Michael Birk, Frito - Lay

FLNA Fleet Michael Birk Sr. National Fleet Sustainability Manager

PepsiCo's Performance with Purpose‌

Corporate Vision: Become A Pre-eminent Green Company

Water

100

70 60

'99

'00

'01

'02

'03

'04

'05

'06

'07

'08

'09

80

60

25%

90

70

50

Electricity

100

kwh / Lb

BTU / Lb

Gal / Lb

33%

90

80

40

Natural Gas

100

45%

90

80

70

'99

'00

'01

'02

'03

'04

'05

'06

'07

'08

'09

60

'99

'00

'01

'02

'03

'04

'05

'06

'07 '08

'09

3

World Class Fleet

Reliability Provide safe, dependable vehicles for all our associates and the customers we share the roads with everyday

Sustainability

Capability

Preserve the environment and reduce green house gases while becoming one of the most fuel efficient fleets in America

Build a powerful team of fleet professionals who continue to provide World Class Service

7th Largest Fleet in North America‌

Route Trucks 13,300

Medium Duty 3,400

Trailers 3,800

Tractors 1,100

Todays Objective…

Provide practical “How To” example of implementation technique and tools…

Q: What is “Critical Mass” with an Alternative Fuel?

A: When it becomes “The Fuel” of choice and the predominant fuel in a segment of the fleet. i.e. when most of your new vehicle purchases are the “alternative” fuel.

We Will Be Most Fuel-Efficient Fleet in America through People, Process, & Technology…

2012

2010

2008

2X MPG

EV

6-7%

MM Gal

46.1

45.6

46.7

47.8

CNG

8-10%

18%

50 46.3

2020

45.7

43.4

41.2

39

37

35

33

25

31

50% 29

27

25

23

‘18

‘19

‘20

Strategy Implemented

0 ‘04

‘05

‘06

‘07

‘08

‘09

‘10

‘11

‘12

‘13

‘14

‘15

‘16

‘17

Electric Box Trucks‌ Largest All-Electric Commercial Fleet in North America with 280 Vehicles by the End of 2013

$.30 per gal.

Reduces

CO2 by

75%

<75% GHG/mi

<89% $/mi

Why CNG…

How to implement NGV’s?

Its about………

Which Fuel Where?

Equipment Fuel Maintenance Culture, Organization & Change Management

Business

People

How to figure out what works whereâ&#x20AC;Ś Segment your fleet and the fuel choices Fuel

Availability

Source

Renewable?

High mileage route, bulk & OTR

High

Import

NO

(baseline)

Gasoline

Cars, route trucks

High

Import

NO

(baseline)

Propane

route trucks

CNG

OTR tractors

Diesel

Electric Hydrogen Ethanol/E85 Biodiesel/B20

mid-mileage bulk

High

Domestic

NO

Low/Moderate

Domestic

Some

High

Domestic

Some

GHG/mi

Fuel $/mi

FL Application

LCC/ROI

Future cost down?

Notes

Short vs long term depends on annual miles and grant funding availability no funding requirements

TBD

Low

Domestic

TBD

Moderate

Domestic

YES

net GHG uncertain, cost neutral net GHG uncertain, cost neutral

bulk & OTR

Moderate

Domestic

YES

TBD

Low

Domestic

Some

DME/syn diesel

TBD

Low

Domestic

TBD

Application

Annual Miles

Diesel

Cost vs annual miles

currently still requires grant funding

Cars, route trucks

LNG

Whatâ&#x20AC;&#x2122;s important?

TBD

TBD

TBD

Gasoline Propane

Electric

TBD

CNG

TBD

TBD

LNG

requires significant development

Renewable/Domestic Domiciled vs. long-haul

less costly equipment

Hydrogen

?

Low Route Truck

Med High

?

Low Bulk Truck

Med High Low

Tractor

Med High

?

How to determine the economics…

• Side-by-side model • Investment • Fuel • Maintenance CNG Side-By-Side

General # tractors Base Unit MPG, diesel eq.

