SEASON THREE: EPISODE TWO

HOW MUCH MORE JUICE CAN BE SQUEEZED OUT OF THE AERODYNAMICS LEMON?

Sophisticated fleets have already taken advantage of the low hanging fruit - sideskirts, trailer tails, and OEMs have made their tractors more streamlined. So, our host wonders, what's left? How much more is possible? Can trucking businesses still make lemonade by adopting new practices? Or is this field just out of juice?

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Episode Transcript

Dan: From Transport Topics in Washington D.C. This is RoadSigns. Here is your host, Seth Clevenger.

Seth: Thank you for listening to RoadSigns, the podcast series from Transport Topics that explores the trends and technologies that are shaping the future of trucking. As we all know this industry has been on a steady march toward better fuel efficiency and lower greenhouse gas emissions. And one key component of that journey is aerodynamics. Modern on-highway tractors have become increasingly streamlined and we've also seen trailer side fairings really catch on in recent years. But the opportunity doesn't end there. Fleets can go a lot further through a holistic approach that improves airflow from the front bumper to the back of the trailer. One factor driving this push for better aerodynamics is the federal government's Phase 2 greenhouse gas rule. The trailer portion of that regulation has been put on hold, and that remains a source of uncertainty for the industry. But what is certain is that fleets will continue to seek out ways to save fuel and reduce costs. But how will they achieve those targets through aerodynamics? Especially if they're already using late-model equipment and trailer skirts. What technologies and strategies will drive the next steps in streamlining the tractor-trailers of tomorrow? To help answer those questions I recently sat down with several industry leaders in this field during the Technology and Maintenance Council's 2019 annual meeting . Later in the program we'll hear from Mathieu Boivin president and CEO of Transtex, a supplier of trailer side skirts and other aerodynamic systems. But we'll start with a conversation rerecorded with another aerodynamic supplier and an executive at a major fleet. Let's go to the interview now.

Seth: We're here at TMC’s annual meeting in Atlanta and we're pleased to welcome Josh Butler who's co-founder and president of FlowBelow Aero, supplier of aerodynamic systems for tractors and trailers based in Austin, Texas. Also joining us is Kyle Wallace who's senior director of business intelligence and analytics at Navajo Express out of Denver, Colorado. Thank you guys both for joining us. So traditionally we see a lot of focus go to the trailer in terms of aerodynamics, side skirts in particular have been a major focus but we've also seen companies like FlowBelow come along and pay a little bit closer attention to the tractor as well in your case the FlowBelow, the company’s first and best known product is the Tractor AeroKit which includes fairings for the tractor’s tandem axle. Josh. take us through the opportunity you saw on the tractor and why you decided to focus on that particular niche.

Josh: Well Seth it was simple for us because when we first started our company we were starting to look at the tractor and the trailer together. And obviously our attention was first on the trailer and we saw that everybody, there's probably 10 companies making side skirts. And I talked to a fleet that had, you know, he had an extreme ratio but it was 5 to 1 ratio trailers to trucks. And he told me, “I don't really ever want to put anything on my trailers again. I don't get the return on investment that other fleets get. But if you make something that you can put on the truck that would work for me.” Of course the truck OEMs do everything they can for aerodynamics but they move relatively slowly and the back area of the truck, where our product mounts, is kind of the area which they've always ignored. Let's say they haven't focused on from the design standpoint because they just purchased components like axles, wheels, hubs, fifth wheels, all of those pieces are components supplied by other companies in each of the OEMs just buys them, assembles them at the plant so they never really addressed the area behind the wheels around the wheels. And that's what we just latched onto and say, look there's opportunity here. Nobody's doing anything about it. We filed patents and basically captured that niche by protecting the intellectual property for it, developed the product spot in the market you know. Navajo wasn't our very first customer one of the first mainstream customers I'd say so not an early adopter but once we got past that phase, start to work with large fleets. You know we began working with Kyle Wallace at Navajo Express. They've deployed the product and he's seen how we've improved it over the years and made it better and now it's factory install. So we've gone all the way from just an aftermarket accessory to an OEM first fit. And that's been really exciting for us.

Seth: So Kyle, I wanted to get your thoughts and you know you're an adopter of the FlowBelow system. You guys have been using aerodynamics in one form or another for quite awhile. Could you take us through your history with this and the types of systems that you've spec’d on your equipment and what you've seen.

