John Johnson joined the DC Velocity team in March 2004. A veteran business journalist, John has over a dozen years of experience covering the supply chain field, including time as chief editor of Warehousing Management. In addition, he has covered the venture capital community and previously was a sports reporter covering professional and collegiate sports in the Boston area. John served as senior editor and chief editor of DC Velocity until April 2008.
Want to drive a hydrogen-powered car? Be prepared to wait 10 years or so. Want to drive a hydrogen-powered forklift? Just step in to your nearest distribution center. If it isn't testing out forklifts powered by hydrogen fuel cell technology today, it might be soon.
Hydrogen fuel cell technology is fast making inroads in North America's manufacturing and distribution operations, where fuel cell-powered lift trucks are quietly taking their place beside their battery- powered counterparts. This April, retail giant Wal-Mart expects to take delivery of an unspecified number of fuel cells from Plug Power Inc. that will be used to power pallet trucks at its food distribution center in Washington Court House, Ohio. The purchase follows an in-depth pilot program at two Wal-Mart DCs in Ohio in late 2006. In those trials, 12 fuel cell-powered pallet trucks operated under regular working conditions for more than four months, logging more than 18,000 hours and 2,100 indoor fuelings by pallet truck operators.
In South Carolina, the Greater Columbia Fuel Cell Challenge just concluded the last of six individual twoweek trials with fuel cell-powered lift trucks. Organizers of the Fuel Cell Challenge, which is aimed at making the Greater Columbia area a hotbed of fuel cell development, expect to run more trials this year. The Department of Defense has also put in an order for fuel cell-powered lift trucks to be used at its facilities in California and Virginia, and fuel cell trucks are already in use at a General Motors facility in Canada.
In New York, Raymond Corp. has been testing a fuel cell-powered lift truck since last summer. Raymond, a lift truck maker that's owned by Toyota, recently added two more vehicles, the latest in December. Raymond's fuel cell lab will run at least four fuel cell trucks from multiple suppliers for two years, measuring performance and reliability in specific applications. In May, Raymond opened an onsite indoor refueling facility for fuel cells. The refueling station, which is located at Raymond's Greene, N.Y., manufacturing facility, is the first such refueling center in the state.
All of this has led Wall Street analyst Brannon Cook to predict big things for fuel cells in the distribution arena. The JPMorgan Chase analyst says that although fuel cell technology has proved more expensive to develop than initially expected, the demand from certain markets is growing.
In a research report, Cook says he believes that cars powered by fuel cells are "over a decade away from pre-commercial adoption," but that demand from smaller markets, like forklifts and backup power, is growing.
Wal-Mart's green machines
Some of that demand is likely to come from Wal-Mart. "We've seen how fuel cells can improve efficiency in our distribution centers while enabling us to be more responsible global citizens," says Johnnie Dobbs, Wal-Mart's executive vice president of logistics and supply chain. "Wal-Mart is focused on finding ways to improve our relationship with the environment throughout our operations. Our hope is that our investment in fuel cell technology will encourage its development as a viable option to existing technologies."
Along with corporations like Wal-Mart, states and municipalities are investing in the technology. In fact, Wal- Mart chose the Washington Court House, Ohio, DC for its upcoming fuel cell tests in order to take advantage of funding from the state of Ohio. Ohio recently awarded a grant to fuel cell vendor Plug Power Inc. and its Cellex subsidiary in an effort to increase the viability of fuel cells. "The funding is to help us not only to move the technology forward, but to prove the cost effectiveness locally at distribution centers," says Tom Hoying, vice president of sales and customer operations for Plug Power's Motive Power Division.
In the Wal-Mart tests, the cell-powered lift trucks will be refueled at an indoor refueling station. Drivers will simply pull up to a hydrogen pump, much the way automobile drivers pull up to the pump at a gas station. A compression system located outside the DC will allow for the onsite generation of hydrogen, something made possible by the state funding.
As for Plug Power's next venture, Hoying says the company is preparing for an "early commercial release" of a product for use in the food, retail, and mass-merchandising sectors this spring. Testing at six companies will begin in April, and Hoying expects many of those companies to place initial orders in the second half of the year.
"The key thing is making sure the technology does what the customer needs it to do, and that when it goes down, you can resolve problems quick enough so they aren't experiencing any down time," says Hoying. "If [the technology] works, demand will be very strong."
So far at least, the technology appears to be delivering on its promise. Roy Eckmeier, senior manager of operations at FedEx Express, says he's been pleasantly surprised by his company's experience using fuel cells provided by Hydrogenics on its fleet of Hyster lift trucks. "Until now, we've operated heavy equipment with battery or propane power, but we recently began using hydrogen power," says Eckmeier. "As with any new technology, the first concern we had was [whether it would] operate as well as the equipment we have presently. Our experience to date has been that there has been relatively no difference between the fuel cell technology and the equipment we have used previously."
