Frito-Lay Puts a Charge Into Chip Deliveries
Frito-Lay plans to have the largest fleet of all-electric
commercial trucks in North America and is headed in that direction with
the announcement that it is putting five trucks on the road making deliveries
in New York City beginning this month.
The salted snack manufacturer plans to
have 21 electric trucks operating this year in Canada and the U.S. with another
150 to follow next year. Frito-Lay currently has six vehicles operating in
Canada. The trucks, designed by Smith Electric Vehicles, can go up to 100 miles
on a charge and generate no tailpipe emissions.
Frito-Lay also plans to operate
electric trucks in Columbus, Ohio and Ft Worth, Texas as part of its pilot
program.
"Frito-Lay has implemented bold goals for reducing our use of key resources
such as fuel to ultimately help us reduce our overall environmental impact,"
said Mike O’Connell, director of fleet capability for Frito-Lay North America,
in a press release. "There are real economic and environmental benefits
to electric trucks. Once the planned 171 electric trucks are deployed, we will
eliminate the need for 500,000 gallons of fuel annually. Each truck emits 75
percent less greenhouse gases than a conventional diesel truck."
"Frito-Lay’s
truck program is a significant step forward in the advancement of electric
vehicles," said Bryan Hansel, CEO of Smith Electric
Vehicles. "Businesses
will improve their environmental impact and see cost savings with the reduction
of fossil fuels. More importantly, the insights gained operating in urban
environments will be invaluable in extending electric vehicle technology to
consumer markets in the future."
Frito-Lay is far from alone in attempting
to green its fleet. Many other companies are looking to improve fuel efficiency
and reduce greenhouse gases through a variety of means. Safeway, for example,
went to a completely biodiesel fleet in 2008. At the time, the company estimated
it would "reduce carbon dioxide
emissions by 75 million pounds annually, the equivalent of taking nearly 7,500
passenger vehicles off the road each year."
Discussion Questions: What do you think will be the fuel choice of the
future for U.S. retail distribution? Do you see a transition to alternative
fuels happening in the near-term?
The lowest cost fleet fuel will win, at least in the short term. Some companies may use alternative energy sources to generate good will (and maybe some savings) but they will only hit scale when the economics work out.
Electric vehicles for local deliveries make sense for wholesalers/retailers, both from a financial practice of long-term savings, and the carbon footprint. The technology has been available for some time.
It will be the better financed, larger firms that have significant fleets, like Frito-Lay, that will be able to adapt to these changes. Useful life, depreciation, and tax considerations have to be put into the equation. Infrastructure, and capability of fleet manufacturers to ramp up production and delivery will be a part of the decision making process to shift as well.
This is a tactical shift that will take 10 years plus to move to “primary” status.
Greening one’s distribution fleet, assuming there no overriding political consequences, will occur in direct proportion to the increased greening of one’s bottom line.
In 3 years the entire New York City Taxi fleet of 30,000+ vehicles will be electric or hybrid. All new buses are electric or hybrid. Those actions alone will have very positive effects on the local environment. But, it will also have positive effects on the costs.
If the 20th Century was the “American Century,” the 21st century will belong to the country that is the most energy efficient. It will be similar for companies. Petroleum based fuel will be a costly laggard. Frito-Lay will be the first of many to make this transition. What is unfortunate is that these huge alternative fuel fleets will not be manufactured in the U.S.
This gives new meaning to the notion of “distribution power.”
All fleet operators should take notice of Frito-Lay’s action, especially those covering denser urban areas. Yes there are capex challenges, so don’t expect to see overnight sweeping conversion to all-electric. And the net benefits to the “carbon footprint” are not exactly crystal clear once exotic manufacturing and electric power generation impacts are figured in.
But this is a promising example of responsible corporate management. I hope the experiment delivers a financial ROI that encourages its expansion. I also hope they don’t have to buy all the batteries from the Chinese.
Frito-Lay is getting good publicity with this. So are and will the others making this a part of their future operating budgets. My concern is what the true cost will be when the bean counters get finished analyzing it. That will be the determining factor in delivery method selection. After all is said and done, do we care how it gets to the shelves or how much it costs to purchase from the shelves?