Kyle: Yeah at Navajo we really try and take a holistic approach to making the most efficient tractor-trailer combination that we can. And so I've looked at many different varieties over the years but really what drew me to the FlowBelow initially was the fact that the ROI works out very well and the fact that it is on the tractor that is producing more revenue. Tractors are always running compared to a trailer where it's harder to work out an ROI on a trailer product because you're going to have more downtime and not be producing as much revenue with it. So with that it was really kind of where we decided give Flow Below a test because I mean there's certain major points on a tractor-trailer where you're going to lose aerodynamic efficiency one being the trailer gap which has a refrigerated company. We can't do very much about that, but the other being on the drive axles and going onto the front of the trailer there then obviously the skirts and everything else that goes along with the trailer itself. And I mean everybody has different kinds of skirts. There's some that are better than others in my opinion and some they're a lot more durable than others in my opinion. So it's also just kind of got down to a preference at this point when it comes to that. But when you're looking at something on the tractor like FlowBelow it's you know they stand out as their own as an independent company that figured out the engineering themselves without, you know, basically piggybacking on everybody else.

Seth: Sure. Now a question I want to ask both you guys. Tractor-trailers today are far more aerodynamic than they were say decades ago or even just a few years ago really. I mean you see the advancements that the OEMs have made to make the on-highway tractors more efficient. And we've seen all these systems that can make the trailer and the tractor more streamlined. So the question is at what point do we reach a point of diminishing returns in terms of aerodynamics? Is it getting tougher to find that next level of incremental improvements in aerodynamics? and how much further can we go to find more efficiencies through aerodynamics? I'll start with you Josh.

Josh: Sure. Well I still think at this point there remains significant opportunities especially when you look at the adoption of the technologies. Of course if you adopted everything available on the market today. There would probably be diminishing returns. But if you look at what's actually been deployed, it's not the case today. The vast majority of fleets in my opinion, I don't have the exact data to support this, are usually just running one aerodynamic solution on the trailer. Usually just skirts mostly because that's required but also because the other products may be closer to the diminishing returns category in their minds at least. So at some point it puts more pressure on the cost side for these guys. You know for Navajo to afford to add another piece on the back end which does less fuel savings than a trailer cost more. Well it's like, well okay. The payback still has to be there. At least that's what I've been told on the fleet side, talking to these folks, is that yes that opportunity remains but it's the low-hanging fruit is gone. It's not diminishing returns but it's like you still gotta evaluate the business case every time; the skirt area, the tail area, the gap area, and around the wheels of truck and trailer I think still remain the biggest areas to focus on. I don't think that's going to change anytime soon until all those areas have been completely optimized for fuel savings in aerodynamics.

Seth: Sure. And Kyle I want to get your take on this as well. Do you see a point where it becomes harder and harder to find those incremental improvements? Or do you still see a lot of opportunity to do more with your equipment and in terms of aerodynamics?

Kyle: Well I mean I think we'll always try to be on the leading edge of it, no matter which path we're following at the given time. But I do think there is a lot of opportunity left, as Josh said. But a lot of this has to come back down to the OEM manufacturers pretty quickly here. I mean if they're not going to lobby the FMCSA about say, going to camera side mirrors or something like that what these other opportunities either via regulation or via the OEMs has not been really available to change from any third-party provider than it's going to come to a point that it's for a fleet side. It's ROI is really what it still comes down to at the end of the day.

Seth: Sure and the side mirrors example is that is a very good one. You think about the opportunity to save by moving the cameras. And that's something that we have seen some movement, FMCSA moving toward allowing that.

Seth: Also just looking at the systems that are available in the market today you're not really looking to the future but just looking what you can use as a spec option or aftermarket system now. Just how much opportunity is there just to improve industrywide fuel economy simply by taking advantage of the technology that is already available? Josh, your thoughts on that?

Josh: Well I think there's huge opportunity and NACFE best demonstrated that in my opinion with Run on Less program last year showing 10.1 MPG was possible. And this is 2017. So it's not unheard of these days for fleets to have a couple of drivers that are getting 12 even sometimes scratching 13 miles per gallon. And this is all with commercially available technologies. So I think it's very much doable, there's still big opportunity. It's not just aerodynamics though it's also driving habits and electronics, engine technologies, powertrain technologies. It's the combination of all of that. And I think in my opinion, the best way to implement some of these things is to do those in parallel the training that goes along with implementing a device is useful because you get buy-in from the end user the drivers, the mechanics are all bought into it and they're not working against the grain so to speak.

