Logistics Specialist Anand Mimani On Running Energy-Efficient Trucks

As the focus of the world is moving increasingly towards cleaner forms of energy, industries are realigning their way of doing business with sustainability goals. A key factor in being sustainable is minimising pollution that is created primarily because of logistics. 

Liquefied natural gas (LNG)-driven trucking services are trying to efficiently transport goods while also minimising carbon emissions. “LNG helps reduce about 30% of the carbon dioxide and other gaseous materials like SoX (sulphur oxides) down to about 100%, NOx (nitrogen oxide) down to about 59%, and particular material down to about 91%,” Anand Mimani, chief executive officer of logistics company GreenLine, told The Core.

Transporting heavy goods over long distances, the environmental impact tends to be substantial. This begs the question of tackling logistics in an energy-efficient way. While the policy focus is increasingly on migrating to cleaner forms of energy, when it comes to alternate fuels, access to financing cleaner vehicles becomes difficult. 

“The truck financing on account of alternate fuel is a little slow by the institutions. We are requesting all the necessary offices to look into it and help and support in getting the truck financing on alternate fuels. Truck financing companies slow in giving clearances for alternate fuels,” Mimani said.

For The Weekend Edition: The Core Report, financial journalist Govindraj Ethiraj spoke with Mimani to understand the business of alternate fuel-driven trucking services. 

Edited excerpts:

Let me start with a few basic questions. You run a trucking service that is powered by liquid natural gas. And that trucking service usually caters to mostly industrial customers travelling long distances. And in doing that, you’re reducing the carbon footprint and also the cost because you’re not buying diesel, which would have otherwise powered such trucks. Tell us what the company Greenline does in terms of size, scope, and how it works. 

Greenline is a very young company, it’s a startup (that began) two years ago that we did, and the whole idea and vision-mission was to decarbonise road logistics. And we could find that LNG is a good transition fuel for heavy-duty truck movement as you rightly said. The value proposition was very clear if you have to decarbonise road logistics, using this fuel, you could move your vehicle up to 1,200 to 1,400 km depending on the terrain, with a 40-tonne payload as a capacity of the vehicle. In the logistics area, we have built this company from an ESG (environmental, social, and governance) platform point of view. Environment because LNG helps reduce about 30% of the carbon dioxide and other gaseous materials like SoX (sulphur oxides) down to about 100%, NOx (nitrogen oxide) down to about 59%, and particular material down to about 91%. And LNG is nothing but another form of natural gas. So in India, we’ve been using compressed natural gas and now we move to using LNG as a fuel from an environmental point of view as well as from a sustainable fuel point of view. 

Overall costs, as we know, between diesel and natural gas, natural gas is cheaper everywhere across. And so we said it’s a good win-win situation from a long-term perspective as India has to be a gas-based economy, which was shared by PMO’s (Prime Minister’s Office) vision. We said on those lines, it is good to get into the creation of this ecosystem. 

How big is the fleet today, how many trucks are moving on a particular day and where are they usually going or coming from? 

We’re closing a fleet size of approximately 350-odd vehicles today on the ground in March. And we would say our vehicles have made three-fourths of the country go green. When I say that, I would say right from Delhi, moving to Rajasthan, Gujarat as a state, Maharashtra, Chhattisgarh, going all the way down to states like Andhra, Telangana, Tamil Nadu, Karnataka—our trucks are moving in all these states. 

With the fuel efficiency that we have over here and the range efficiency that we can build in this, the places where our vehicles are moving and decarbonising the road logistics with a 40-tonne payload of goods getting moved. Whether you say steel as a sector, cement or you can call it metal mining, because we started deploying for companies like Hindustan Zinc. Besides the commodities, we also started moving them for FMCG (fast-moving consumer goods companies) and other express cargo. We can see that we are being able to make inroads with these vehicles all across sectors as well. 

Tell me about a truck in itself. You said 40 tonnes. How does that compare to a normal truck which is running on diesel? Does it have more payload capability? Is it the same payload?

