|
Grayson Brulte:
|
Hello, I'm your host, Grayson Brulte. Welcome to another episode of SAE Tomorrow Today, a show about emerging technology and trends and mobility leaders and innovators make it all happen. On today's episode, we're absolutely honored to welcome Matt McClelland, Vice President, Sustainability Innovation, Covenant Logistics.
On today's episode, we'll discuss a practical approach to sustainability and why the small things make a difference. We hope you enjoy this episode. Matt, welcome to the podcast.
|
|
Matt McLelland:
|
Hey, thanks. Great to see you again.
|
|
Grayson Brulte:
|
It's always great to see you and all of our folks in trucking know you're Mr. Adventurer. You're out there in your camping van doing all sorts of stuff. You got a cyber truck recently, but when you're out there on the road on your adventures or hiking the Dolomites, you're always thinking about sustainability and this weekend, very similar to you, I was having a coffee reading the Wall Street Journal and it was an article I want to ask you about because talk about greenwashing and how brands are not going to meet their publicly stated 2025 environment environmental goals.
What do you make of this? Why is the journal now highlighting it?
|
|
Matt McLelland:
|
I read that same article. In fact, my journal comes a day late on the weekend, so I actually didn't read that until this morning. It's interesting because a lot of big brands are making carbon commitments, right? And it seems like the clothing barons were doing it.
A little bit sooner than some of the other, traditional like trucking companies and folks like that. There was a company, I can't remember the name right off the top of my head. They made a brand of clothes that were only designed to be worn twice. And then it was discarded. And I just don't understand how things like that survive even today.
But yeah, so that article that you're mentioning was about greenwashing. It was about, Lululemon who had gotten out of their skis and made some commitments about. About the way they were going to be doing recycling the content of their clothes and ultimately ended up working out that way.
And so they had to do a little bit PR control, damage control and figure out how to pull that back. And it's I'm going to see, I believe Grace and you and I probably agree on this. I think we're going to start seeing a lot more of that. Over the next year across, the industry that you and I spent a lot of time in all the way to consumer brands.
I think that a lot of folks have gotten out over their skis Made commitments without really figuring out what the roadmap it was going to take in order to get there and yeah, I just think we're on the front end of this.
|
|
Grayson Brulte:
|
We are the front end of this we've talked about this offline, but I’m gonna bring this online The technology wasn't ready to make these commitments.
I believe you read something about Mr. Bill Gates talking about that. Why make these commitments when the technology is not there and readily available to make these commitments?
|
|
Matt McLelland:
|
Yeah, you mentioned Gates. In fact, it's funny, I have his book right here, How to Avoid a Climate Disaster. And it's funny because Bill Gates and I have the same science degree from the same college.
We don't have one. But he's a, he's an incredibly smart guy. And I agree with him on a lot of things, there's a lot of things that we don't, but this book is fascinating. And if the listeners haven't read it, I think that they should, because, in this, he unpacks environment, what it means, what carbon initiatives are, how to put that in context.
And in it, one of the most important things he talks about in the very beginning is that a lot of companies that have initiatives for 2040 and 2050, if you were to ask them to unpack it, break it down, explain to me, How you're going to get there with the milestones are along the way. Most of them wouldn't be able to do that.
They just pick a date. It's far enough into the future. And this is the key part, right? This is the part that you and I talked about. They're banking part of their strategy on technology that has yet to be invented. And I'm not saying that's a bad thing. I think that. This, the phones, the computers that we use, the cars that we drive, all these things are getting faster and better and cheaper exponentially.
And I think that sustainability initiatives are the same way. But I don't see how you can pick a date for something that's a gold that big without a little bit more A little bit more progress than we've got right now. Does that make sense?
|
|
Grayson Brulte:
|
That makes a lot of sense. Then where does risk management brand management come into the picture because you're taking a lot of risk the journal article broke down the reputational risk you're sitting here a covenant leading You're not just sitting there throwing a dart at the board.
You're actually seeing what's available and you have this great term. I'm going to paraphrase you the bridge technology, the hybrid technology. Why are goals not being set with what's readily available today? Or if you look at new and emerging technology, that's getting better. Renewable diesel, for example, it's a great bridge technology, but yet those aren't taken into account unless someone like you, you're doing your homework.
|
|
Matt McLelland:
|
Yeah, so I'm glad you brought that up. And there are a lot of different directions that we could take that. So just for a little bit of background for your listeners. Covenant Logistics, we're a for hire trucking company. And the reason that's important is because we have, there are private fleets and there are for hire fleets.
Covenant being a for hire fleet is we operate trucks and do deliveries, nationwide, long haul. Based on what customers hires to do. Sometimes those are contracted rates that, that kind of go for short periods of time. Sometimes they're longer periods of time, but here's why it's important to distinguish us from for hire from private fleets is that our ability to set sustainability initiatives, our ability to say, we're going to decarbonize X percentage of our fleet by a certain date are 100 percent dependent on customers willing to pay the premium that it's going to take in order for that to happen. And so to get back to your question in order to set initiatives, we have to be able to recoup the cost on that. And so we haven't really taking a strong of a position on this is probably a lot of our investors and a lot of our customers would want us to, because we just can't afford to do it.