Seth: OK. And Kyle from the fleet perspective what are the main factors that really drive you toward just looking for ways to be more and more efficient? Of course every fleet out there is trying to save fuel and trying to reduce costs but do you also hear from your shippers that they want to see greater efficiency as part of their strategy as well?

Kyle: As one huge push that we've been doing the last several years with our shippers is to provide them with a CO2 reduction throughout putting a bigger payload on fewer trucks for them per year. So by adding either specialized equipment as far as 57-foot trailers or super set combinations of 48- to 42-foot trailers or ultra lightweight daycabs that we could put up to 55,000 pounds on a standard 53-foot reefer trailer now you know just offering those type of things to our customers and being creative about it and getting with both our third-party vendors and our OEMs and you know, really pushing the boundaries of what we can spec with the OEMs is really where we've been having a lot of success and you know we got recognized last two years in a row as a Excellence Award recipient from the SmartWave people and that's given to about the top 2 percent that are applied to it. So.

Seth: Got it. It's very interesting also to hear that there are some of your shippers are looking at this not only from a pure MPG perspective but to the broader efficiency looking at operations and ways to increase your payload and be more efficient that way as well. You know, if you're really looking at a carbon footprint perspective. You know, when we look at the regulatory landscape of course, we have on the books several more stages of greenhouse gas emissions with Phase 2 that's going to continue to push the OEMs toward more and more fuel economy gains and carbon emissions. Greenhouse gas emissions reductions. But how much more of that is going to come from aerodynamics? I mean obviously they have to look at the engine they have to look at many forms of efficiency but how much do you think that the current and future greenhouse gas emission regulations are going to continue to push the industry toward more and more forms of aerodynamics?

Kyle: So I don't necessarily think that the industry needs more regulations at this point in my opinion what happened with EPA and CARB for the first phase, and which is part of the reason why skirts are so common or that 5 percent criteria. That really pushed fleets to turn toward aerodynamics. After that, now you have a mindset that's totally changed. People now realize hey that that regulation although they don't normally like regulations, trucking industry. That one actually helped them and helped them save fuel. And now you have an attitude shift toward saving fuel with aerodynamics, it's no longer seen as something they probably don't need to do unless they have to do it. So our business model is to not depend on regulations because you can't predict them. Obviously, Phase 2 got put on hold. That would only help accelerate it, I think. But you know, any kind of technology has got to have a good business case anyway. And if it doesn't then you're risking a lot by depending on regulations.

Seth: Yeah certainly on the trailer side that got put in the regulation balance is a definite point of uncertainty for the industry moving forward and is very much in limbo. You know, Kyle, how do you at Navajo Express look at greenhouse gas regulations? Obviously that's an issue for your tractor suppliers and trailer suppliers to comply with potentially but do you how do you see that shaping the future of equipment and the future of your business?

Kyle: Well I really do think it will affect our business personally through the fact that you know it's the shippers that are going to be pushing this more than anybody. You know higher payload better MPG lower CO2 footprint and you know on top of that, regulations are not regulations I don't see the fuel prices going down in America anytime in the future at all. Really. And with that, I mean we're always going to be needing to squeeze a little bit more out of a lot of the trucks with the better fuel efficiency. So I don't see anything really backing down on this whether it's mandated on us or not. I think the genie is out of the bottle and it's just going to keep getting better from here.

Seth: Sure. And before I let you guys go I want to get some final thoughts on what the future is going to look like with aerodynamics. We've seen this industry come a long way. As I mentioned earlier we've seen more and more types of systems hit the market like FlowBelow has introduced. But Josh what do you think is next? I mean where are we going what's this industry going to look like and how much more streamlined is a tractor-trailer going to be say 10 years from now?