All these vehicles in diesel are also the same payload, 55-tonne and 40-tonne payload. And it is the same platform on which these vehicles are being played. 

And when you want to power it with LNG, this is a retrofit that you do or does it come from the manufacturer? 

None of my vehicles are retrofitted. They are all manufactured by Blue Energy Motors, which is an OEM (original equipment manufacturer) manufacturing these vehicles. We just buy it from them and deploy it on the ground. 

They manufacture the whole thing or is it like, do they buy a Tata chassis or something and then?

No, they buy all the components from the world, you can say number one or number two players manufacturing auto components. The main focus of Blue Energy Motors as a company is to have the R&D (research and development) facility, the assembly line, the integration of a vehicle and the kind of product that needs to be launched in the country and thereafter ensuring the marketing and the sales and the service and the support of the same. 

Do they have other customers apart from you? 

Yes, they are having other customers also buying these vehicles today. 

When a truck runs on LNG, does it have the same locomotive power as if you were to power it with diesel? 

In fact, better, because LNG is a stronger fuel than diesel, and it has a better power ratio. And so, yes, LNG gives all the kinds of efficiencies, that are required from a trucking point.

Is it easy to find LNG? And how do these trucks fuel up? And how long can they run with one tank? 

LNG is a new concept in the country which has been pushed by us, whether you say Blue Energy Motors manufacturing the vehicle, or Greenline deploying such vehicles in the country. Today, between the west coast and southern of India, there are LNG stations now available in the last year. Slowly, stations are being built up more in the country by our own subsidiary company, which is Ultra Gas as well. And that’s how it’s spanning up more in the country. 

You’re saying that the infrastructure is sort of growing with you or expanding with you, and therefore it will. But that infrastructure would serve other truckers who also use LNG?

It is for everyone. 

Could LNG also power cars? Today we talk about CNG (compressed natural gas), right?

The USP (unique selling point) of LNG is to go for a long distance at one fill with a heavy load capacity. It’s mainly CNG in cars because the distance is not that high. And the tonnage is also not that. I mean, four or five people sitting in the car. That’s what we look at. Cars are mainly with CNG as a cylinder. And trucks, heavy-duty trucks, are mainly with LNG as a cylinder.

And how far does a tank go? One tank of LNG?

One filled tank of LNG, anywhere between 1,200 to 1,400 km is the range that we are covering. 

To come to cost. Now, how does it pan out versus other fuels? And are there other set-offs that the people who use your service get? 

As said, I mean, natural gas is already there in India, whether you call it in CNG form. When you compress it, it becomes CNG. If it’s a liquefied gas, it is LNG. It’s a similar kind of pricing as what you find in CNG

Which means it’s less than fuel?

It is less than fuel, for sure.

Then is the cost of the truck much higher relative to (a diesel vehicle)?

Yeah, in comparison to a diesel vehicle, the cost of LNG powered vehicle is higher… from a capex point of view, yes. 

And those who use your trucks, I mean, do they get like a carbon set off somewhere? Or is it purely because they’re trying to either save costs or appear green? 

We have done it differently. When we went into this concept, our whole thought was to decarbonise road logistics, which should be measurable. And so we went and put up a carbon clock in our command centre in GreenLine, so that every truck when it is moving, every kilometre, we calculate the trees, which are getting saved. We calculate the carbon dioxide, which is getting saved. We’ve given it to a third-party agency to ensure that they audit us and share a kind of confirmation to our customers as to what have they saved and tell us also what have we done every month. And since the idea and vision mission is to go green. 

You said you have 350 trucks currently, and I’m sure that’s growing. But what’s the potential of this market in the near term? Is it all the trucks that are plying in India?

I’ll put it this way, India today has a 4-million truck vehicle economy, which is growing as per the last NITI Aayog report. In the next ten years, India is supposed to grow at a rate of 8.8% CAGR (compounded annual growth rate), and it would be at least an 8-million vehicle market. We believe there’s enough room and LNG is a good, cleaner transition fuel, which can play a very important role in deploying these vehicles in the form of reducing carbon dioxide, in the form of better profitability from a long-term and on a win-win scale basis.

