Cold-chain operators are facing a huge rise in costs now red diesel’s subsidy has ended
Writing in the April issue of Cold Chain News, Jack Carfrae reveals the details and the alternatives.
You may have noticed that running a haulage company is not cheap, and if you’re in the temperature-controlled business with diesel-powered transport refrigeration units (TRUs), it just became lot more expensive.
Your typical TRU has a standalone engine which, until this month, would run on red diesel. That’s taxed at 11.14p per litre but, in its March 2020 Budget, the government announced plans to ban red diesel’s usage across most sectors from 1 April 2022 as part of its environmental strategy.
At the time of writing, the average price per litre of white diesel was 178.97 pence, according to the RAC. That’s pump, not bunkered, but either is hugely more expensive than red, the average cost of which was 79.09p per litre in February, according to the Agriculture and Horticulture Development Board.
White diesel’s levy is 57.95p per litre, which means TRU operators now face an additional 46.81p per litre. We calculated that the move would add £6.53 to average daily running costs and approximately £100m to the industry’s estimated 40,000 TRUs. That calculation was made before the Russia-Ukraine conflict caused prices to surge, sparking discussions about diesel rationing.
Prior to the Treasury’s announcement, the Cold Chain Federation consulted with the government about a longer-term plan to wean operators onto cleaner alternatives. “We were in discussions with the government about some form of roadmap that was five-to-10 years long,” says Cold Chain Federation chief executive, Shane Brennan, “it’s a shame, and it set us back at the time, because we were making really good progress on a kind of voluntary partnership approach with a terminal date for red diesel, but with a number of activities going on before that to help the operators.”
The federation’s 2021 report – Shaping the Cold Chain of the Future: The Road to Net Zero – explained how the industry could, with Government support, actively move towards to a clean future. That support has yet to materialise, and it’s yet another thing that’s irking CCF members. “Red diesel is going away from this sector but… there are no grants to support the shift to alternative technology. It’s just a hit to the operator’s pocket,” adds Scott Dargan, Carrier Transicold’s managing director for the UK and Northern Europe.
Fuel theft is reportedly spiralling, too, and white diesel’s greater saleability makes it a more attractive target than red. Speaking to the Sunday Times in March, the National Vehicle Crime Intelligence Police Service said fuel theft accounted for 38% of all cargo crimes – almost double that of a year ago.
The government’s targeting of red diesel is understandable against the wider environmental agenda and some of the emissions figures associated with TRUs. A September 2021 report by the Zemo Partnership (formerly the LowCVP) and Transport Scotland did exactly as its title – Emissions Testing of Two Auxiliary Transport Refrigeration Units – suggested. It concluded that all auxiliary TRUs in Scotland produce annual averages of 14-43 ktCO2e greenhouse gases, 104-311 tonnes of NOx, three-to-nine tonnes of particulate mass and a particulate number of 11-32×1021. In short, pretty mucky.
However, Brennan believes such analyses don’t accurately reflect real-world applications. “The fridge is only operating to get the environment it is chilling down to the temperature it needs to be, at which point it turns off – so it’s not a continuous cycle. I don’t want to overstate it, because ultimately, the future of these fridges is not diesel. Nonetheless, the critics are absolutely vociferous about it, and tend to exaggerate the output based on unrealistic kinds of modelling.”
What are the alternatives
Diesel TRUs may be the industry standard but there are other, cleaner options, such as alternator- and pump-based units – common among lighter commercial vehicles – and fully electric systems.
Manufacturers claim some alternator and pump units will pay for themselves quicker than you might think, because of the lower maintenance and running costs.
“It’s kind of a misconception that it takes a long time to get return-on-investment,” explains Jon Jerrard-Din, UK area sales manager at Thermo King, referring to its alternator-based Frigoblock units, “it can be as short as 18 months, and it’s rarely more than into the third year. The vast majority of operators run them for eight-to-10 years… [and] the unit costs the same to maintain when it’s eight years old as it does at one and two years old.”
The downside with such systems, according to Brennan, is the manual aspect of hooking them up to the tractor unit. “There are differences between the connections for different types of manufacturers [and] you’ve also got to make sure the driver remembers to plug that thing in.”
