Being Green Doesn't Have to Cost a Lot of Green

Companies looking to operate more environmentally friendly fleets don't have to swim in a sea of red ink.

Adopting hybrid diesel-electric hybrid technology into their fleet operations can help food and beverage distributors, recyclers and waste haulers, construction and other companies demonstrate their environmental stewardship. Plus, the diesel-electric hybrid equipment can help reduce their fuel costs as hybrids consume less fuel than diesel engines.

For example, P&R Paper Supply Company is expected to save upwards of 30 percent on its fuel bill by using a Kenworth T370 hybrid leased from PacLease. The hybrid will also reduce its exhaust emissions of hydrocarbon, carbon monoxide and nitrogen oxide because it uses less diesel fuel. P&R Paper is using the hybrid truck to complement its Styrofoam recycling program.

The Redlands, CA.-based paper products supplier joined forces with three major food and foodservice packaging manufacturers - Dart, Genpak and Pactiv - to help sponsor the hybrid truck and facilitate the recycling program. Each supplier plays an active role in the generation and recycling of Styrofoam products. After Styrofoam cups, trays and containers are used at schools, prisons and restaurants, they're repacked in boxes and loaded into the hybrid truck and backhauled for recycling into other products.

Exhaust emission reductions could present additional revenue options for fleets if the American and Canadian federal governments approve proposed legislation creating an emissions cap-and-trade system in North America. That's because the legislation may allow companies exceeding their carbon reduction goals to sell credits to companies not meeting federal limits.

Many fleets are considering adopting hybrid vehicles, but questions abound about justifying the additional cost associated with acquiring the new technology. That can leave many wondering how they can afford to add hybrid trucks to their operations.

Acquiring them through full-service leasing could provide the answer. With a full-service lease, companies pay for the use of the truck - not the truck itself. This approach can often provide cash flow and operational advantages to ownership.

By conducting a lease analysis, PacLease specialists can help fleet managers and owners first determine if operating hybrid trucks is right for them. Then the specialists can analyze whether a full-service lease makes sense and how affordable the monthly full-service lease can be.

For example, operators of local or regional delivery trucks that run in stop-and-go traffic or travel less than 45 to 50 mph, like P&R Paper, can realize a 30 percent or more improvement in fuel economy with hybrid diesel-electric trucks. Whereas, utilities, agencies and companies operating medium duty trucks with equipment that draws power from the trucks' engine can realize as much as a 50 percent improvement in fuel economy.

Whether and how quickly operators realize a positive ROI from leasing hybrid trucks will depend on fuel economy, fuel prices, the length of the lease term and the number of miles their trucks travel.

With diesel fuel at $3 a gallon, we've shown that the impact of leasing and operating a hybrid truck over a 7-year term for fleets can mean paying an additional $95 a month over the cost of leasing and operating a similarly-sized and equipped standard diesel truck. But as diesel fuel costs increase, those companies could actually realize a positive return on investment through fuel cost savings.

By acquiring hybrid trucks through full-service leasing providers such as PacLease, fleets can gain other substantial benefits. They can, for example, be assured of receiving tax credits of up to $12,000 for each hybrid truck. There's no risk of having to wait for the federal tax credit to be processed by the IRS, because the lease rate already reflects the value of the tax credit.

While the tax credits sunset every year, the federal government is expected to re-establish them for the next tax year. Companies should discuss this with their tax advisors and representatives from a local PacLease franchise.

For those companies that operate in California, the California Air Resources Board (CARB) and local air quality management districts provide grants to help acquire cleaner burning vehicles. In addition, adopting hybrid technology can also help fleets meet CARB emissions requirements quicker because the fleets get double credit for replacing older, high polluting diesel-powered units with hybrids. PacLease can assist those companies in determining their qualification for those funds, and help companies develop an asset plan that meets CARB goals and timelines.

Fleets can also reduce their exposure to maintenance costs because PacLease handles all the maintenance on the hybrid. When they return the hybrid trucks at the end of the lease, they're also sheltered from fluctuations in the trucks' residual values. That's because with a full-service lease, PacLease determines that value at the beginning and factors it into the lease payments.

While full-service leasing has always offered companies benefits, including the ability to preserve their lines of credit for projects or other revenue-generating endeavors, it can also help make new technology more affordable.

If you're considering adopting hybrid truck technology into your operation, full-service leasing may offer the best way to do it.

Olen Hunter is director of sales for PACCAR Leasing (PacLease) in Bellevue, WA. PACCAR is a global technology leader in the design, manufacture and customer support of premium light, medium and heavy duty trucks under the Kenworth, Peterbilt and DAF nameplates. The company also provides customized financial services, information technology and truck parts related to its principal business.