I would not say how much would it convert from diesel to LNG, but I’ll say, moving forward, people, whoever are converting their vehicles, or buying new vehicles, would look at LNG as an option. 

And for you, as a company, are you wedded to LNG or are you wedded to clean solutions? So therefore you could be, whatever, a Tesla truck tomorrow? 

Yes. We are very clear, we have CNG-powered vehicles also. You’ve got Tata 1512s, you’ve got Volvo-Eicher CNG vehicles as well. And so we have LNG vehicles. We are also planning to go for EVs (electric vehicles) and maybe hydrogen tomorrow. Any kind of alternate fuel and bringing clean energy in decarbonising the road logistics of India, we would be going ahead with those kinds of trucks. 

If you look internationally, are there similar examples of networks that are sort of clean fuel or alternate fuels and so on? 

Of course, LNG is new in India, but if you go to Europe or the US, China, and Japan, everywhere LNG vehicles are working. EV vehicles are working. Lately, hydrogen has also started to emerge as well. It is working everywhere in India. It is just that in India we’ve created the ecosystem as moving forward. And I’m sure everybody would else would follow on the same. 

Do you see the larger manufacturers also getting into the manufacture of similar trucks or such trucks? 

Yes, I believe Tata Motors, and Ashok Leyland, who are the major players in automotive truck manufacturing, are going to be launching it very soon. And even Volvo, Eicher, and Mahindra also do plan to bring these vehicles very soon in the country. 

As a company today, so when you say you’re running the trucks, are you managing the logistics, the fleet logistics as well, or is that done by someone else? 

The complete fleet logistics is managed by us. 

In doing so, then, so therefore the fleet logistics, I’m assuming, is the bigger part of the daily operational run, isn’t it? 

Yes, it is. 

Tell us about what sort of insights you see or have, having done this now for two years that perhaps people may not know as you’ve sort of built up this fleet. 

When we moved into deploying these vehicles, we said we would like to do it a little differently. We are more conscious from an ESG point of view. We ensured that 100% of our vehicles have the first-level ADAS (advanced driver assistance systems) systems as well. The driver community should also be well taken care of because they are your pilots, they are your captains running the ships. And so we said their safety, and security are equally important as your assets. And that is something that we deployed. 

LNG as a fuel is better than diesel, not just from an environmental point of view, but the engines also make less noise. It’s about a 30% reduction in noise level as well. And so we saw these benefits across as a fuel, as an alternative fuel is very good. We have our own command centres, governance team, and everything, so we have our defined SLAs (service-level agreements) for vehicle movement, and tracking, everything has got built up. 

Have you faced any problems on the road which you perhaps did not anticipate then, but now are better in control? 

Yes, of course, the ADAS-level systems that we deployed, we all saw in the first week of January, the kind of driver agitation, which is a very big concern. On the highways, when you go, if there’s an accident, there are no cameras and you don’t know how it works. It’s a general phenomenon or a tendency that if a truck driver has hit a vehicle, it must be the fault of the truck driver only. But that is not the case a lot of times. But with the ADAS-level systems that were deployed, we could get it demonstrated and proved to the police authorities whenever such similar accidents happened that it was not our driver’s fault. And with that, it was clear to the police authorities that they could release them. 

That sent out a message to the entire community that this company is here to ensure our safety, and personal safety as well, which is very important as a factor that binds us between both the community and the companies. 

I guess it’s now well-established that we have newer and newer road networks that are coming up. The most logical thing is that the time taken must be coming down in overall logistics… I’m saying a package that leaves Calcutta, which has to come to Bombay. I mean, how long does it used to take earlier (from what) it takes now? Therefore, if you know that it’s going to take less, your entire system may be moving at a much higher speed and efficiency. 