Lots to like
It's not hard to see why companies are interested in experimenting with fuel cells. Aside from the environmental benefits (see sidebar), fuel cell-powered lift trucks offer a number of operating advantages. For starters, they're able to operate at full power up until the moment the cell runs out of fuel, much the way a car does before it runs out of gas. Lift trucks powered by traditional batteries, by contrast, tend to lose power toward the end of each shift as the battery wears down, which can become a drag on productivity.
Fuel cells also have the advantage over batteries when it comes to refueling. While it can take 20 minutes or longer to change a battery, a fuel cell can be recharged in a matter of minutes. In the Greater Columbia Fuel Cell Challenge project, for instance, drivers generally were able to refuel the trucks in a minute or two and be on their way. In addition, fuel cells eliminate the headaches surrounding the proper disposal of lead acid batteries.
Bruce Mantz, who operates third-party logistics service provider Automated Distribution Systems, adds that fuel cells can also save DC operations valuable space. With fuel cells, there's no need for a separate storage area to house the units when they're not in use (as there is with batteries). In the Wal-Mart trial, for example, the indoor fuel dispensing area required just 200 square feet of floor space, compared with the 4,000 square feet needed for the lead acid battery room. That's a major consideration for a 3PL operation like Mantz's, where every square inch of DC floor space represents a revenue opportunity.
A tough cell
Though fuel cells are getting generally high marks from users, the technology still has some obstacles to overcome. A user in the South Carolina trial had to shut down its test when high temperatures in the non-air-conditioned distribution center began to affect the fuel cell's performance. Fuel cell testers also report that replacing batteries with fuel cells changes the characteristics of a lift truck. Before they can send a truck that's been converted to fuel cell power out onto the floor, they have to re-do their calculations for load center and stability, taking the fuel cell into consideration.
Then there's the cost. Although the price of outfitting a truck with a fuel cell power pack is about half what it was two years ago—and continues to decline—it can still run to about $40,000 per truck, or about 10 times the price of a conventional lead acid battery. In addition, it can cost $100,000 or more to equip a building with a hydrogen storage tank, compressor, and dispensing system. Cook notes that both technological advances and price decreases are taking longer than expected, which has given rise to charges that the technology has failed to live up to the hype.
Those charges will sound familiar to anyone who followed the RFID market in the early days, back when Wal-Mart first began testing the technology. What happened with RFID may offer some clues to fuel cell technology's future. With the Behemoth of Bentonville as its champion, RFID soon took off. Prices dropped, technological advancements were made, and reliability issues were resolved. Today, RFID is slowly but steadily becoming embedded in supply chain operations from coast to coast.
The hope is that Wal-Mart can do the same for fuel cells. And at least one industry player thinks that's precisely what the retail giant has in mind. Commenting on the retailer's commitment to the fuel cell trials, Hoying of Plug Power has this to say: "Wal-Mart's commitment [to the technology] shows their strong interest in seeing fuel cells brought into the mainstream materials handling industry."
goodbye, air pollution?
The continued development of hydrogen fuel cells for lift trucks won't cut down on traffic congestion, but the air we breathe could be cleaner in 10 or 15 years if the technology takes off as expected.
How much of a difference could the technology make? A new study sponsored by fuel cell makers Plug Power Inc. and Ballard Power Systems could offer some clues. Last year, the two collaborated on research to evaluate the potential impact of hydrogen fuel cell technology on greenhouse gas emissions, focusing on the fuel cell applications that are most likely to see near-term commercial use (which included material handling as well as residential cogeneration, backup power systems, and public transit buses). The study's results showed that global greenhouse gas reductions from these combined applications could be in the range of 31 million to 116 million metric tons through the year 2025, assuming a baseline level of hydrogen production. A reduction in greenhouse gases of that magnitude would be the equivalent of removing between 1.4 million and 5.6 million cars from roadways around the world.
"Our analysis provides a view of realistic environmental benefits that can be anticipated from fuel cell adoption in commercial markets," said John Sheridan, president of Ballard, in a statement announcing the study's results. "There are a range of market applications for which fuel cell-based products provide competitive advantage, while at the same time significantly reducing [greenhouse gas] emissions."
Congestion on U.S. highways is costing the trucking industry big, according to research from the American Transportation Research Institute (ATRI), released today.
The group found that traffic congestion on U.S. highways added $108.8 billion in costs to the trucking industry in 2022, a record high. The information comes from ATRI’s Cost of Congestion study, which is part of the organization’s ongoing highway performance measurement research.