What we're really interested in and what I'm really excited about is this very thing you talk about bridge technologies, a zero-emission vehicle doesn't get us 600 miles a day, but a bridge technology, a biogenic fuel, a hundred percent biodiesel or CNG, RNG, maybe some hybrid version of an electric truck. These are things that we could be doing today. You and I've talked a lot about renewable diesel in the past. In fact, for those of you that are watching this in video, I've got a little vial of it right here. This is a product that you can put in at the pump, assuming that you can get it outside of California.
Cause right now it's still a little bit scarce. It's not that much more expensive than regular diesel, 60 percent fewer greenhouse additions out of the tailpipe just from using this, and I can start using this drop in fuel. And I'll say one last thing and I'll let you direct me in a different direction because we could go on and on about renewable diesel is that this is available today.
This is affordable. And just because it's not a zero-emission solution doesn't mean that it's not a great thing that we should start doing right now.
|
|
Grayson Brulte:
|
It's available. It's available. It's there. And just to clarify for the listeners, you and I both know this, but I love your expertise. There's no infrastructure upgrade required.
You don't have to plop in a new engine. You don't have to get a new fueling station. But yet if you look at the all-electric mandate or mindset, the technology is not where it's going to be, and you have to build all this infrastructure But yet renewable diesel is here today without the need for the capex of infrastructure But yet there's this all-electric mindset and mandate. Why?
|
|
Matt McLelland:
|
Yeah So I want to say one thing about this that I want us to come back to electrification because I don't want To send the listeners a message that I'm just completely throwing it under the bus.
But the Infrastructure Reduction Act or the IRA that was passed a few years ago, a lot of money that seems to be targeted largely towards electrification. It goes some other places too, right? But there's a lot of emphasis on electrification. I think that money could have been better spent. At least in terms of what the money was set aside for, which is carbon reduction.
I think they should have done what Canada did, which was offset, use government investment to create a giant refinery, like they did in Alberta, Canada as a way to, and they can build that up within a year. They can start just churning this stuff out left and right. They, we can't, the reason why RD only exists in California is because it's a hundred percent of it is consumed right there within just a few miles of where it's produced, they don't need to waste any money shipping it, moving it anywhere through a distribution network.
Because that costs money and they can use it all right there. One of the biggest uses of renewable diesel, at least the feedstock and the refinery process is that you can use it to make what's called sustainable aviation fuel. So between the trucking industry and the aviation industry, The IRA should invest in some of these refineries to make some progress here in the short term.
|
|
Grayson Brulte:
|
Should, but you forgot, not getting into politics, but refineries are considered evil and dirty, but yet they make a lot of sense if you look at refinery investments. Delta, you're a Delta flyer, I believe you're a million-mile flyer. They invest in refineries when Gil West and Ed Bastian were running the company and look at success they had with that.
So why don't we put a business mindset when it comes to refineries because of the positive economic impact that they can have also while reducing carbon emissions?
|
|
Matt McLelland:
|
Yeah, there's this phrase I like using that's a don't let perfection get in the way of progress. And, yes, it is still a refinery.
But, as long as you and I still need to drive to the airport and take a flight and get a truck full of critical supplies, whether it's medical or groceries, trucks aren't going away anytime soon, and neither is petroleum-based propulsion of planes, trains and automobiles. And to make it more difficult for us to do our job, like the carbon initiatives and ACT and ACF, some of those things that are going on in California that are forcing for hire and private fleets to start Pushing a certain percentage of their fleets over towards electrification.
Because again, the way the law is written, the only thing that counts is zero emission vehicles, electric or hydrogen vehicle, then we're just leaving a lot on the table. And you made a comment about me and my personality and the things I enjoy doing early in the podcast, I'm a huge outdoor advocate. I love being outside. And one of the things that really gets me excited about work is that the results of the things that I get involved with only make my playground bigger. And there's just so many benefits that we can have to make the environment a better place right now without having to go in all electric.
|
|
Grayson Brulte:
|
You're right, but it seems that it's political taboo. And then we learned on Sunday, let's see what the political fallout of this is going to be. We're going to have a new administration come January 20th. It's either going to be a different Democratic candidate or it's going to be a second Trump term.
What impact is that going to have on sustainability? Because the cabinet is going to change, the executive positions are going to change. There's going to be a complete overhaul one way or another.
|
|
Matt McLelland:
|
Yeah. I'm not sure. There's a lot of ways to take that. And I know that we try to keep the politics out of this a little bit, but I think that the left has gone too far with this obsession with electrification as a, as the only, you and I've used the example for as a construction worker, having a tool belt with a screwdriver for, and a flathead screwdriver and a hammer and a drill and a chisel, because you have different tools for different jobs, but the democratic tool belt is just a, is a hammer and a hammer is an electric vehicle. And I feel like that's the wrong approach. I think Trump, on the other hand, when he starts talking drill, baby drill, which he did in one of his campaign speeches the other day, I think that's divisive, provocative language.
