Alternative framework for energy analysis in transport EEO sector workshop

1. Alternative framework for energy analysisin transport EEO sector workshop Sofitel Melbourne on Collins 8 August 2013

2. 1 Practical implications of EEO changes on transport

3. 1 Removal of +/– 30% accuracy requirement Means that payback assessment is more aligned with a commercial risk assessment • In calculating payback, transport operators deal with unknowns or great uncertainty • A decision to invest regularly becomes a risk assessment rather than a true business case

4. 2 Flexibility in conducting energy analysis Alternatives to an EMB • EEO has previously been explicit in energy analysis requirements . • ‘EMB or equivalent’ has been the expectation. • ‘…or equivalent’ has been the default interpretation. • Transport participants have difficulty analysing energy in their fleet. • Industry preference for an ‘approved list’ of energy saving opportunities. • Existing resources provide this to some degree, but the application of these still requires an understanding of how energy is used. • Example: a hybrid truck can reduce fuel use by 25%, but used in the wrong application it can use 10% more fuel than a conventional truck. • There are few generic opportunities that provide equal savings for all trucks. • Knowing what will work on which vehicle is the challenge.

5. Different paradigms for understanding energy use • Energy mass balance • requires engineering knowledge, commercial and operational analysis (capacity/capability?) • Duty cycle analysis (parameters include speed, idle time, engine load, PTO time, braking, etc.) • identifies vehicle operations consuming energy, but not the causes • Fleet segment analysis • shows vehicles that use energy, but not why, or what to do about it • Contract-specific analysis • helps contract administration/invoicing, but trip data for load/fuel often impractical or unavailable • Supply chain approach (consideration of factors influencing or causing energy use) • integrates and augments several of the perspectives above • considers customer requirements, supplier capability, equipment specification, people, processes

6. Existing resources to help the transport sector • Energy Mass Balance – Transport • A detailed framework for understanding and analysing energy useusing proven engineering analysis of energy and mass flows throughthe system. • Measurement and opportunity evaluation in the transport sector – supplementary information for EEO participants • A guide to measuring energy use and evaluating energy savings,which addresses some of the unique challenges (e.g. uncertainty)in transport applications. • Potential energy efficiency opportunities in the Australian roadand rail sectors • A catalogue of energy saving opportunities for the road (heavy vehicles) and rail transport sectors.

7. 2 An alternative framework for analysing energy use

8. Energy analysis in transport • Do you understand how energy is used in your fleet – cars, trucks, trains, planes, ships? • What is your understanding? For example: • What is the influence of engine size / type / fuel? • How much influence does the driver have on fuel use? • How significant is terrain on different routes? • What difference does high versus low engine idle make? • What (and why) are the different opportunities for highway versus urban trucks? • A number of significant challenges make energy analysis in transport different to other sectors

9. Why is transport different? • A number of factors make energy analysis in transport different to other sectors: • Lean management structures • Skills • Limited motivation for fuel savings (as fuel costs are passed on) • Uncertainty in savings: • performance uncertainty + volatile fuel price = uncertain savings = risky business case • Short freight contracts versus long investment horizons

10. The transport task approach • Supply chain links • Factors in control / out of control • Organisational flexibilities: • trip design • equipment selection • operator behaviour

11. Energy use as a six-part composite picture(NOT a six-step process) Level 1 Quantify total energy use. Level 2 Quantify energy use for duty cycle and equipment type,i.e. fleet segmentation. Level 3 Describe energy efficiency of fleet segments (or individual vehicles) using appropriate energy intensity metrics. Measureenergy useandenergy intensity Level 4 Determine aspects of equipment operation consuming energy. Level 5 Examine factors influencing energy use from trip design, equipment procurement and operator behaviour. Level 6 Understand underlying drivers for factors influencingenergy use, including interdependencies. Understand factors that influence energy use

12. FRAMEWORK FOR MEASURING ENERGY USE & INTENSITY Total fleet energy TOTAL ENERGY (GJ) Level 1 Total fleet energy Local pick-upand delivery Urbanhaul Regional linehaul Interstate linehaul Commercialwaste Residentialwaste Urbantipper Council/utilityvehicle Drive cycle Segmented fleet energy Energy (GJ)per fleet segment Level 2 Utility Van Rigid truck Semi-trailer B-double Road train Bus Coach Othervehicles Vehicle type For each fleet segment (or vehicle): energy (GJ) use per production unit Energy intensity Energy per kilometre Energy per tonne kilometre Metric describing fleet energy intensity Energy per volume Energy per passenger Level 3 FRAMEWORK FOR UNDERSTANDING INFLUENCES ON ENERGY USE Aspects of equipment operation influencing energy use Equipment operation Average speed Averageidle time Engineload Powertake-off Stopping frequency Level 4 Business factors influencing energy useof equipment operation Trip design Equipment procurement Operator behaviour Level 5 12 Route selection Dead weight Driver technique Underlying factors influencingenergy use Mode selection Aerodynamics Organisation culture Level 6 Delivery times Tyre selection Speed management Load intensity Combustion efficiency Idle time Carrying capacity Servicing & maintenance

13. Levels 1–3: Measuring energy use and energy intensityA foundation for understanding how much energy is used, and where in the fleet FRAMEWORK FOR MEASURING ENERGY USE & INTENSITY Total fleet energy TOTAL ENERGY (GJ) Level 1 Total fleet energy Local pick-upand delivery Urbanhaul Regional linehaul Interstate linehaul Commercialwaste Residentialwaste Urbantipper Council/utilityvehicle Drive cycle Segmented fleet energy Energy (GJ)per fleet segment Level 2 Utility Van Rigid truck Semi-trailer B-double Road train Bus Coach Othervehicles Vehicle type For each fleet segment (or vehicle): energy (GJ) use per production unit Energy intensity Energy per kilometre Energy per tonne kilometre Metric describing fleet energy intensity Energy per volume Energy per passenger Level 3 13