Fully electric TRUs are in their infancy. Carrier Transicold launched its Vector eCool system in October 2020, which it claimed at the time was “the first fully autonomous, all-electric engineless refrigerated trailer system”.
It converts kinetic energy from the trailer axle and brakes into electricity, which is then stored in a battery pack to power the refrigeration unit. One such model was fitted to a Gray & Adams demonstrator trailer last year and, in December, refrigerated operator Samworth Brothers Supply Chain fitted six to its trailers after a four-week trial with the demo.
Fully electric units are as good as it gets on environmental grounds, but they are not cheap to buy. Carrier says the operating costs, at least, are less than those of a diesel unit, but price aside, Brennan claims demand is outstripping supply – yet another obstacle for keen operators.
A further alternative to the status quo is Hulsteins’ Ecogen range, which effectively converts existing diesel TRUs to electric. The systems run off the engine’s power take-off (as do some other pump-driven units, such as Carrier’s Eco-Drive), they generate 400 volts and connect to the fridge motor via a five-pin plug.
“Fit one to a tractor unit, and every trailer it couples to, it turns into an electric fridge,” explains UK managing director, Graham Usher, “in terms of fitting, the cost is about £16,500, so it’s about £300 per month over a five-year period, including maintenance.”
The unit will allegedly connect to more or less any existing TRU and, accounting for the tractor engine’s work to power it, it’s said to generate a 75-80% saving on diesel.
TRUs can even draw their power from solar panels, which is exactly what Sunswap’s Endurance system does. A series of panels fitted to the top of the trailer supply the unit with 65% to 80% of the necessary charge, according to the company, while the remaining juice can be pulled from the mains when the truck and trailer are parked up.
Running costs apparently total 10% of a diesel equivalent, and the company claims it’s the “greenest and most cost-effective TRU on the market”.
Last are cryogenic systems, which haven’t taken off in the UK due to the lack of infrastructure, but have seen success in Scandinavia, where supplies and logistics are more established, and they’re certainly environmentally friendly.
“We’ve had a cryogenics business in operation now for about 20 years,” says David O’Gorman, Thermo King’s regional director for North and Western Europe, “we use liquid CO2 that’s recycled from other industrial manufacturing processes, for example, from factories that produce fertiliser or animal feed.
“Instead of the CO2 being exhausted into the atmosphere, it’s recovered, recycled and cleaned, so we give it another lease of life through our refrigeration system before it eventually enters the atmosphere. It’s very successful, and has been highly adopted in Scandinavia in particular, just because of geography – the network and the infrastructure is very well developed.
“There have also been a lot of subsidies around the green message in Scandinavia – Denmark, Norway, Finland etc – but the challenge that you face [elsewhere] is the investment in the infrastructure. You need a dedicated CO2 filling station and a dedicated supply of CO2, and it’s something many people don’t see the value in.”
Infrastructure considerations also apply to the innovative zero emission refrigeration system provided by Clean Cold Power. The Croydon based engineering research, design and implementation SME is working on international projects to prove that their liquid nitrogen energy source solution can replace diesel and provide an alternative to battery electric systems with its own unique strengths.
Nick Arden, project manager, Clean Cold Power, said: “The scale of liquid nitrogen infrastructure planning feasibility, cost and site implementation work is arguably easier than placing a diesel tank in the ground or the complications with obtaining a reliable and powerful enough electrical charging supply to site.”
Looking Ahead
The big question remains as to whether the future is one of innovation and market drivers or regulation, and it is perhaps when we look further afield to the West Coast of the United States we see a glimpse into the future.
The California Air Resources Board has recently agreed a legally enforced phase out of diesel refrigeration units requiring operators to replace 15% of their units every year starting in 2023, failure to do so comes with operating fines and registration consequences. Brennan says: “Whilst we don’t expect the same rules to be brought in here tomorrow, this idea of controlled phase out of units is exactly the kind of action we can see coming next for our industry.”
“No one should see red diesel changes as the end of the matter when it comes to the pressure to phase out diesel, and the businesses that plan for it now will be best prepared for future change.”