Total hours of congestion fell slightly compared to 2021 due to softening freight market conditions, but the cost of operating a truck increased at a much higher rate, according to the research. As a result, the overall cost of congestion increased by 15% year-over-year—a level equivalent to more than 430,000 commercial truck drivers sitting idle for one work year and an average cost of $7,588 for every registered combination truck.
The analysis also identified metropolitan delays and related impacts, showing that the top 10 most-congested states each experienced added costs of more than $8 billion. That list was led by Texas, at $9.17 billion in added costs; California, at $8.77 billion; and Florida, $8.44 billion. Rounding out the top 10 list were New York, Georgia, New Jersey, Illinois, Pennsylvania, Louisiana, and Tennessee. Combined, the top 10 states account for more than half of the trucking industry’s congestion costs nationwide—52%, according to the research.
The metro areas with the highest congestion costs include New York City, $6.68 billion; Miami, $3.2 billion; and Chicago, $3.14 billion.
ATRI’s analysis also found that the trucking industry wasted more than 6.4 billion gallons of diesel fuel in 2022 due to congestion, resulting in additional fuel costs of $32.1 billion.
ATRI used a combination of data sources, including its truck GPS database and Operational Costs study benchmarks, to calculate the impacts of trucking delays on major U.S. roadways.
There’s a photo from 1971 that John Kent, professor of supply chain management at the University of Arkansas, likes to show. It’s of a shaggy-haired 18-year-old named Glenn Cowan grinning at three-time world table tennis champion Zhuang Zedong, while holding a silk tapestry Zhuang had just given him. Cowan was a member of the U.S. table tennis team who participated in the 1971 World Table Tennis Championships in Nagoya, Japan. Story has it that one morning, he overslept and missed his bus to the tournament and had to hitch a ride with the Chinese national team and met and connected with Zhuang.
Cowan and Zhuang’s interaction led to an invitation for the U.S. team to visit China. At the time, the two countries were just beginning to emerge from a 20-year period of decidedly frosty relations, strict travel bans, and trade restrictions. The highly publicized trip signaled a willingness on both sides to renew relations and launched the term “pingpong diplomacy.”
Kent, who is a senior fellow at the George H. W. Bush Foundation for U.S.-China Relations, believes the photograph is a good reminder that some 50-odd years ago, the economies of the United States and China were not as tightly interwoven as they are today. At the time, the Nixon administration was looking to form closer political and economic ties between the two countries in hopes of reducing chances of future conflict (and to weaken alliances among Communist countries).
The signals coming out of Washington and Beijing are now, of course, much different than they were in the early 1970s. Instead of advocating for better relations, political rhetoric focuses on the need for the U.S. to “decouple” from China. Both Republicans and Democrats have warned that the U.S. economy is too dependent on goods manufactured in China. They see this dependency as a threat to economic strength, American jobs, supply chain resiliency, and national security.
Supply chain professionals, however, know that extricating ourselves from our reliance on Chinese manufacturing is easier said than done. Many pundits push for a “China + 1” strategy, where companies diversify their manufacturing and sourcing options beyond China. But in reality, that “plus one” is often a Chinese company operating in a different country or a non-Chinese manufacturer that is still heavily dependent on material or subcomponents made in China.
This is the problem when supply chain decisions are made on a global scale without input from supply chain professionals. In an article in the Arkansas Democrat-Gazette, Kent argues that, “The discussions on supply chains mainly take place between government officials who typically bring many other competing issues and agendas to the table. Corporate entities—the individuals and companies directly impacted by supply chains—tend to be under-represented in the conversation.”
Kent is a proponent of what he calls “supply chain diplomacy,” where experts from academia and industry from the U.S. and China work collaboratively to create better, more efficient global supply chains. Take, for example, the “Peace Beans” project that Kent is involved with. This project, jointly formed by Zhejiang University and the Bush China Foundation, proposes balancing supply chains by exporting soybeans from Arkansas to tofu producers in China’s Yunnan province, and, in return, importing coffee beans grown in Yunnan to coffee roasters in Arkansas. Kent believes the operation could even use the same transportation equipment.
The benefits of working collaboratively—instead of continuing to build friction in the supply chain through tariffs and adversarial relationships—are numerous, according to Kent and his colleagues. They believe it would be much better if the two major world economies worked together on issues like global inflation, climate change, and artificial intelligence.
And such relations could play a significant role in strengthening world peace, particularly in light of ongoing tensions over Taiwan. Because, as Kent writes, “The 19th-century idea that ‘When goods don’t cross borders, soldiers will’ is as true today as ever. Perhaps more so.”
Hyster-Yale Materials Handling today announced its plans to fulfill the domestic manufacturing requirements of the Build America, Buy America (BABA) Act for certain portions of its lineup of forklift trucks and container handling equipment.