And while I believe that we do need to, to continue to create the infrastructure we need for petroleum-based products, at least in the short term, somewhere in the middle is where we need to start leaning. And I think that regardless of who wins, there's still going to be progress.
It's probably going to be exactly the way any individual wants it to be. I don't think. People on the left are going to think the right's gone far enough. And I think people on the right are not going to think the left has gone too far with identifying everything about electrification. But, at the end of the day, things will be different.
And I really hope that whoever wins will wake up and acknowledge that hybrid solutions, the messy middle, these bridge technologies that are here right now need to be considered. And need to be acknowledged and need to be written into some of the existing legislation that's dictating these climate initiatives that private companies are having to set.
|
|
Grayson Brulte:
|
Hybrids, great example, one of the fastest growing classes of vehicles, and let's not forget hybrid owners vote. Hybrid owners vote, but yet why is there not more positive communications around hybrid vehicles coming out? They're better for the environment the consumers clearly voting with their pocketbook and they're gonna vote in the ballot in November But yet it seems that hybrids are trying to be pushed away when you do not need the infrastructure Electric vehicles outside Tesla not ready for the primetime you and I know I had an electric vehicle is finally deemed a lemon It just didn't work But yet hybrids work.
I'm going back to a hybrid. I got a hybrid. I ordered one. And then you're sitting here, you own an electric vehicle as a cyber truck, you own a gas-powered van. What are your thoughts on the right approach? Because and I both know, that EVs are not the right solution for every type of driving.
|
|
Matt McLelland:
|
So in my own lived experience, you made a good point. I did just, I'm now the proud owner of a Tesla cyber truck. I waited four years to get it. I'm very fortunate, blessed maybe that. I do have a second car. It's not actually a gas power. It's not gas. It's diesel, but same idea, right? The hybrid the battery electric truck the cyber truck is good for 98 percent of everything that I do but if I have to go on a road trip an electric vehicle still will work.
It's going to be a little bit more challenging, my van, my Sprinter van is going to be a much more practical solution. But then I'm fortunate in that I have that option to have two different vehicles. I think that in the short term, until electrification can become a little bit more mainstream until renewable energy can be a little bit more available, not just in one location, but across the country, charging stations, the battery technology that is coming from places that are a little bit more concerned about human rights. I think that in the short term, a hybrid solution is where we need to be and I, this, if you're fortunate enough, whether you're a trucking company or an individual to be able to have a backup plan, because again, an electric vehicle is not without issues.
And maybe we can spend a couple of minutes talking about that because, that's the space that I live and work in every day. Electric vehicles just. Yeah. Don't work for the type of freight that we haul. We go typically 300 to a thousand miles a day, 300 to 400 to 500 and our sort of dedicated solo trucks and up to a thousand miles a day.
And our team-based trucks, you can't achieve those kinds of distances with an electric vehicle. And then of course, the bigger, the battery, the heavier, the truck, the heavier, the truck, the less freight in the back, the less freight in the back. Then all of a sudden, you've got to have two trucks doing the work of one truck.
And then you've got congestion and resource allocation sort of challenges and cost and expense. So it's really gets complicated, and there is no one size fits all solution to any of this.
|
|
Grayson Brulte:
|
For what your business is electric won't work. Hydrogen eventually will fill that void or will another, or is it be renewable diesel? Or is there another new potential emerging technology that you have your eyes on to fill that void?
|
|
Matt McLelland:
|
It's a great question, Grayson, because if things keep moving along like they are now. The only definition of a zero-emission vehicle is a hydrogen or an electric truck. So we will have to purchase and to use and to invest in that equipment, which I can only hope that.
Our customers are willing to pay the premium. It's going to take to operate those assets. The frustrating thing about carbon, and again, I don't want to come across as anti-regulatory because I believe truly that some of our nation, some of our most complicated problems have been solved through smart regulation over the last century, right? But I think that big fleets like us, we're not on the same playing field as smaller fleets. And what I mean by that is in California, a big fleet is categorized as 50 million a year or 50 trucks which we fall into that category. Companies like Werner, U.S. Xpress, J. B. Hunt, Knight Swift, these are all companies that, that fall into that category.
Smaller fleets are exempt, and you could say they're exempt from now, but they're exempt. And there's been no talk about when that's going to change. So if I'm customer ABC and I've got to get a load of fruits and if I've got to move office equipment or automotive supplies throughout the state of California, and I have to work with a big fleet and I have to pay, a certain rate, but then working with a company that's exempt from those rules.
You can get that same freight move for what a 20th of the cost, 30 cents on the dollar, 20 cents on the dollar. I'm going to choose the cheapest option every single time. And we're not really going to be in a level playing field. A lot of us are worried how these regulations are actually going to allow us to continue operating these states.
