Proprietary & Confidential TMC Engine Summit March 16, 2004 Steve Duley Vice President Purchasing.
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Transcript of Proprietary & Confidential TMC Engine Summit March 16, 2004 Steve Duley Vice President Purchasing.
Proprietary & Confidential
TMC Engine SummitMarch 16, 2004
Steve Duley
Vice President Purchasing
Proprietary & Confidential
Serving North America
DEDICATED
EXPEDITED - TEAMS
INTERMODAL
ONE-WAY VAN
BROKERAGE
BULK
SPECIALIZED
> > >
Proprietary & Confidential
Schneider National
$2.9 billion in revenue in 2003
Operate 12,000 tractors, 15,200
drivers, and 45,000 trailers with
20,800 associates operating in
28 countries
Purchase $1.5 billion in 3rd party
transportation from 1,300 carriers
Pay 20 million invoices totaling
$7 billion to 8,500 carriers
Commitment to superior
information and communications
technology
Truckload
Intermodal
Financial Services
Financial Services
Spot Brokerage •Glass Brokerage •
Tariff Based •
OptiModal •TruckRail •
One-Way Van •Dedicated •Expedited •
Specialized •Bulk •
Operating Services •Application Services •
SFI •INS •
Payment Services •New Ventures •
Brokerage
Logistics
Proprietary & Confidential
Engine Review
Post October 2002 –
January 2004
Proprietary & Confidential
Engine Evaluation Table – Last Update 1/19/04
Model Qty. Description Mfr Date
Apprx. Miles
Detroit Diesel
12.7L Series 60 1 Preproduction Pilot – Repower 11/01 Repower 400,00012.7L Series 60 2 Preproduction – Manufactured Pilot 03/02 275,00012.7L Series 60 5 Preproduction 08/02 290,00012.7L Series 60 48 Production 2/2003 02/03 255,00012.7L Series 60 1,000 Production – 6-10/2003 06/03 –
10/0350,000 – 150,000
MBE4000 5 Production 05/03 120,000
CaterpillarC12 Bridge 5 07/02 271,000
C15 Bridge 5 07/02 378,000
C15 Acert 2 Pilot – Manufactured 04/03 160,000C15 Acert 10 Preproduction – Manufactured 04/03 138,000C13 Acert 2 Pilot – Manufactured 12/03 48,000C13 Acert 10 Preproduction 12/03 47,000
CumminsISX 10 Production @ Kenworth 12/02 220,000
Proprietary & Confidential
Post October 2002 Engine – Evaluation Results
Purchase price over $5,000 per engine.
MPG loss 3-5%. (10 years of progress – lost!) Oil drain interval same as post 1998 engines.
One engine teardown @ 250,000 miles was normal.
Driver feedback – “acceptable – good performance.”
Reliability first 250,000 miles (30% life) is ok.
Some early failures of every significant EGR component i.e. VGT turbo,
EGR valve, VPOD, sensors, pipes, EGR coolers.
Concerned about operating costs/reliability as vehicle ages: Warranty ends.
More parts to maintain.
High cost parts.
More complex troubleshooting.
Significant improvements have occurred since 10/2002.
Proprietary & Confidential
Engine Component Price ComparisonComponent Pre Oct 2002 >Oct 2002 Labor Hours Labor Cost @ $75/Hr
Turbo $537 $1,330 1.1 $83
Water Pump $114 $240 3.4 $255
Fuel Pump $101 $110 0.8 $60
Air Compressor $381 $405 1.9 $143
Camshaft $474 $400 4.2 $315
Injectors (6) $200 $210 4.1 $308
Exhaust Manifold $137 $186 0.9 $68
Sensors $80 0.5 $30
Relative Humidity --- $80 0.4 $30
Turbo Speed --- $180 0.4 $30
Barometer --- $15 0.4 $30
Turbo Boost $51 $30 0.4 $30
Intake Air Temp $49 $5 0.4 $30
EGR Components
Turbo Actuator $252 $190 1.1 $83
VPOD Assy. --- $200 0.5 $38
EGR Cooler --- $560 3.0 $225
EGR Valve --- $970 1.5 $113
Cold Pipe --- $460 0.5 $38
Hot Pipe --- $30 1.0 $75
Sub-Total $3,296 $6,731
Oxy Catalyst (CAT Bridge) --- $1,400 1.0 $75
Proprietary & Confidential
Government Regulations Increasing Engine Costs
Post 2002 engine will increase operating costs by 2-3 cents/mile.
