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TMC Engine Summit
March 16, 2004
Steve Duley
Vice President Purchasing
Proprietary & Confidential
DEDICATED
EXPEDITED - TEAMS
INTERMODAL
>>>
ONE-WAY VAN
BROKERAGE
BULK
Serving
North America
SPECIALIZED
Proprietary & Confidential
Schneider National
$2.9 billion in revenue in 2003
Spot Brokerage •
Glass Brokerage •
Tariff Based •
Operate 12,000 tractors, 15,200
drivers, and 45,000 trailers with
20,800 associates operating in
28 countries
Brokerage
OptiModal •
TruckRail •
Intermodal
One-Way Van •
Dedicated •
Expedited •
Specialized •
Bulk •
Operating Services •
Application Services •
SFI •
INS •
Payment Services •
New Ventures •
Truckload
Pay 20 million invoices totaling
$7 billion to 8,500 carriers
Logistics
Financial
Services
Purchase $1.5 billion in 3rd party
transportation from 1,300 carriers
Commitment to superior
information and communications
technology
Proprietary & Confidential
Engine Review
Post October 2002 –
January 2004
Proprietary & Confidential
Engine Evaluation Table – Last Update
1/19/04
Model
Detroit Diesel
12.7L Series 60
12.7L Series 60
12.7L Series 60
12.7L Series 60
12.7L Series 60
MBE4000
Qty. Description
1 Preproduction Pilot – Repower
2 Preproduction – Manufactured Pilot
5 Preproduction
48 Production 2/2003
1,000 Production – 6-10/2003
5 Production
Caterpillar
C12 Bridge
C15 Bridge
C15 Acert
C15 Acert
C13 Acert
C13 Acert
5
5
2
10
2
10
Cummins
ISX
10 Production @ Kenworth
Pilot – Manufactured
Preproduction – Manufactured
Pilot – Manufactured
Preproduction
Mfr
Date
Apprx. Miles
11/01
03/02
08/02
Repower 400,000
275,000
290,000
02/03
06/03 –
10/03
05/03
255,000
50,000 – 150,000
07/02
07/02
04/03
04/03
12/03
12/03
271,000
378,000
160,000
138,000
48,000
47,000
12/02
220,000
120,000
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 Comparison
Component
Pre Oct 2002
>Oct 2002
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
$80
0.5
$30
Sensors
Labor Hours
Labor Cost @ $75/Hr
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
$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
$3,296
$6,731
---
$1,400
EGR Components
Turbo Actuator
Sub-Total
Oxy Catalyst (CAT Bridge)
1.0
$75
Proprietary & Confidential
Government Regulations Increasing
Engine Costs
Total Cost of ’02 Engines
Oct 2002
Purchase price
$4,500
Fuel MPG
$5,500
Maintenance
$6,000
Fuel Costs/Gallon
______
Total Operating
$11,500
Residual value reduction
$4,000
Total Cost
$20,000
NPV (6 years @ 8%)
$15,000
Forecast Date
8/2001
Technology
EGR
Post 2002 engine will increase operating costs
by 2-3 cents/mile.
Proprietary & Confidential
Engine Review
2007-2010 Engine
Proprietary & Confidential
EGR with a
Particulate Filter Approach
Variable
Geometry
Turbocharger
Intercooler
Air
to Air
Cooler
1
NOx Reduction
with Increased EGR
Rates
C
2
T
3
4
Catalyzed
Particulate Filter
5
6
EGR Cooler
EGR
Control
Valve
Particulate Filter to be
Integrated into the Vehicle
Exhaust System
Proprietary & Confidential
Diesel Particulate Filter Concerns
Catalyzed
Particulate Filter
Initial and replacement price
(precious metals?).
Active regeneration process.
Maintenance interval.
Maintenance process.
No heavy truck experience.
Particulate Filter to be
Integrated into the Vehicle
Exhaust System
Requires low sulfated ash oil
(possible unique oil).
Reduced life with LSD fuel.
Overall operating cost.
Proprietary & Confidential
Government Regulations Increasing
Engine Costs
Total Cost of ’02 and ’07 Engines
Oct 2002
1/2007
2007*
Purchase price
$4,500
$16,000
$8,000
Fuel MPG
$5,500
$7,200
$7,200
Maintenance
$6,000
$9,000
$6,000
Fuel Costs/Gallon
______
$5,100
$5,100
Total Operating
$11,500
$21,300
$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
EGR
NOx Trap
EGR/SCR
Technology
* 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
Cab
8 / 1,000
Major Elec
Harnesses
Rebuild
Cost
Rebuild
Extended Life
Yr/1000 Miles
#
Rebuilds
Potential
6 / 750
$5,000
4 / 500
1-2
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
Proprietary & Confidential