We're just taking a wait and see approach. I do believe that some of these things are going to be challenged probably. Successfully, and it's going to kick the can down the road a little bit further, and I really hope that time that we're buying is going to change the regulatory sort of the way they look at technology, and they're going to allow for some of these renewables, some of these hybrids, some of these bridge technologies to be considered.
|
|
Grayson Brulte:
|
It should be considered. So let's throw another ingredient into the mix here. The CEO of the Science Based Technologies Initiative resigned on July 2nd. What impact is that going to have since that's so widely cited?
|
|
Matt McLelland:
|
SBTI, Science Based Targets and Initiatives, is interesting because, what that organization does, and again, I admire the work they do to address the idea of climate change and, Corporations can contribute to that.
What SBTI does is, they want companies to make climate commitments and to be able to back up how it is that they plan to get there. I think Amazon had a goal to be a certain percent zero mission by 2030, and then going all the way a little bit further in 2040 and all the way in 2050, they got SBTI certified, they were able to demonstrate how are they going to do it, they start digging a little deeper a few years later, and they ended up having to pull it back.
Because look, the math just wasn't going to work. And I think that, all of these models and forecasts and things that have to deal with SBTI certification, those are really difficult and really challenging and really difficult to figure out and easy to get wrong. And I'm not sure exactly why that guy abruptly left, but typically you don't abruptly leave a position of that significance unless, you, unless there's something going on that is pretty significant. So I don't know exactly what it was, but I do think that organization probably lost a little bit of credibility because of that. And yeah, so we'll see.
|
|
Grayson Brulte:
|
Could that lead to the days of sun setting environmental goals? Could that really lead to that? Because we've seen what happened with clothing.
We're going to see what's going to happen. The truck side. Could that lead to the sun setting of goals until there's actually a day? Yeah. Approving technology and on the backside that could that usher in what you've talked about bridge technologies?
|
|
Matt McLelland:
|
I mean we have seen you know, just I guess it was last month Grayson this gets a little bit bigger than just sustainability goals But tractor supply, large public company based in Nashville, Tennessee just right the road for me They pulled back all of their sustainability and DEI initiatives They completely said we're backing off all this stuff.
It doesn't mean that we're not going to try to continue to be a company that values basic concepts of diversity, equity, inclusion, and sustainability. They're not going to all of a sudden start throwing stuff in the ocean and, get rid of the blue recycle bins around the office. They're going to keep up those programs, but they aren't going to live under the heavy regulatory environment of how those things are managed and put together So I can't remember there was another company over the weekend that recently just pulled back.
|
|
Grayson Brulte:
|
John Deere pulled back.
|
|
Matt McLelland:
|
Yeah, John Deere pulled back there's as well. Yeah. Thank you for reminding me of that And so I think we're gonna start seeing more of that Covenant's position has always been a very pragmatic one You know, we are very proud of the investments that we're making, you know again I'm proud don't want to turn this into a promotion of the person, the company that I work for, but I do believe that most companies like Covenant in modern society, we're good corporate citizens.
We don't do thing. We don't have behavior that has to be regulated to the way that it does. For example, when we change engine oil, I don't think in any scenario, whether there was regulation or not, we would be. Pouring it into, someplace that's going to end up in the streams and water systems of around.
I think we would always be recycling and disposing of it properly. Maybe I'm a little bit Pollyannish about it, but I do believe that corporate actors today are much better citizens than they have been in the past. I think that our approach to sustainability is just so important. Just talking very clearly about the programs that we're doing, the solar panels that we have on the roof, the investments that we're making to try to improve fuel economy, working with partners that believe in the circular economy, believe that, we need to try to use recycled materials before we use new materials, the people we buy our trucks from, the companies we buy our fuel from, the people that we buy our tires from, just for example, the Last year, we bought around 33, 000 tires from Bridgestone.
Half of those were retreads. We're really proud of that. And we would, we're doing that without having this big sustainability and, initiative around it. We're just telling our story and we're very proud of our story. But again, we haven't set targets that we're going to have to walk back if something were to happen and we won't be able to continue to do those things.
|
|
Grayson Brulte:
|
You're doing. You're not telling but I do want to tout your company and I know you've spent a lot of time and effort on This your sustainability report is well done. It's practical. It's not written from a high level you write about What you're doing. What was the inspiration? How did you and Covenant come around to taking this?
I'm gonna call this practical approach to sustainability We're actually doing things with the retread of tires the recycling of oil You're actually doing little things that add up to one big giant meaningful thing
|
|
Matt McLelland:
|
Yeah Grayson I'm gonna take a moment to do something that I feel like a lot of people don't do is One of the things I love about my job is that I have my frenemies, right?
I call them my frenemies. These are people at my competing, competing organizations companies like Werner, people like J. B. Hunt, companies like, companies like Nightswift and I have on speed dial the sustainability leadership of most of those companies. And we have conversations on a regular basis about, I like this. I'm trying this. Did you have good luck with this? And we trade ideas. So we're competitors, but in the sustainability space, there's a lot of information sharing. One of my close friends, and you know him well, he's not really a competitor, but he is Mike Placencia down at Ryder Ventures.
