CLEVELAND FedEx to test hybrid system

FedEx is considering switching its delivery trucks to hybrid engines.
CLEVELAND (AP) -- A deal to provide a mechanical system for 20 delivery trucks is about to put Eaton Corp.'s diesel-electric hybrid technology to the test.
At stake is the potential for the Cleveland-based industrial technology corporation with about $7 billion in annual sales to eventually power a FedEx Express fleet of 30,000 medium-size delivery trucks.
Meanwhile, FedEx, based in Memphis, Tenn., sees the deal as a way to cut fuel costs by as much as 50 percent. Environmental Defense, a New York-based organization that coordinated the deal in partnership with FedEx, anticipates fuel conservation and cleaner air.
On-the-road testing of the FedEx OptiFleet E700 hybrid delivery trucks is to start in January. The trucks will be based in four cities. FedEx has not disclosed the locations.
"A lot of these delivery trucks are right in our neighborhoods," said Alexander M. Cutler, Eaton's chairman and chief executive. "They make noise, they pump out emissions, they're sitting in your driveway. It becomes a very personal issue, as well."
Strong potential
Hybrid technology -- which also has been tried on a small scale by FedEx rival UPS -- offers potential for substantial growth in Eaton's $1.2 billion truck division, now smallest among the company's four segments. The other divisions are automotive, fluid power and electrical.
"There are somewhere between 120,000 and 140,000 medium-duty trucks produced per year in North America," Cutler said. "If you assume you can have lives in these trucks between five and eight years, it gives you a feel for how large the potential fleet is over time."
Delivery trucks in the United States are almost all powered by internal combustion diesel engines.
The Eaton hybrid is a diesel engine equipped with filters to limit emissions while working in combination with an electric motor linked to a battery. The computer-controlled system saves the driver from deciding when to switch between diesel or electric power.
FedEx spokesman Ed Coleman said the fleet could be replaced over the next 10 years.
Undetermined cost
Neither Eaton nor FedEx has disclosed its costs.
It's still too soon for investors to get excited about whether the hybrids can improve Eaton's earnings or stock performances, said Jeffrey Hammond, who researches Eaton for McDonald Investments.
"Eaton has always been willing to put the investment part up front, understanding that there could be a period of time when it doesn't really move the [earnings] needle but understanding the potential," Hammond said.
Hybrid technology research has been ongoing for years, but applying it commercially has depended on making components -- such as an electric motor's battery -- more dependable and less expensive, said Giorgio Rizzoni, director of Ohio State University's Center for Automotive Research.
He said FedEx can expect fuel savings, but maybe not 50 percent as is hoped.
"If they can achieve 50 percent improvement in fuel economy, I'll tip my hat," Rizzoni said. "The system has to be used in the driving cycle just the right way."
Hybrid's history
The technology's benefit occurs best in stop-and-go typical of delivery trucks.
UPS began its own hybrid electric vehicle program in 1998, using PEI Electronics hybrid technology.
The first hybrid truck went into service in 1999 in Huntsville, Ala., on a 31-mile route with 158 daily stops, UPS spokeswoman Paula Smith said.
"We have invested a lot of time and technology in working out the issues," she said. "It's not a race."
Besides fuel efficiency, Environmental Defense said Eaton's system met its goal of decreasing air pollutants by 75 percent to 90 percent.