14. Levels 4–6: Understanding the factors that influence energy useEquipment operation described by duty cycle, but influenced by supply chain factors FRAMEWORK FOR UNDERSTANDING INFLUENCES ON ENERGY USE Aspects of equipment operation influencing energy use Equipment operation Average speed Averageidle time Engineload Powertake-off Stopping frequency Level 4 Business factors influencing energy useof equipment operation Trip design Equipment procurement Operator behaviour Level 5 Driver technique Route selection Dead weight Underlying factors influencingenergy use Mode selection Aerodynamics Organisation culture Level 6 Delivery times Tyre selection Speed management Load intensity Combustion efficiency Idle time Carrying capacity Servicing & maintenance The underlying factors above are not exhaustive – there may be others relevant to your fleet

15. The supply chain approach looks beyond truck efficiencyChanging underlying factors can reduce time, speed, or even the need for a trip • With this approach, potential savings are also unique to every fleet (no generic answer) • Large Type 1 fleet • New trucks, customer trailers • Good training and systems • Long-haul bulk resource • Non-time sensitive • Medium size Type 1 fleet • Old trucks and trailers • Interstate linehaul • Tight delivery windows • Small Type 2 fleet • Urban delivery • High staff turnover

16. The framework is not a silo exercise for ‘fleet guys’Finding savings requires engagement/input from across the company and supply chain Trip design Equipmentprocurement Operatorbehaviour • Understanding what the operational parameters are is not enough • There are linkages and relationships between factors • Not all factors are amenable to adjustment in all fleets (get right people to know what is) • Suppliers, customers, staff and authorities can all be crucial to energy savings Route selection Mode selection Delivery times Load intensity Equipmentprocurement Operatorbehaviour Dead weight Aerodynamics Tyre selection Combustion efficiency Carrying capacity Operator technique Organisation culture Speed management Idle time Servicing/maintenance

17. Using the framework to understand and identify opportunitiesInvestigation and iteration are key to understanding significance of factors • To start with, we often have a vague sense of which factors are most relevant • Via testing or measurement, the contribution of each factor becomes clearer • As each factor is better understood, opportunities for energy savings emerge

18. Final notes on the conceptual framework • It’s NOT a process to be stepped through linearly • It’s NOT a checklist • It DOESN’T remove or shortcut EEO requirements • It IS intended as a practical middle-ground between detailed engineering analysis and a simple menu pick of opportunities • It helps develop an understanding of fleet energy use (vehicle types and influencing factors) • It guides discussions about where a company might find energy savings • Supporting requirements • Data systems • People (skills, knowledge) and processes (engagement, reporting)

19. 3 Results of three fleet trials using the new framework

20. Overview of fleet trials • Two companies involved: Linfox and Visy Logistics • Three fleets chosen to cover different applications: • mix of in-house (Type I) and 3PL (Type II) contracts • single trailer, B-double and road train combinations • resources, FMCG, paper and waste • company-owned, customer-owned, and subcontracted logistics • A high degree of facilitation was used to trial the framework, including: • aggregating and formatting data • data analysis • highlighting potential opportunities for further investigation • Facilitator played a similar role to a consultant assisting with traditional EEO

21. Linfox (Woolworths)3PL, groceries and FMCG from DC, urban and regional haul • 3 months’ baseline data used for reference • High level of detail in vehicle data: trucks, trailers, load, fuel, location • Data reviewed for correlations and trends in fuel consumption by vehicle/driver/route/speed and other influences (e.g. idling) • Data analysis identified 10 opportunities for further discussion or investigation • One opportunity was implemented (local servicing). Improved tyre management, idle reduction, and new truck procurement are under consideration.

22. Linfox 2 (BHP) 3PL provider, bulk resources, multi trailer combinations • 3 months’ baseline data used for reference • High level of detail in vehicle data • Data complexity creates its own issues • Operational parameters analysed across the fleet to identify influencing factors that might be changed • Data analysis identified 7 opportunities for further discussion, later narrowed to 4: newer more efficient prime movers, idling reductions, low–rolling resistance tyres, change of final drive ratio • Nothing implemented during the trial, but new prime movers were already being acquired, tyres are under investigation, and a diff ratio change has been completed(data pending)

23. Visy Logistics Mix of in-house and subcontract vehicles, single and BDouble, regional haul • Interesting case study in defining operational boundaries • Company-owned vehicles only involved in some parts of the logistics chain • Opportunity to pursue mode shift was predetermined (commercial decision) • Ability to compare actual energy used was limited by availability of real fuel data • Assuming energy use factors for trucks where data was missing, showed that mode shift could substantially reduce energy intensity • In this case data in levels 1–3 would support more accurate analysis (not required for EEO)

24. Visy Logistics Selection of energy metrics is critical for a clear picture and relevant comparison Looking at individual journey segments, GJ/t provides a confusing comparison But for the overall operation (paper from Tumut to Port Melbourne),GJ/t is precisely the right metric for comparison of road versus rail

25. Conclusions on the suitability of the framework for the real world • It is a conceptual framework to help guide or direct investigation and analysis • Data is still king – there are no shortcuts • The framework can provide guidance on what data is required • Implementation of opportunities • It helps develop an understanding of fleet energy use (vehicle types and influencing factors) • It guides discussions about where a company might find energy savings • Supporting requirements: • data systems • people (skills, knowledge) and processes (engagement, reporting) • Supporting resources: • energy mass balance, measurement and opportunity evaluation, potential energy efficiency opportunities for road and rail