Fleet Financing

Merchants Fleet goes fast and furious on electrification

Even before the COVID pandemic deepened America’s penchant for online shopping, New York City delivery drivers were dropping off about 1.5 million packages on New Yorkers’ doorsteps every day.

This daily avalanche of commerce has brought with it traffic jams and parking chaos bad enough that the New York City Council recently passed a bill intended to curb the fight for curbside space. But the ubiquitous boxy delivery trucks, which have descended on cities and suburbs across the country, aren’t just causing frustration for other drivers. They belong to a category of vehicles – medium and heavy trucks – that emit about 24% of transportation emissions in the United States, even though they represent only 5% of all vehicles on the road, according to the American Agency. environmental protection. .

Emissions from delivery trucks, as well as CO2 coming out of the tailpipes of other company vehicles, is a problem that Merchants Fleet aims to solve. The growing fleet management company has set itself ambitious electrification targets: 50% of its own fleet by 2025; and 50% of its customers’ fleets by 2030.

To get there, it pre-ordered 40,000 electric vehicles, committing about $2.4 billion to pay for them, Hari Nayar, director of electrification and sustainability at Merchants Fleet, told GreenBiz. That includes a total of 18,000 electric vans and midsize delivery trucks made by General Motors’ BrightDrop subsidiary, which has also signed major deals with Walmart and FedEx.

“We want to be the most electric fleet management company on the planet,” said Nayar, who joined Merchants Fleet just over a year ago. “When these vehicles come out, we want to be #1 or #2 online. We don’t want to be #25 online, we don’t want to be #15.”

From a sheer size standpoint, Merchants Fleet may need that kind of moxie to secure their place in line. A mid-sized North American fleet manager based in Hooksett, New Hampshire, the company manages approximately 160,000 vehicles, including not only work and delivery trucks, but also company cars used by sales representatives and other staff performing intensive work. By comparison, Element Fleet Management, one of the largest enterprise fleet managers, has over one million vehicles in circulation worldwide.

There is a very wide range of knowledge, preparation and experience.

And it’s not like delivery giants like FedEx and Amazon are taking a nonchalant approach to electrification. Amazon has ordered about 100,000 electric vans from Rivian, the bustling electric vehicle company it owns 20%, with the first 10,000 of those scheduled to ship this year. Additionally, the e-commerce giant has ordered “thousands” of new Ram ProMasters from Stellantis, another electric delivery van expected to launch in 2023.

In other words, demand for these vehicles exceeds supply, which Nayar expects to continue even as the number of fleet electric vehicles on the road increases this year. In fact, converting 50% of Merchant’s own fleet “is an achievable goal even today, if we wanted to do it,” he said. “However, that doesn’t make a whole lot of business sense, because the charging infrastructure to support that doesn’t exist in the United States today. … And a lot of the vehicles exist in PowerPoints on websites or in media reports, but people haven’t really experienced them.”

The company set the target for 2025 because that timeline aligns with the growth plans of the electric vehicle charging station businesses that Merchants Fleet has relationships with, Nayar added. And of course, Merchants is keeping tabs on the details of the Biden administration’s infrastructure plan, which includes $7.5 billion for charging stations.

Big influence, big shows

According to a report published by RMI in January 2021, corporate fleets can “have an outsized influence on the success of the electrification of the entire transport sector”. it makes the transition. It can also help streamline utility permitting and interconnection processes and influence broader trends towards electrification.

Beyond that, businesses urgently need to take a leading role in electrification, as commercial vehicles also have outsized greenhouse gas emissions, and those emissions have skyrocketed over the past 30 years. .

Between 1990 and 2019, emissions from medium and heavy trucks jumped more than 90%, the largest percentage increase of any major mode of transportation. The category includes vehicles used for other purposes, such as utility and service trucks, but growing consumption of goods, now ordered on a whim at the click of a button, was the main driver of the increase.

In total, the United States accounts for approximately 18% of global road freight CO2 emissions, the largest share of any country in the world.

However, not all fleet operators have ambitious electrification goals. In 2020, when RMI surveyed fleet managers from local and state governments, utilities, universities, private technology companies and delivery services for its report, the organization found that more than 80% had already started to electrify their fleets. However, not all of them were ready to hit the road running, Chris Nelder, one of the report’s authors, told GreenBiz.

“There is a very wide range of knowledge, preparation and experience,” he said. “For example, we talked to some fleet managers who knew nothing about utility interconnection. They had no idea that they needed to start talking to their utility a year or more before they needed of a significant power boost to their facility, if they were to install a bunch of charging stations for a new fleet of electric vehicles and then we talked to other fleet managers who are so far ahead of the game, they’re ahead of pretty much anyone else in the business because they’re running massive operations around the world trying to go electric.”

Merchants Fleet aims to be at the forefront of the spectrum.

The company recently launched Electrify Fleet Hub, a unique online information platform designed to help fleet managers through the process of transitioning to electric vehicles. The hub allows users to search for current and future electric vehicle models based on their specific needs; provides roadmaps for planning EV adoption, charging and infrastructure as well as funding sources; and includes other resources such as white papers, infographics, and webinars.

The company also influences its customers and its own employees by allowing them to test drive vehicles. “We try to facilitate vehicle pilots,” Nayar said. “We have one early in the first quarter of this year. We will have access to BrightDrop’s EV600 for some of our customers.

“One of the things that excites me the most is…that the first experience has to be the gold experience. That’s what’s going to drive adoption. And the first experience really has to be for the driver who’s driving the vehicle, not the C-suite the person who approved it, or the person who wrote the purchase order, but the person who delivers these packages, or the person who drives this school bus, or the operator of this crane or that forklift. That’s the person you have to target because if they like the vehicle, 90% of the job is done.”