That means the Greenville, North Carolina-based company now plans to expand its existing American manufacturing with a targeted set of high-capacity models, including electric options, that align with the needs of infrastructure projects subject to BABA requirements. The company’s plans include determining the optimal production location in the United States, strategically expanding sourcing agreements to meet local material requirements, and further developing electric power options for high-capacity equipment.
As a part of the 2021 Infrastructure Investment and Jobs Act, the BABA Act aims to increase the use of American-made materials in federally funded infrastructure projects across the U.S., Hyster-Yale says. It was enacted as part of a broader effort to boost domestic manufacturing and economic growth, and mandates that federal dollars allocated to infrastructure – such as roads, bridges, ports and public transit systems – must prioritize materials produced in the USA, including critical items like steel, iron and various construction materials.
Hyster-Yale’s footprint in the U.S. is spread across 10 locations, including three manufacturing facilities.
“Our leadership is fully invested in meeting the needs of businesses that require BABA-compliant material handling solutions,” Tony Salgado, Hyster-Yale’s chief operating officer, said in a release. “We are working to partner with our key domestic suppliers, as well as identifying how best to leverage our own American manufacturing footprint to deliver a competitive solution for our customers and stakeholders. But beyond mere compliance, and in line with the many areas of our business where we are evolving to better support our customers, our commitment remains steadfast. We are dedicated to delivering industry-leading standards in design, durability and performance — qualities that have become synonymous with our brands worldwide and that our customers have come to rely on and expect.”
In a separate move, the U.S. Environmental Protection Agency (EPA) also gave its approval for the state to advance its Heavy-Duty Omnibus Rule, which is crafted to significantly reduce smog-forming nitrogen oxide (NOx) emissions from new heavy-duty, diesel-powered trucks.
Both rules are intended to deliver health benefits to California citizens affected by vehicle pollution, according to the environmental group Earthjustice. If the state gets federal approval for the final steps to become law, the rules mean that cars on the road in California will largely be zero-emissions a generation from now in the 2050s, accounting for the average vehicle lifespan of vehicles with internal combustion engine (ICE) power sold before that 2035 date.
“This might read like checking a bureaucratic box, but EPA’s approval is a critical step forward in protecting our lungs from pollution and our wallets from the expenses of combustion fuels,” Paul Cort, director of Earthjustice’s Right To Zero campaign, said in a release. “The gradual shift in car sales to zero-emissions models will cut smog and household costs while growing California’s clean energy workforce. Cutting truck pollution will help clear our skies of smog. EPA should now approve the remaining authorization requests from California to allow the state to clean its air and protect its residents.”
However, the truck drivers' industry group Owner-Operator Independent Drivers Association (OOIDA) pushed back against the federal decision allowing the Omnibus Low-NOx rule to advance. "The Omnibus Low-NOx waiver for California calls into question the policymaking process under the Biden administration's EPA. Purposefully injecting uncertainty into a $588 billion American industry is bad for our economy and makes no meaningful progress towards purported environmental goals," (OOIDA) President Todd Spencer said in a release. "EPA's credibility outside of radical environmental circles would have been better served by working with regulated industries rather than ramming through last-minute special interest favors. We look forward to working with the Trump administration's EPA in good faith towards achievable environmental outcomes.”
Editor's note:This article was revised on December 18 to add reaction from OOIDA.
A Canadian startup that provides AI-powered logistics solutions has gained $5.5 million in seed funding to support its concept of creating a digital platform for global trade, according to Toronto-based Starboard.
The round was led by Eclipse, with participation from previous backers Garuda Ventures and Everywhere Ventures. The firm says it will use its new backing to expand its engineering team in Toronto and accelerate its AI-driven product development to simplify supply chain complexities.
According to Starboard, the logistics industry is under immense pressure to adapt to the growing complexity of global trade, which has hit recent hurdles such as the strike at U.S. east and gulf coast ports. That situation calls for innovative solutions to streamline operations and reduce costs for operators.
As a potential solution, Starboard offers its flagship product, which it defines as an AI-based transportation management system (TMS) and rate management system that helps mid-sized freight forwarders operate more efficiently and win more business. More broadly, Starboard says it is building the virtual infrastructure for global trade, allowing freight companies to leverage AI and machine learning to optimize operations such as processing shipments in real time, reconciling invoices, and following up on payments.
"This investment is a pivotal step in our mission to unlock the power of AI for our customers," said Sumeet Trehan, Co-Founder and CEO of Starboard. "Global trade has long been plagued by inefficiencies that drive up costs and reduce competitiveness. Our platform is designed to empower SMB freight forwarders—the backbone of more than $20 trillion in global trade and $1 trillion in logistics spend—with the tools they need to thrive in this complex ecosystem."