Cummins to Boost Sales Via Fuel-Efficiency Push

This story appears in the March 31 print edition of Transport Topics.

LOUISVILLE, Ky. — Cummins Inc. officials speaking here emphasized the fuel-efficiency gains that can save $4,000 per truck annually and stimulate additional business in the improving 2014 trucking market.

 “One of the reasons that business is picking up is that customers are confident in the savings,” Jeff Jones, vice president of the North American engine business, said March 25 at a press event prior to the start of the Mid-America Trucking Show. “Customers will buy a truck with an engine that is at least 7% more fuel-efficient than four years ago.”

“The math is pretty easy to justify,” Jones said, at a time when fuel typically is the largest expense line item for fleets.

The savings were based on running 100,000 miles with $4 a gallon diesel for a truck with a 15-liter engine, whose mpg now is 6.96, compared with 6.5 four years ago. Savings resulted from optimization of combustion and aftertreatment and better low-end torque, Jones said.

Additional savings are achieved by reducing parasitic loads and adding a naturally aspirated air compressor.

Jones cited multiple reasons, in addition to fuel efficiency, as the underpinning for an expected rise in the market this year. He told Transport Topics that a key reason was the improving economy in sectors such as consumer spending, manufacturing and housing. Other factors include an aging fleet, more available financing and higher carrier profits.

The heightened attention to fuel efficiency continues the theme of last year’s MATS, where OEMs and their suppliers underscored the value that was available through new products. For Cummins, the improved outlook could mean a pickup in sales activity that has been relatively flat for the past two years.

“A meaningful change appears to be under way in the industry demand backdrop,” said a March 26 report from Robert W. Baird analyst David Leiker, whose comments reinforced Cummins’ Class 8 outlook.

“Better GDP/freight trends at a time productivity is hampered by regulatory burdens are working to constrain capacity to the point of requiring new trucks. With GDP growth of 2-3%, order/sales momentum should remain intact into the second half,” Leiker’s report said.

Initial indications based on truck sales and orders early in 2014 offer reasons for optimism. Truck orders between December and February reached about 95,000, the fastest pace in almost eight years. Sales last month rose 11%.

Additional cost savings in the 3%-to-6% range can be obtained when Cummins engines are paired with Eaton transmissions in the Smart Advantage package, according to the Columbus, Ind.-based engine maker.

Based on Cummins’ calculations, annual fuel savings can exceed 10%, or about $6,000, for carriers whose previous equipment had pre-2010 engines.

On the telematics front, Cummins said it’s developing an application known as Connected Diagnostics that is scheduled to be available in the third quarter. The company is working with several telematics providers with the intention of giving drivers or other fleet personnel immediately available information when an engine system fault code is displayed during operations.

The engine maker also said it is developing other telematics-related applications, without giving details. Full production of Connected Diagnostics is planned for next year.

“Our ability to understand issues immediately allows us to provide the right level of support at the right time for our customers,” Jones said in a statement.

Jennifer Rumsey, vice president of engineering of the engine business, highlighted several steps to achieving efficiency improvements. They were focused on better integration of subsystems, including combustion, air handling, aftertreatment and electronic controls.

She also said the Supertruck project, though it is ending this year, has provided valuable technological advancements.

Dave Crompton, vice president and general manager of the engine business, said Cummins is investing $2 billion in research and technology over three years “to get ahead of the growth curve.”

In addition, Cummins introduced a 560 horsepower rating for the ISX15 with 1,850 pound-feet of peak torque that is designed for operations on steep grades and with heavy loads.

Meanwhile, in the natural-gas sector, Gordon Exel, president of Cummins Westport, told TT the joint venture’s ISX 12G engine production is expected to double this year to 4,000 units from 2,000 last year.

“It’s been a great launch,” Exel said, while noting that sensor problems that resulted in a recall have been addressed and implemented.

An additional announcement was the availability of an upfit package for its turbo-diesel Ram Heavy Duty truck, in conjunction with the 25th anniversary of Cummins engine availability in 2014 model year pickups. That package includes custom badges, floor mats, a red breather cover under the hood and a leather interior.

Jones noted during the press briefing that the idle torque on the 25th anniversary models exceeded the peak torque of the original 1989 engine.