have largely reduced their fleet of diesel trucks in favour of LNG trucks. These companies have followed the encouragement of the State and taken the risk of betting on the only alternative available on the market for diesel trucks. If they do not receive help, they will pay with their lives for their work as a pioneer in climate protection in the logistics sector," says the BGL in a document published on August 24. The additional operating cost of an LNG truck is estimated at €9,360 per month as of September 2022, based on an average mileage of 13,000 km. In Poland, the carriers have also called on the government. In a letter addressed to the Prime Minister on 19 September, the TLP (Transport Logistyka Polska) stressed that "without the urgent launch of appropriate government support for the sector, Polish road hauliers will lose in the coming years their long-established competitiveness in the international transport services market".
This Polish trade association goes even further: it claims that without this aid, the sector will be forced to stop the planned investments in modern and environmentally friendly solutions in the framework of the European Green Deal for exemple. A clear threat to the road transport decarbonisation targets set by the European Commission.
The model of the Natural Gas trucks called into question
The inflationary environment is straining carrier/shipper relations. The carriers manage as best they can to integrate their diesel indexing clauses and do not hesitate to choose to stop working with clients who refuse to accept them. On the other hand, relations are much more tense for hauliers with a fleet of gas vehicles. "On the basis of current gas prices, the NGV economic model is no longer viable, because until now intensive use of gas trucks has made it possible to offset the additional cost of purchasing vehicles," underlines Jean-Michel Mercier, Director of the Industrial Vehicle Observatory (OVI) at BNP Paribas Rental Solutions. For the moment, only the argument of "Crit'air 1" certificates remains, as these will soon be mandatory to enter the Low Emission Zones (LEZs). But at what cost?
A retailer such as Monoprix, up until now highly invested in NGV transport to deliver its city-centre stores, is speculating. “We have real questions that are linked to the price of alternative fuels. We have been investing in gas trucks for years now and today the price of fuel has been multiplied by 5. We are having real difficulty in maintaining activity with these vehicles, but they are the only ones who can enter the LEZs, apart from emerging solutions such as biofuel B100 or electricity, which are not yet mature. We feel we are trapped having invested in gas, with delivery rounds that are costing 50% more and there is a real temptation to return to diesel," explained Cédric de Barbeyrac, Monoprix's director of transport, during the 2nd Interlud meeting that took place in Paris on October 4.
Although Cédric de Barbeyrac announces that he intends to "soldier on", the current situation has clearly put a stop to new orders for gas-driven trucks. "At the moment, all gas truck orders are stopped," admits Thierry Archambault, Deputy Chairman of the CSIAM (International Automobile and Motorcycle Trade Union Chamber), which represents the main manufacturers of heavy goods vehicles in France. These manufacturers argue for a decorrelation of the prices of biogas and gas, in order to allow this sector to get out of the doldrums.
An inexorable energy transition
Over the years, under societal and regulatory pressure and sometimes out of conviction, the road freight transport sector has come around to the idea that energy transition is a necessity. The willingness to invest is even quite widespread. But it faces a lack of operational technical solutions and the fear of carriers betting on the wrong horse. In a low-margin sector, it is understandable to see this reluctance to invest in technologies that are not guaranteed to produce the desired effects. The shock suffered in 2022 by the pioneers of gas may, as such, leave its mark.
As a result, the sector no choice but to work its way forward on the path of energy transition with a certain lack of visibility. Indeed, as we will see in the second part of this study, the pressure, whether it comes from the regulatory framework or the market, is increasing. There is some good news, however, and this will be the subject of the third part of our study: in recent years, there has been an acceleration and multiplication of technological innovations.
To voice this confidence in the sector's ability to adapt and overcome hazards, nothing beats the experience of a professional. Specialised in transport and refrigeration logistics since 1968, the Delanchy family group, originally from Britanny, now counts around forty gas-powered vehicles out of the 1,000 that make up its fleet. "We are awaiting 10 more vehicles, which were already on order, but we have currently put this energy on stand-by for 2023," says Nicolas Muet, External Communication and Partnerships Manager for the group. On the other hand, this carrier is beginning to turn to electric motorisation, and already has 3 non-articulated trucks in its fleet and 10 others planned for 2023, assigned to the shortest runs, taking into account their autonomy and the consumption for the refrigeration unit. "The cards have been reshuffled following the rise in gas and diesel prices. Even if it costs more than traditional solutions, new energies, especially electricity, will be increasingly profitable given the rise in fuel prices," already predicts this business leader.