Gas truck boom
As the Chinese government curbs diesel in war on smog, LNG heavy vehicle sales soar
On a recent morning in Yutian, a dusty town in Tangshan city, North China’s Hebei Province, bisected by the highway that connects Beijing to the sea, Su Meiquan strolled into a dealership packed with hulking trucks and prepared to drive off with a brand new rig.
After years of driving a diesel truck for a trucking company, he had decided to buy his own vehicle – a bright red rig fueled with liquefied natural gas (LNG), capable of hauling as much as 40 tons of loads like steel or slabs of marble.
Su hopes the LNG truck – less polluting and cheaper to operate than diesel ones – will be the cornerstone of his own business, plying the route to the western fringes of China.
“Everybody says gas is cleaner with nearly no emissions,” he said after signing a stack of paperwork in the dealer’s office. In front of him, photos of proud drivers posing in front of their own new LNG trucks had been taped to the wall.
Sales of large LNG trucks are expected to hit record levels in China this year as the government steps up an anti-pollution campaign that includes curbs on heavy-duty diesel vehicles.
LNG trucks only account for about 4 percent of the more than 6 million heavy vehicles able to haul 40 to 49 tons of goods that are currently on China’s roads. The vast majority of the 43 billion tons of freight transported across China last year was by highway.
But demand for LNG trucks is soaring as companies and manufacturers shift to vehicles that run on the gas that the Chinese government sees as a key part of its war against smog.
The amount of LNG heavy trucks sold surged by 540 percent to nearly 39,000 in the first seven months of the year, according to Cassie Liu, a truck analyst at the IHS Markit consultancy.
That was partly fueled by a ban this year on the use of diesel trucks to transport coal at ports in Hebei and East China’s Shandong Province as well as in North China’s Tianjin.
“We are seeing a blowout in LNG trucks this year, thanks to the government’s policy push,” said Mu Lei, marketing manager for the China National Heavy Duty Truck Group, known as Sinotruk, the country’s largest manufacturer of heavy-duty trucks.
The shift to gas trucks is helping fuel demand for LNG in China, as are other government measures aimed at clearing the air, especially in northern China, which is shrouded in a hazardous coal-fueled smog for much of the winter.
One major project is piping gas to 1.4 million households across northern China for heating this winter, shifting away from coal.
China, already the world’s No.3 LNG consumer, has seen imports jump by 45 percent so far this year.
Chinese companies like Jereh Group and ENN Energy Holding, which build LNG filling stations, and Zhangjiagang CIMC Sanctum Cryogenic Equipment Co, which specializes in LNG tanks, are expected to benefit from the gas boom, analysts said.
Increase in orders, sales
Government restrictions on cargo overloading last year, for safety reasons, has also driven truck sales as operators rushed to buy bigger trucks.
In November, the Chinese authorities will also impose restrictions on thousands of northern China factories using diesel trucks, forcing many to use more railways and to consider gas-powered lorries.
Sales of new heavy-duty trucks, including diesel and LNG vehicles, jumped by 75 percent in the JanuaryAugust period to 768,214, according to industry website www.chinatruck. org.
It did not break down the numbers, but companies say that diesel growth is being dwarfed by that of LNG trucks.
In early October, Sinotruk netted new orders for 1,371 heavy-duty trucks, 900 of which run on LNG, at an event bringing together coal transport companies from seven northern Chinese cities, Mu said. In the first half of this year, Sinotruk sold 5,200 LNG trucks, up 650 percent year-onyear.
“Gas trucks are both more environmentally friendly and more economic,” said Lai Wei, general manager of Tianjin Shengteng Transport Company, a privately run trucking company.
Lai will triple his LNG fleet to more than 100 by the end of this year, adding 65 new trucks made by Shaanxi Heavy Duty Automobile Co, the country’s largest LNG vehicle producer.
He is also cutting back his diesel fleet to 30 from the previous 50 because of the new emissions rules in Tianjin that come into effect this month.
Only vehicles meeting “National V” emissions standards, similar to Euro V standards for trucks and buses in Europe, will be allowed to operate at the port.
Lai said he was also concerned that there might be further restrictions on diesel trucks in a few years.
Cleaner, cheaper
China, the world’s top energy consumer, wants gas, which emits half the carbon dioxide as that of burning coal, to supply 15 percent of energy demand by 2030, up from 6 percent currently.
That effort stalled in 2014 as an oil price slump lifted demand for diesel. But as oil prices have risen in the past 20 months, rebounding to above $50, LNG sales, especially from Australia and the US, have soared.
On average, diesel costs between 10 and 30 percent more than gas currently at Chinese gas stations, according to truck companies.
For Su, the new truck owner in Yutian, about 140 kilometers to the east of Beijing, price is a major reason for making the switch from diesel.
He plans to hire two drivers to shuttle the 3,500 kilometers between Yutian and Urumqi, capital of Northwest China’s Xinjiang Uyghur Autonomous Region, to carry steel products west and coal or other goods on the way back.
“It really suits our journeys as the longer the trip, the more you save on fuel with an LNG truck,” he said. He is paying 390,000 yuan ($59,080) for a Sinotruk rig, about 60,000 yuan more than a diesel truck would have cost.
“On a return trip, we can save 3,000 yuan in fuel,” he noted. “That means we’ll be able to recoup within a year the extra costs for the vehicle.”