I'll call Mike. And I just talked to him a couple of days ago about electrified trailers, cause he's done a lot of research into that. And I said, hey, I've met this company. We're thinking about trying this. What is your take on it? And we talk as peers and colleagues, even though we're competitors, eventually it gets into non to NDA territory.
And we have to be very careful about that where I'm going with this. Is the following. I think that I appreciate your positive comments about our sustainability report, but I think that all of us are cognizant of unnecessary business travel of using retreads whenever possible of using biodiesel B 20 whenever it's available about using and working with OEMs that are very cognizant of the circular economy about using remanufactured parts instead of parts that are brand new, created from virgin sources, and I think that we all probably do that to some extent because, we all are professional companies with a lot of really smart people and, the funny thing about sustainability and we haven't always called it that, but that's what we've been doing is part of sustainability is just Good business, right?
We didn't call it sustainability. We're trying to get better fuel economy. Better fuel economy is cost savings. Cost saving is higher profits. And we would be doing that even if we weren't being mandated to do it. So to wrap, bring this back around full circle to your original question.
I really enjoyed putting our report together. I was inspired by a lot of other great sustainability reports by my competitors, my good friend Jerrod Mounce over at J.B. Hunt, Shawntell over at Werner, Margarita down at Ryder, these are all people that Guy Hurst up at C.R. England, A lot of us work together with my growth.
Our friend, my growth at the North American Council for Freight Efficiency. We're all on a call every two weeks to share best practices. And that's just really one of the things I love about the industry.
|
|
Grayson Brulte:
|
How much do you learn from your competitors? You call in front of me, we overlap on a lot of friends. We're at ATA together and you and I can't go two feet without bumping into somebody we know and saying, hello, what do you feel that you truly learn from Your frenemies, I call them friends, you call them frenemies. What do you learn from them?
|
|
Matt McLelland:
|
A lot of times it's, I tried this and it really worked well. I'll give you an example. Although this person I'm going to reference is not really a frenemy, they're more of a potential customer, but a for-hire fleet that is doing tremendous, making tremendous strides, promoting sustainability, putting their money where their mouth is making significant financial investments and reaping massive carbon benefits is Pepsi.
So my friend Adam Buttgenbach runs a lot of those fleet initiatives for them. He's out of Dallas, Texas. He does a lot with their electrification program, but I came across a company called Optimist Technologies. They make a bolt on to a truck that allows you to run a hundred percent biodiesel. I knew that Adam was using them on around, two or three hundred trucks in his fleet.
First thing I did was I called Adam. Adam, tell me about your experience with it. And he went on and on, tell me all about it. And then he did something else. He said, Matt, if you want to go up and see it, I will arrange for you to have a private tour at our Kansas City location. I'll make sure that the general manager of that facility rolls out the red carpet and shows you and your team, everything that they want to see.
You can talk to our technicians. You can talk to our drivers. You can talk to the people that refuel the trucks, because I think this is a great technology. It eliminates almost all carbon from the tailpipe. And I want to try to promote this. Not because I like the company Optimist, but because I love the fact that this is a solution that we can implement today as a carrier using a diesel truck and a biogenic fuel that has 93 percent carbon reduction and whatever you need, feel free to call me.
And I love that. I love that I can call Adam and have that conversation. So I learned a lot from my, my, my frenemies. I probably shouldn't say that. That probably sounds a little sinister, doesn't it? But what I really love is being able to return the favor. I had somebody the other day, call me and ask about electric APUs, electric auxiliary power units, or something that we use in our sleeper cabs to allow our drivers to run our heating and cooling systems and auxiliary power devices at night when they're doing their rest cycle, when they're sleeping without having to idle the truck.
So we did a lot of research. We tested for years. We finally settled on a product from a Transtex-owned company called DClimate. We put these devices in most of our trucks and it works great. And so a buddy of mine from a competing company called and said, Hey, I understand that y'all did this. I saw a press release, what can you tell me about it?
And I opened up the door and showed him almost all of our research. I didn't talk to him about pricing because that of course gets sensitive. And a lot of that is very unique to customers based on spend and relationships, but I was able to share everything else. And I love that about my job.
|
|
Grayson Brulte:
|
They're not frenemies. We're all gonna get together and we'll all be together sometime, we'll razz you about it, but we're not frenemies. We're in, we're friends that learn from one another.
Electrify trailers. What are your thoughts on electrified trailers? The space is heating up. Obviously you have range energy with what Ali's doing. You have various other competing companies. What are your thoughts on electrified trailers? Will they help become eventually a bridge technology? Or do you think that the technology is going to go somewhere else?
|
|
Matt McLelland:
|
I think that there are so for a trucking company like us, the best thing that we can invest in is identical tractors, identical trailers, because that allows us to have trailer pools spread out across the United States.