Oct 2002
Purchase price $4,500
Fuel MPG
Maintenance
Fuel Costs/Gallon
Total Operating
$5,500
$6,000
______
$11,500
Residual value reduction $4,000
Total Cost $20,000
NPV (6 years @ 8%) $15,000
Forecast Date 8/2001
Technology EGR
Total Cost of ’02 Engines
Proprietary & Confidential
Engine Review
2007-2010 Engine
Proprietary & Confidential
EGR with aParticulate Filter Approach
12
34
56
T
Intercooler
EGR Cooler
C
Catalyzed Particulate Filter
EGR Control Valve
Air to Air Cooler
Variable Geometry Turbocharger
Particulate Filter to be Integrated into the Vehicle Exhaust System
NOx Reduction with Increased EGR Rates
Proprietary & Confidential
Diesel Particulate Filter Concerns
Catalyzed Particulate Filter
Particulate Filter to be Integrated into the Vehicle Exhaust System
Initial and replacement price
(precious metals?).
Active regeneration process.
Maintenance interval.
Maintenance process.
No heavy truck experience.
Requires low sulfated ash oil
(possible unique oil).
Reduced life with LSD fuel.
Overall operating cost.
Proprietary & Confidential
Government Regulations Increasing Engine Costs
Oct 2002 1/2007 2007*
Purchase price $4,500 $16,000 $8,000
Fuel MPG
Maintenance
Fuel Costs/Gallon
Total Operating
$5,500
$6,000
______
$11,500
$7,200
$9,000
$5,100
$21,300
$7,200
$6,000
$5,100
$18,300
Residual value
reduction
$4,000 $5,000 $5,000
Total Cost $20,000 $42,300 $31,300
NPV (6 years @ 8%) $15,000 $35,000 $26,000
Forecast Date 8/2001 6/2002 1/2004
Technology EGR NOx Trap EGR/SCR
Total Cost of ’02 and ’07 Engines
* Revised 2/2004
Proprietary & Confidential
SNI View of 2007 SCR should be approved.
Must receive adequate representative field test engines by mid-year
2005.
Cost estimates are much higher than EPA’s estimate. EPA should reforecast costs.
A government funded financial incentive is needed.
Without a successful field test AND incentive. Significant prebuy followed by a long interval no/slow buy.
Cost/recovery challenge. Cumulative cost impact – i.e. health care, litigation, insurance, hour of
service changes, driver wages.
Raise prices – lose freight.
Transition – compete with old technology.
Support Clean Air “Win-Win” solution needed.
Proprietary & Confidential
How Long Can Fleets Slow/No Buy?Major Components
Service Life Without Rebuild Yr/1000 Miles
Rebuild Target Age Yr/1000 Miles
Rebuild Cost
Rebuild Extended Life Yr/1000 Miles
# Rebuilds Potential
Cab 8 / 1,000 6 / 750 $5,000 4 / 500 1-2
Major Elec Harnesses
10 / 1,200 6 / 750 $1,000 8 / 1,000 Unl.
Htr/AC System 6 / 750 5 / 600 $1,500 4 / 500 1-2
Engine 8 / 1,000 6 / 750 $7,000 4 / 500 1-2
Frame 8 / 1,000 6 / 750 $1,000 4 / 500 1-2
Transmission 10 / 1,200 None $3,200 8 / 1,000 1-2
Steer Axle 12 / 1,500 None $1,000 8 / 1,000 1-2
Rear Axles 10 / 1,200 None $3,500 8 / 1,000 Unl.
Total Cost of Rebuild
$15,000
Incremental Cost of 2007 Engine from pre-October 2002 $40,000
Incremental Cost of 2007 Engine from post-October 2002 $20,000 - $25,000