Engine Efficiency Factor Transmission efficiency Annual Miles/Unit Total Annual Miles

Inputs in yellow outputs/calculations in green

Diesel 100 7.0 1.0 1.0 100,000 10,000,000

CNG 100 6.0 0.95 0.90 100,000 10,000,000

Capital Investment Purchase Price ea- w/o incentives Incentives - portion of incremental $ Incentives - cash/rebate Incentives - Tax credit Garage Conversions Net Capital Price Book life, years

$100,000

$150,000

$0 $0 $0 $10,000,000 7

$1,000,000 $0 $1,000,000 $15,000,000 7

Fuel Fuel Price, $/gal (Bulk), GDE Annual Fuel Used, gallons DE Fuel cost/mi Annual Fuel $

$4.00 1,428,571 $0.571 $5,714,286

$2.00 1,666,667 $0.333 $3,333,333

Repair & Maintenance Annual PM, base tractor DEF Subtotal, R&M R&M, cost per mile

$206,878 $114,286 $321,163 $0.03212

$282,819 $0 $282,819 $0.02828

Other Fueling Frequency, x/wk Labor hrs/fueling event Labor rate, $/hr Subtotal, fueling labor

5.00 0 $25 $0.00

5.00 0.4 $25 $260,000.00

SUMMARY - Annual/per truck Fixed expense (depr) Fuel R&M Other

$1,428,571 $5,714,286 $321,163 $0

$2,142,857 $3,333,333 $282,819 $260,000

TOTAL annual

$7,464,021

$6,019,009

TOTAL per mi GHG Generation, mTons GHG g/mi/unit

• Maintenance & Garage conversion models • PM events • Frequency • Cost • Inside vs. outside labor

$0.75

$0.60

14528.6 1452.9

12063.3 1206.3

DIESEL

CNG Diesel Interval

100,000 Mile Look $ 50.00 /hr labor rate Extended Cost

QTY

Cost per event

Parts/Mat'l

Labor hrs

$ $ $ $ $ $ $ $ $ $ $ $ $

3.33 1.67 1.67 0.00 0.00 0.42 0.00 1.25 0.20 0.42 0.20 0.20 0.00

$213 $350 $175 $0 $0 $200 $0 $50 $1,800 $300 $250 $450 $0

$100 $200 $150 $0 $0 $0 $0 $0 $1,500 $200 $50 $250 $0

2.3 3.0 0.5 0.0 0.0 4.0 0.0 1.0 6.0 2.0 4.0 4.0 0.0

708.33 583.33 291.67 83.33 62.50 360.00 125.00 50.00 90.00 -

$ 2,354.17 total for above interval

CNG Interval

PM Task 30,000 60,000 60,000 n/a n/a 240,000 n/a 80,000 500,000 240,000 500,000 500,000 0

Safety Insp/Oil filter/top off Major PM/ LOF Fuel Filter Spark plug Fuel Tank Inspection Valve adjustment Coolant filter only DPF/Regen DPF/Cleaning SCR / DEF system 7th injector maintenance Transmission Fluid Coolant replacement 5410 Tractors / All WO including PM

18,000 36,000 36,000 72,000 36,000 72,000 n/a n/a n/a n/a n/a 306,000 0

Labor hrs

Parts/Mat'l

Cost per event

QTY

1.2 1.8 0.0 1.0 4.0 4.0 0.0 0.0 0.0 0.0 0.0 4.0 0.0

$150 $175 $0 $450 $30 $65 $0 $0 $0 $0 $0 $250 $0

$210 $265 $0 $500 $230 $265 $0 $0 $0 $0 $0 $450 $0

0 2.78 2.78 1.39 2.78 1.39 0.00 0 0 0 0 0.33 0.00

total for above interval:

Extended Cost

$ $ $ $ $ $ $ $ $ $ $ $ $

736.11 694.44 638.89 368.06 147.06 -

$

2,584.56

0.11 / mile $ 2,354.17 PM cost/ 100M miles $0.0235 PM cost / mile

PM MX Difference; CNG B/(W)

($0.0023)

$ 2,584.56 PM cost/100M miles $0.0258 PM cost / mile

 Applicable to any alt fuel  Understand the main drivers  Look for biggest opportunity areas  Align with all functions on the numbers

CNG – How to source CNG Fuel Our strategy is to pursue the anchor partner approach Don’t just sit and wait for fuel to come your way!

Type

Pros

Cons

Type of Agreement

Public fuel station

•No Capital •No volume commitment •No Operating complexity

•Location •Performance •Pricing

Best Negotiated Price; volume tiers may be available.