It allows us to have one truck that is capable of pulling a certain amount of freight in California and then all of a sudden it goes to Texas and then all of a sudden that truck needs somewhere to go and it can go pick up a trailer anywhere else, and it'll work. It'll fit, and it'll be able to go to the next, so it's very ubiquitous fleet because that gives you maximum flexibility when you start using solutions.
Grayson, whether it's an electrified trailer or some like specific alternative fuel that might have range limitations that all of a sudden starts to put a wrench in this. It in that kind of flexibility that you have. So electrified trailers, I think are perfect solutions for maybe dedicated fleets that have a one-to-one tractor trailer ratio, whereas in the four higher fleets, we're about one to 2.8 trailers, you have to have more trailers than you do tractors because they're, they have to get left places and got to go pick something up. Some fleets have as high as a one to five ratio and electrified trailers, an expensive asset to be sitting idle. So you have to be in a scenario where that tractor and that trailer are connected in order for that electrified trailer.
And I guess you should probably help to talk about what those things do to be able to increase the fuel economy of that asset by pushing it down the road, being able to create MPG north of 20, sometimes 25 MPG. But it only works if number one power's available at your destination location. And B if that trailer is not sitting idle somewhere, it's an expensive asset.
And you mentioned 1 range energy revoice and other company, Ian rust and his team are doing something unique. It's electrified sits in between the tractor and the trailer and it's a pusher as a service type solution where you can hook that thing up and you basically pay for it by the mile.
So it's an asset that you don't actually have to own. I do see there being a place for that technology, Grayson, these bridge technologies often are hybrid solutions that are Kind of one trick ponies. They're good for certain situations not as good for others So probably a better solution for the private fleets than for the for hire fleets, but heck we're willing to try it You know, the first time that opportunity comes available, we have to find a good customer to work with because there's some startup cost and some complexity when you first start do some of these POCs, these proof of concepts, but we're super excited to look into that.
|
|
Grayson Brulte:
|
You also have the autonomous trucking program. When you try new technologies, do you try it based on routes? Based on customer demand. And what does that determining factor would say, okay, we're going to try this new piece of technology.
|
|
Matt McLelland:
|
For us, Grayson it's really largely dependent on the appetite for some of our customers to want to try something new.
I can't name names here and I wish I could, because I'm so proud of them. I'm so happy that we do business with this particular customer, but they expect me as the sustainability VP. To bring a couple of ideas to them every six months, just to try. Now they don't always pull the trigger on them, but a couple of years ago, I brought them a 90-day prototype for an electric truck.
They invest in what it was going to take to temporarily charge it. And we did a 90 day pilot of electric truck. And through that pilot, we learned three things. Number one, it did exactly what it was designed to do. For those runs that were under 150 miles a day, it did it in a way that the driver really liked the power and the torque and the comfort and the reduced driver fatigue.
The third thing that it did was it allowed them to try something new and to really do a detailed analysis on. Something that potentially was going to make their business better. Now, ultimately with that electric truck and that electric truck pilot, the cost was going to be exorbitantly different than the diesel truck and they opted not to move forward, but I love it when a customer really wants to take that plunge with us and try that electric truck or try that electric trailer or try that we're about to do a hundred percent biodiesel as a project for three trucks in a dedicated operation we have for them.
I'm super excited about. The potential carbon reduction and the lessons learned that we're going to get from that project.
|
|
Grayson Brulte:
|
You mentioned they passed on cost. Is economics and cost a defining factor of implementing these new technologies for your customers?
|
|
Matt McLelland:
|
So cost is always a factor, right? And what I find interesting and frustrating about my role is in for companies that have chief sustainability officers, they get paid to come up with these big picture macro type ideas, but ultimately when it comes for them to be implemented and the transportation buyers at the lower end of that food chain who are tasked with, booking companies like Covenant and others to haul freight for them.
They're incentivized on the exact opposite. They're incentivized on cost reduction. So cost reduction and heavy capital investment in sustainable solutions. Those don't always go together. And those two groups need to do a better job of talking to each other. And I can't tell you how many times I've been in a meeting where.
From a leadership level, the chief sustainability officer saying, yeah, we're really interested in X, Y, and Z. Let's go make that happen. They set up a series of meetings. We start going down that path. And then all of a sudden, the project gets shut down because of cost. And so I think this year we're working with two customers that have a buffer.
They've created a budget where they're willing to test some new ideas and even go with the. The more expensive solution that's going to be something that demonstrably will have a significant carbon reduction. But until 2024, we really didn't see much of that. If you're a private fleet, you can afford to do whatever you want to, if you want to your CSO and your CEO and the CFO, the chief financial officer decide that, yes, we're going to electrify 20 percent of our fleet by 2030.