Josh: Well I think in 10 years they'll probably look a lot different. You're already starting to see the hints of what that change is going to look like if you take a look at the side extenders on trucks. They're starting to go further back. There's a couple of gap devices on the market that are actually for sale now that open and close and seal off the gap between the truck and trailer those right now are priced pretty high and so you don't see widespread adoption. The areas around the wheels on the truck side we've got to the point now where we're on over 10 percent of all new trucks sold include them which is incredible -- good adoption rate, exceeded our expectations. But there's still enormous opportunity for us. So that's a trend I'd see around the wheels, the gap between the truck and trailer right. I mentioned, that could be addressed from the trailer side too. I think the preference on the fleet side does have that come from the truck because you've got the ratio of trailers to trucks as you go further back. You know skirts will probably extend further forward. You do see some longer skirts on the market. I think Transtex, for example, has a 23-footer instead of a 19-footer that covers up the landing gear. I've seen some skirts to go all the way back and cover the wheels of the trailer. Our AeroSlider product, which is pairing between the trailer wheels is an alternative to that. So one of those two technologies -- to cover up the lower and rear portion of the trailer. And then tail devices. You've seen a little bit of a trend from long tails like this 80 dynamics tail and it got acquired by Stemco. Now there's shorter tails that are more durable, don't have the risk of getting damaged by duct doors, things like that. And so either way a tail device of some kind is going to become a common sight. You know, that the front of the cab I think you're seeing on the new enhancements to the Cascadia that just came out. They've done little things that add up to big amounts of fuel savings like tow hook covers, gap sealing air dams. They're also lowering the right height. So all of those things all add up to basically sealing the perimeter of the truck not letting air flow through or under unless it's necessary for engineer flow cooling, sealing as much as possible. But always within the practical limits.

Kyle: I also think that we'll be seeing at least a hybrid power train of some sort of electric power. I think the batteries are what's really holding things back right now from going full electric. But whether it's some better form of compressed natural gas or full electric. You know I think we're not too far away from that.

Seth: Certainly exciting time to be in this industry. A lot of change and we're just seeing the march toward greater fuel economy, greater efficiency just continue. And you guys are right at the forefront. So thank you so much for joining us. It's great to hear your thoughts on this.

Seth: We're here at TMC as annual meeting in Atlanta. And we're excited to welcome Mathieu Boivin who's the founder, CEO and president of Transtex, a supplier of trailer fairings and other aerodynamic systems for the trucking industry. So thank you so much for joining us Mathieu. So let's go ahead and start by considering how you started this company, how you got involved in this business and really built this company on a trailer aerodynamics. What was the origin, I hear that you were an engineering student and had this idea that gave birth to this company?

Mathieu: Yeah. It all happened. Yeah. That all started at university when we were doing a wind tunnel testing and the project was a bit crazy at the start. It was to put wings over the top of a trailer try to lift the trailer on the highway. And that was kind of a very bad idea. But as a we were moving wings around the trailer we just discovered that putting wings at the rear and under the trailer would reduce drag not create anymore lift. And there was the start of improving the aerodynamics of a trailer.

Seth: Very good. And now we see out on the road so many trailers are equipped with side skirts. So what's your assessment of just where the industry is now, and just how much traction and how much how much does the industry improve in terms of aerodynamics from when you got your start to where we are today?

Mathieu: Yeah. My first say show, TMC show was in 2000 where we were the only aero provider I would say at that show. And now you see a lot of solutions that will improve aerodynamics of trailers and trucks. I would say 90 percent of trailers come out of the factory now with an aero device at least the skirt regulation of push for a lot. But I think fleet now understand that fuel saving will reduce their operating costs and that's the big driver.

Seth: Absolutely. And you know when you also look at the market it’s really diversified in terms of the types of devices you mentioned side skirts and real rear fairings tails. We see a lot more different types of devices on the market as well under trays, fairings for the tandem axle is available and Transtex is also expanding its product lines with some acquisitions of some product lines from Smart Truck. Yes. So tell us about that. How is that going to expand your business and what do you see sort of value in offering all these different add on systems beyond the core components that you've been selling for many years?

Mathieu: Yes. So as an innovator you start pushing one product and you see that to add fuel saving to a truck trailer you'll have to add more than one solution. So we're really focused on a mission to bring fuel saving, and for that so we have started with a skirt system and came a skirt family so we could put her skirt on every type of truck trailers. With time, we also figure out that we would need more stores. To bring more we push product development on tails and we were very interested in one of the technologies that was out there, owned by a SmarTruck and we purchased the asset of the TopKit. So an aero TopKit is joining the Transtex edge product line to add savings to skirt. So making a great combo going to the next level for fuel saving adding to the 5 percent to what skirt will save and we believe that was going to just bring fleets to the next level.

Seth: Sure. And for those who aren't aware of the TopKit system you explain that. I mean this sits on sort of the rear of the trailer roof exactly how does that work?

Mathieu: So what's very important for every aero device. I believe it's zero driver interaction. So we're looking at a technology that is will really redirect the air at the rear of a trailer to kind of reduce this parachute effect that happens at the rear of a trailer on a high speed. By doing this of course the trailer goes easier at high speed and you have fuel saving. So that's the concept of redirecting the air a little bit without extending too much of the rear of the trailer so then you don't have maintenance costs to keep the product in operation.