Anchor Partner

•No Capital •Pricing •Distance •Performance •Royalty potential

•Volume Commitment

Take-or-Pay Cost +

•Distance •Performance •Pricing

•Operational Complexity •Capital

Internal Station

(gas + capital + ops+ profit)

Cost (gas + capital + ops & mx)

How to pursue stations: Anchor Partner Strategy – National RFP • Commitment for fuel volume over 5 or 7 years.

• 14 potential sites for new stations • Issued to national & local fuel providers • Favorable Pricing, Station Performance, & Location • Competitive bidding • Awarded 7 stations for 2013

How to Manage the Change - People

• • • • • • • •

Engage drivers & technicians at site business reviews National Ops Meeting – Mgrs/Leaders Sign Boards National Calls – weekly, monthly Training: leveraged OEs and NGVI Site Prep – countdown readiness Resourcing • Dedicated national program leader • Dedicated national technical expert

Overcommunication!  Invite & welcome people to challenge it

How to communicate â&#x20AC;&#x201C; poster board examples

Simple, visual Post in Driverâ&#x20AC;&#x2122;s rooms, hallways, etc.

How to ensure the sites are ready â&#x20AC;&#x201C; site Countdown/ checklist Lead

Task Name

Mi chael B.

CNG Ki ckoff (QBR)

Da vid

Loca l Deal ers hip identifica tion

Vol vo/Agility

Meet with Loca l Dea lers hip

Mi chael B.

Na tional or Regiona l OEM Fi eld Servi ce Conta cts identifi ed

Les ter W

Ma intenance Tra ining (Pla n & Execute)

19-May 26-May 2-Jun 9-Jun

At launch: On-site HQ project team representation

Tank ins pection Tra ini ng Engine Tra ining Jim J

PM interva l identifi ed

Jim J

Communi cate Roa d Side As s i s ta nce i nforma ti on

Jim J

Educa te s ite on flui d recommenda tions

Les ter W

PM Pa rts identi fied / ordered

Les ter W

CNG tool s

Mi chael B.

Tank Ins pection Deca l s

Mi chael B.

Provi de Site OE conta cts

Mi chael B.

Site join na tiona l relia bi lity ca ll

Jim J

PMI Method complete

Jim J

Wa rra nty Informa tion communica ted

Mi chael B.

Pa yl oa d / Ra nge identified a nd communica ted

Loca l tea m

Determine runs CNG tra ctors a re compa tibl e to

Hermes R

Ga ra ge a s s es s ment

Loca l tea m

Site a wa renes s communica tion - CNG Sa fety requirements

Les ter W

Shop fa cil ity wa rning s i gna ge

Loca l tea m

Order a ppropriate CNG s pecifi c fuel ca rds

Loca l tea m

Es ta blis h fuel protocol, prima ry, s econdary, i n-route

Les ter W

Provide Site with CNG Ma intena nce video

Mi chael B.

Provide Site with CNG Sa fety / Opera ti on Vi deo's

HQ/ Si te

Driver Sa fety / Emergency Procedure

Site

Ens ure Site Saftey Ma na ger is invol ved on CNG Project

High urgency and touch on any reliability or fuel issues (w/vendor support)

How to get a site ready â&#x20AC;&#x201C; Demo truck

2 Demo tractors Send to sites ahead of launch Practice & get comfortable with driving and fueling Leasing/Renting may be a viable option

How to Educate • Driver Round Tables/Meetings • Field Participation in Pilot Reviews & Conferences • Training/Familiarization Videos

CNG Fueling

Fueling Process Training Safety Overview

Natural Gas Vehicles A Closer Look at Safety

Fuel Properties Truck Safety Tank Design & Testing

How has it worked?

CNG Sites 2013: 208 units = ~20% of fleet at 50% of locations

Beloit

Canton Killingly

Topeka Frankfort Rancho Cucamonga

Phoenix

Jonesboro Charlotte

Irving Dallas Casa Grande

Perry

Rosenberg

2013: 70% of new units are CNG

2014- :

80+%

Orlando

Is the Frito-Lay fleet at “ Critical Mass”

EV – close but not quite yet Propane – close but not quite yet CNG Class 8 – YES!

 Business

People

     

Which Alt Fuel Where?

Equipment Fuel Maintenance Culture, Organization & Change Management

â&#x20AC;˘ Save almost 3,000,000 gallons of diesel And 3,000 tons of emissions annually

Questions?