UPS makes US$100m investment in CNG vehicles

United Parcel Service Inc on Tuesday extended its commitment to compressed natural gas vehicles with a US$100 million plan to build 12 fueling stations and add 380 CNG trucks to its fleet.

The announcement comes as a sharp slide in the price of crude oil has hampered demand for alternative transportation fuels such as CNG.

But the package delivery company said in a statement that it is making a long-term investment, rather than planning around short-term fluctuations in fuel prices, because it owns all of its vehicles and fueling infrastructure.

Though the price of diesel fuel has dropped nearly 30 per cent in the last year, CNG prices have been relatively stable and are still slightly lower than diesel.

Diesel fuel averaged US$2.23 a gallon in January, compared with US$2.09 per gallon equivalent of CNG, according to data from the US Department of Energy.

UPS said the CNG stations will be built by TruStar Energy of White Plains, New York, while the truck tractors will be supplied by Kenworth, a division of PACCAR Inc.

UPS has steadily been increasing its use of alternative fuel vehicles, which now make up 6 per cent of its 100,000-vehicle global fleet.

Tuesday's announcement comes a year after UPS made an even larger expansion of its CNG fleet with 1,400 vehicles and 15 fueling stations.

REUTERS