If they're willing to take that financial expense, they can do it in a way that I can't. I have to find a customer willing to pay that rate. If they're willing to pay that internally and do it themselves, I can only hope that one day I'll be in that same situation.
|
|
Grayson Brulte:
|
Look at all the technology we've discussed. There's a common denominator. There are very vague definitions that are interpreted in many different ways. You can have, and you interpret it one way. I interpret another way. A lawyer, they interpret it a different way. Do we ever get to the point where there are clear definitions that are written in a way that anybody can understand when they become a de facto standard?
So when you say ABC, the other party knows, Oh, okay. It's not let's go back and get a dictionary to find this. Could we have some sort of de facto standard? Standards or definitions as it relates to sustainability at some point.
|
|
Matt McLelland:
|
That's what I love about your friends at our friends at SAE, right? And they're helping with that. It is interesting because, we do have a number of terms that are pretty universal, right? We have MPG, we have, Metric version. We have, quantity-based things like gallons and, carbon, CO2, and we, we know that a gallon of diesel is 22 to 22.1 or two pounds of CO2.
We do have some things that are very fixed. Sustainability and just talking about it at a macro level can mean a wide range of things, right? It can mean. The definition of sustainability, of course, is the ability to meet our needs today without infringing on the ability of the next generation to meet their own in a more practical, sense.
We've, I feel like as an industry, we've tried to, we've got all these different frameworks like TCFD and CDP and, we've got GLEC and all of these different sorts of frameworks and ways of measuring and talking about carbon. We're doing better than we thought than I initially thought when I got into this.
There’re probably too many standards and but fortunately, when I'm talking to customers, we pretty much agree on, carbon reduction, they want to know how much carbon reduction can I get for a dollar. Or can I get for, 20 percent increase in rate.
And so it's surprisingly easier than I thought to come up with those types of things.
|
|
Grayson Brulte:
|
How do you measure carbon reduction? Is there a standard for that? Or is that something that still has to be developed? That's universal, not just North America based or United States based.
|
|
Matt McLelland:
|
So the first thing you have to do is have your baseline. You have to know where you're starting from, right? So a lot of people, when they have carbon initiatives, you'll say, I want to be, carbon neutral by 2040 based on a 2020 baseline. So at some point, they recorded a baseline. And this is what we're, and that baseline affects where they were at the end of that year.
You have to add some numbers to it in order to account for traditional business growth over time, so carbon accounting though is really tricky and there are a lot of ways to get in trouble. By doing it incorrectly, there's this nebulous idea of materiality and whether or not certain types of corporate behavior are material when it comes to calculating your carbon footprint.
And that's where we go back to some of these standards that you have to subscribe to, and you have to meet the couch of carbon based on the standards set up by those institutions. But, for example, company A and company B for us, the majority part of our scope 1 is. Is fuel burned, but what about all the people that drive to the office?
Like their emissions count when I go on business travel, that those emissions count, you can spend a lot of time counting individual business trips. And did we rent a car? Did we share a car? What about my meal? Do my meals count, and then, pretty soon you have to determine which of those things are material and which ones aren't.
Some of the common ones are. Like scope two with energy use scope three is the hardest one because that has to do with counting your carbon based on how the people that you buy and sell you buy your services from what the carbon footprint was. In those services that you used from them, that one gets really tricky, which is why we have a lot of carbon accounting sort of software companies like watershed and salesforce and others.
It's really tricky. You can do it wrong. If you had 2 different auditing firms, if you had PwC and Deloitte both come in and audit the same carbon accounting, you could get 2 wildly different answers. So I think that It is something that our industry likes to call best efforts, demonstrable best efforts.
I think in these early stages of Calvert accounting, you have to be able to show the method to your madness, to be able to demonstrate a reasonable and intentional level to get it right. And I think most people are going to be sympathetic if you miss something, or there's something that's a little bit vague that you end up doing wrong, so we'll see.
|
|
Grayson Brulte:
|
It seems to me there's a lot more questions now than there are answers.
|
|
Matt McLelland:
|
That's the way I see it, buddy. That's the way I see it.
|
|
Grayson Brulte:
|
Matt, in your opinion, what is the best way to develop and implement a sustainability program that's based in practicality?
|
|
Matt McLelland:
|
It's a great question. For us, I think it depends on, and this is a little bit of self promotion here, but I think if you're above a certain size, whether you count that by revenue or headcount or complexity, you've got to have somebody full time dedicated to it.
Somebody that is doing research, somebody whose job. It has enough flexibility and trust with senior leadership where you can do everything from look at internal policy, come up with ideas, work with internal leaders, whether it's in, operations or even procurement, to institute change, but also have some flexibility to go to conferences.
Some of these things, you and I spend time every year at the consumer electronics show. What in the world? Does the Consumer Electronics Show have to do with over the road trucking? I would tell you it has a lot to do with it. And I can also tell you that the relationships and the contacts and the casual and intentional meetings that I end up having there are almost invaluable.
So I think having a senior level person whose job it is full time to get up every day and eat, live, drink, and breathe sustainability. And then really somebody that is really good at going out throughout the entire organization, talking to all the leadership of the different divisions, finding out about what they're doing.