Seth: Understood. I also want to ask you about aftermarket sales versus factory installation as you mentioned -- trailer side skirts have really gained a lot of traction in this industry. They're becoming almost a standard but how much business do you still do with aftermarket sales and what's the breakdown versus factory fit installation?

Mathieu: Yeah. So 10 years ago we were involved in big retrofit programs where we were retrofitting complete fleets at this point. Most of those big fleets have went retrofit program and everything new is coming on factory install so I would say we still we sell about 20 percent of our sell on the aftermarket side and 80 percent to a factory install.

Seth: Okay. And of course we look at tractor trailers on the road and it's not just the trailer it's also the tractor itself. The manufacturers have made on highway tractors more aerodynamic and we've seen all these add-on systems for trailers that have made the trailers also much more aerodynamic. But how much further can we really go with aerodynamics? I mean at what point do we hit a point of diminishing returns where it's harder and harder to squeeze more efficiency out of tractor-trailers based on their aerodynamics?

Mathieu: Yeah we believe there's still a lot to do on aerodynamics. Of course every percentage you're adding now costs more than the first percentage. We added some years ago so it gets harder and harder to add a 1 percent of improvement on the aero. But there's a lot of potential. Of course, now, you know, the 1 percent we develop many years ago cost us maybe a hundred dollars per percent. Now we're looking more at the two hundred dollars per person per percent fuel economy.

Seth: So we've gotten the low-hanging fruit. Now we're up to the medium hanging fruit. Exactly. And go from there. But still there's still a long road ahead. You still see a lot of opportunity, yes.

Mathieu: The technology costs more today, will cost less tomorrow. So we believe that and we're always working now on technology that will come after what we're where we're promoting now.

Seth: Sure. And of course you know we look at all the different types of systems that are available today is a wide range of products from your company and others. So how much can how much fuel can the industry save simply by adopting the technology that's already available? I mean how much more opportunity to see there just from the maybe the companies that haven't been at the forefront of adoption of some of these add-on systems and spec options?

Mathieu: Yes, so a lot of fleets are following regulation which are pushing them to add up four to five percent fuel saving technology. We can go up to more now to at least 8 percent as an average. So those 3 percent represents a lot. Just. For example 1 percent in the industry you know full trucking industry would represent more than 300 million gallons of fuel per year. So every 1 percent the industry adopts of fuel saving technology will make a big difference in their carbon footprint.

Seth: And speaking of regulations the Phase 2 greenhouse gas rule in the U.S. did it originally include a list of requirements for trailers or standards on trailer efficiency. Those were challenged in court and ended up being put in the abeyance so there's kind of some basically uncertainty about where that will end up in the long run. So there is a certain level of uncertainty for trailer manufacturers or who are the ones that have to comply with that rule if it does eventually take effect. Are you seeing any sort of effect in the market based on that uncertainty? Just you know what will be required in terms of trailer aerodynamics and tire pressure monitoring and inflation system some of the add-on systems that the rule might have pushed had it gone into effect?

Mathieu: Yeah uncertainty for sure is not good. But it's pushing implementation of technology when we see it coming. So, of course what was been put on the stay with EPA is a is a step back maybe in in promoting a fuel saving technology but the other way fleets are past the point where they see that those technologies help their operation costs and they're going forward. So I would say there's always a percentage of people that are following technology and there's the first adopters which are in front of the parade. So we have no issue. Now it's the middle part which is falling so I would say first regulation have kind of started the parade and now everything is falling.

Seth: In the business case is still there regardless of your regulations. But before I let you go I do want to get to your final thoughts on where this industry is going in terms of aerodynamics. Where are we and what does the future look like?

Mathieu: Yeah so evidently we are going to be combining solutions so combining aero solutions. Some are already on the market, some are coming. We see a lot of value in combo, working also with the truck. So it's really a truck-trailer combo. So we're already working with other companies to provide combo aero devices which will bring you know soon to the big four and five and eventually been six.

Seth: Oh wonderful, it's been great to have you on the program. Great to hear some insights from somebody who's been in this business for a very long time and has really seen it advance over the years.

In this episode of RoadSigns we were joined by Josh Butler of Flow Below Aero, Kyle Wallace of Navajo Express, and Mathieu Boivin, TRANSTEX.