In a move to add to its fleet of more than 3,150 alternative-fuel vehicles, today UPS (NYSE:UPS) announced it will be investing approximately $70 million to create a delivery fleet that is fueled by propane across rural Louisiana and Oklahoma, and potentially other states.
The investment will result in UPS installing 50 fueling stations at various locations that will be used to fill the 1,000 delivery trucks -- which can travel up to 200 miles on a tank of propane -- it plans to purchase. The company also highlighted it currently has almost 900 propane vehicles, which are currently in use in Canada. The operations in the U.S. are expected to begin by the middle of this year.
"The UPS alternative fuel strategy is to invest in the most environmentally friendly and economical energy sources," said the chief operating officer of UPS, David Abney, in a company press release. "Propane meets those criteria as a clean-burning fuel that lowers operating costs and is readily accessible, especially on rural routes in the United States. States that attract this type of investment with tax incentives and grants will factor into the UPS deployment strategy."
UPS said it tested a fleet of 20 propane-powered delivery trucks successfully in Gainesville, Ga., over the winter. It also worked with equipment manufacturers and the non-profit Propane Education & Research Council (PERC) to secure the necessary permits and certifications with federal and state authorities.
UPS said it expects the fleet of delivery trucks will travel more than 25 million miles per year, displacing 3.5 million gallons of gasoline and diesel fuels. The company said propane has greater price stability and access to supply as a result of the increase in natural gas production across the United States.
The Propane Education & Research Council says propane is a hydrocarbon (C3H8) that is sometimes referred to as liquefied petroleum gas, LP-gas, or LPG. "Propane is produced from both natural gas processing and crude oil refining, in roughly equal amounts from each source," according to the council.
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