Cataloging all of that in, in a corporate social responsibility report. And start doing a good job of telling your story, looking for easy wins, Grayson, looking for low hanging fruit for things that you can be doing. For example, I worked with our IT department to, to figure out how much over time we have been transitioning from real estate hungry, power-hungry data centers to moving and transitioning those solutions into the cloud, which are more efficient.
Use of resources under a single roof that's optimized to do, all these different servers, all these different, using renewable energy, oftentimes it's, there's a lot of benefits from just moving into the cloud and encouraging the company to moving into the cloud. So I think that, it doesn't have to be rocket science. I think I'll just say one more thing. This senior level person could also be responsible for looking at government grants and incentives. I know that there was a company here in Chattanooga, Tennessee, where I lived, that got an entire solar array in the form of covered parking at their parking lot paid for with some kind of state grant that they stumbled across.
And so here they are, offsetting their energy use by a tremendous factor while providing covered parking to people at a place Location that doesn't have any trees and they come out at the end of the day and their cars would be baking hot. So yeah, that would just be how I'd get started.
Give me a call. I'll give you some hints. Download our report. See some of the things that we're doing. Covenant logistics. com slash sustainability. You can read about how I'm thinking about it personally, how I'm looking at it corporately, some of the things that we're doing today and some of the things that we're planning on doing in the future.
|
|
Grayson Brulte:
|
You're doing a lot of good things. You highlighted learning and building relationships. And I'll say that's the key to getting started. You're looking to develop a sustainability program that's grounded in practicality. Call Matt. Matt's an expert. You can go on an adventure or see him at a conference. He's really smart individual to talk to. And I would be amiss if I didn't give a shout out to our buddy Dooner. You'll probably run into Matt and Dooner somewhere along the way.
|
|
Matt McLelland:
|
I was just on What the Truck last week.
|
|
Grayson Brulte:
|
You crushed it on What the Truck. I'll give you some, I don't know, give you some cowbell. Even though I don't have a cowbell here.
|
|
Matt McLelland:
|
Yeah, he, so it's interesting related to this conversation. Dooner and I talked about how my experience with the Cybertruck, albeit short, was affecting the way that I looked at electrification potentially as a fleet solution. So it was an interesting conversation.
|
|
Grayson Brulte:
|
It is. Check out What the Truck on Freightwaves. Dooner does a great job. Matt, for today, sir, as we look to wrap up this insightful conversation, what would you like our listeners to take away with them?
|
|
Matt McLelland:
|
I love it when podcasters ask this question, because I tend to always say the same thing, Grayson.
I think that we get too much in the business of pointing at big companies Like you're the one that has to make the change. Y'all are the one that have to decarbonize. You're the one that needs to start operating more in a circular economy. Y'all are the ones that are causing all these problems. And I think we do that at the expense of looking back at ourselves and the role that we're playing the role that we're playing as consumers into some of the just ridiculous habits that we have of inefficiencies that we have in our daily lives, whether that be driving cars that are bigger than we really need. or unnecessary trips or avoiding, not carpooling better, more opportunities when we could.
One of my neighbors up the street, our good friend, mutual friend, Dustin Koehl, he's our new CEO. He lives a block away from me. I asked him the other day, Dustin, how come we're not carpooling? This is dumb that you and I both get into cars that are bigger than we need. And we're both going to the same place and roughly coming home at the same time every day.
So I think that And actually, I dedicated the last page of our Corporate Social Responsibility Report to the Great Pacific Garbage Patch, which is this giant floating mass of plastic and garbage in the Pacific Ocean, between the United States and Hawaii. These are Things that were largely ended up in the ocean because of us, because you and me as individuals, because of things that either got discarded haphazardly or well-intentioned solutions where we threw something in a recycle bin and it didn't actually end up getting recycled, it ended up in the ocean.
My, my challenge to the listener is to always be aware that the solution, the decisions that you make from the moment you get out of bed every day, have an impact on environment, just like the big things that corporations are doing as well.
|
|
Grayson Brulte:
|
Small things make a difference. Matt's right. It all matters. Dustin. Carpool with Matt. You go for a ride in a Cybertruck. So give you an excuse to carpool because small things make a difference. Today is tomorrow. Tomorrow's today. The future is a practical approach to sustainability. Matt, thank you so much for coming on SAE Tomorrow Today.
|
|
Matt McLelland:
|
Hey, thanks for having me. I hope to join y'all again sometime.
|
|
Grayson Brulte
|
Thank you for listening to SAE Tomorrow Today. If you've enjoyed this episode, please kindly rate and review on your favorite podcast platform. Your feedback is invaluable to us as we work to produce world class content. Be sure to tune in next week when we explore Magna International's approach to over the air updates and security in autonomous and electric vehicles.
SAE International makes no representations as to the accuracy of the information presented in this podcast. The information and opinions are for general information only. SAE International does not endorse, approve, recommend, or certify any information, product, process, service, or organization presented or mentioned in this podcast.
|
