Postal Service Seeks $5 Billion to Replace Its Aging Fleet

This story appears in the March 24 print edition of Transport Topics.

The chief sustainability officer for the U.S. Postal Service said the agency needs $5 billion to replace its aging delivery fleet to have any chance of meeting 2020 fuel-efficiency goals set by President Obama several years ago.

Thomas Day said Congress must provide funding to acquire new vehicles, because the Postal Service doesn’t have the financial means to do it. The vehicles will also need to be larger to accommodate a shift to packages from letters and travel farther to keep up with an expanding delivery network, yet somehow consume 20% less fuel.

“We have an aging fleet that is less fuel-efficient every year,” Day said. “Our only hope is the total replacement of the fleet.”

In an interview with Transport Topics, Day also discussed the potential of alternative fuels such as compressed natural gas to power vehicles, and he shared details of a program to help private mail haulers convert some of their trucks from diesel to natural gas.

The Postal Service operates one of the largest civilian fleets in the world with more than 211,000 vehicles, a majority of which are more than a quarter-century old.

“We don’t have the money to replace these vehicles, and if and when Congress does provide the money, it will take four to five years at a rate of 33,000 vehicles a year to replace the entire fleet,” Day said.

An executive order signed by President Obama in 2009 requires the federal vehicle fleet to reduce petroleum use by 30% by 2020.

However, the Postal Service set targets for itself of reducing petroleum use in postal vehicles 20% from 2005 to 2015 and a similar reduction by contract carriers from 2008 to 2020.

As of 2012, fuel use by postal vehicles is up 4.6% and fuel use by the contractor fleet is down less than 1%.

“The one thing we are not doing well is fuel,” Day said.

In January, Reps. Jared Huffman (D-Calif.) and Gerry Connolly (D-Va.) introduced the Federal Leadership in Energy Efficient Transportation (FLEET) Act of 2014. It would require the Postal Service to reduce petroleum consumption by 2% annually for the next 10 years and allow the use of Energy Savings Performance contracts to buy new vehicles.Under an ESP contract, the Postal Service could contract with a private company to acquire vehicles and pay for them with the money saved on fuel purchases over time. Similar contracts have been used by the U.S. Army and other agencies.

The act would also require all new postal vehicles to average at least 34.1 miles per gallon and emissions of carbon dioxide of no more than 250 grams per mile.

The Postal Service is planning to buy 3,500 delivery trucks this year to fulfill a prior commitment to a group representing rural mail carriers, but there are no plans to begin replacing the bulk of the fleet before 2016.

“If Congress wants to mandate new vehicles, it needs to find the money,” Day said.

Day said the agency has looked at leasing new vehicles to avoid having to come up with money to buy what the Postal Service needs, but with leasing the agency cannot take advantage of the tax benefits. In addition, costs are generally higher than buying outright because the agency keeps trucks in service for so long that there is usually no residual value to offset the cost of the lease.

At a research facility in Merrifield, Va., the Postal Service has tested a number of alternative fuels, including CNG, hydrogen, electric and propane. However, according to Day, none have proven to be suited to the needs of the Postal Service.

“CNG may be the best alternative with one caveat,” Day said. “There is no viable retail fueling environment. If we have to go 30 miles or more to buy fuel, we’re not saving money, we’re losing money.”

Day said the problem is magnified for electric and hydrogen-fueled vehicles.

In the 1990s, the Postal Service converted more than 2,500 gas-powered delivery trucks to run on CNG, but the companies that supplied the vehicles went out of business and it became difficult to maintain the vehicles because of a lack of parts. The current fleet of CNG-powered postal trucks consists of only several hundred vehicles in Texas.

In response to the suggestion by an Oklahoma-based group that the Postal Service convert its entire fleet to CNG and install fueling stations on postal property, Day said the idea is not practical.

For one thing, a retail CNG fueling station would have to have rapid fueling capabilities which can cost upwards of $1 million per installation, Day said.

In addition, most postal properties do not have room to spare, contrary to suggestions made by the group, called “the Mervan Project.”

“Our properties are not oversized,” Day said. “The back side is an active loading area and not very conducive to retail fueling. Plus we need to restrict access for security reasons. The front lot is for retail operations. It’s an interesting concept, but it’s not something that will work.”

Hybrid electric vehicles do work well, and get much better fuel economy, Day said, but they also suffer from a shortage of equipment and high upfront costs.

Tests of electric vehicles found deficiencies with batteries.

Based on the type of driving done by postal workers, Day said, batteries would have to be replaced every three to five years.

“Lithium ion batters are very expensive,” Day said. “It would be hard to recoup that investment.”