Absolutely. I think the road network which is now being built in India at this point has been fantastic. The roads are really good, reducing the time taken. We have clocked our vehicles going from Nhava Sheva (port) to Delhi. Our LNG-powered vehicles have been clocking at about 40 to 41 hours. The road network as it is, has become very good. And with the new networks also coming up, I’m sure it will reduce time, giving more benefits to the logistics companies in terms of profitability. 

Definitely, the road logistics has improved with a good network of roads being constructed today in the country. 

Do your drivers switch at certain points? And how is your fleet organised in terms of concept?

We have both the concepts—single driver concept also, and we have a travel/double driver concept depending on the journey route that is there. If there is something like a 500-kilometre run, we do it, say maybe with one driver also. And if there are express cargoes, like going all the way from Nhava Sheva to Delhi, we do it for double driver systems also because the journeys are longer, there should be appropriate rest times also given to the driver. With that, we have also created a lot of rest areas for our drivers, recreation areas also for our drivers, so that they feel appropriate and more lived up whenever they are in business. 

What’s your fleet size expansion plan? 

Well, we believe as India is growing and on alternate fuel, we’ve taken up a target to deploy approximately 5,000 such vehicles on the ground in the upcoming year. 

I’m sure they would work all over the country, but would you have a sort of focus or concentration in some areas? 

No, when I’m saying, 5,000 vehicles, we would also be planning to do EV vehicles this year as a deployment plan. And it would be all across, whether you say any state in the country, depending on my customer focus areas, we would be deploying it all across. 

When you say EV, do you mean more last-mile EVs? 

No, we would be only going in for heavy duty. We want to remain in that space because if you see today, when you talk of road logistics pollution, heavy-duty vehicles pollute the majority, 70% of the pollution is from heavy-duty trucks. Our focus is only on this segment on today’s date.

Would these trucks carry similar weight? I mean, I know there are EV buses, so therefore the size is understandable. And there are EV trucks in China, the United States, and so on. But I haven’t seen one here as yet. So which one will it be? 

Blue Energy Motors also plans to produce in the future, and it’s all going to be on the same 55-tonne with a 40-tonne payload is what we plan to produce. And that’s the space that we would like to remain. 

And these batteries would take much longer to charge and so on. But what about distance? How much would they run? 

There are both fast chargers as well as slow chargers. Depending on the kind of contracts that we close, we would be deploying appropriate charging systems around the whole vicinity with the customer’s help and support. 

Assuming all these vehicles, whether it’s hydrogen or EV or LNG or even CNG all deliver at the same cost, the same kind of return or return on investment and output. What would you choose if they were all available equally?

Return on investment is important in any business that you do. Otherwise, sustainability doesn’t work at all. Our fundamental belief is all short hauls we would like to go in with EVs and for all long hauls, we would like to go in with LNG as fuel. 

So with that fundamental only, we have carved out our entire business plan.

In terms of technology, what else do you see happening? I mean, not on the fuel side, but in the whole sort of fuel management of a truck, or even for that matter the logistics side? 

Logistics side, I think from India’s point of view, we’re already at it. Whatever you find in the world happening, being done from the ADAS-level system in front of you and everything, it’s all happening. The only thing that would be the next step forward would be making autonomous vehicles. But I don’t think the country is geared up right now for that. 

I don’t think any country is.

I do not think any country is geared for that. And then the next step would be hydrogen, for sure. But that is also still in the making. We are also hoping and looking at it coming up shortly. But yes, at this moment, I think with LNG and EV, it’s a clear way forward, going ahead. 

You mentioned earlier that, and this is what I thought you were transporting more heavy metals and machinery and so on. I mean, anything very heavy but consumer products seems to have is also an area that you serve. 

Yes. 

Do people come to you because they have a certain need and they want to align it with their own ESG principles? Or rather, why would they come to you? I’m assuming you’re also reaching out to them. 

Of course, it’s both ways. And what I have experienced in interacting with all the customers is today, every customer, every corporation is very conscious when it comes to carbon dioxide emissions and everything. Everybody has a focus on ESG. Everybody wants to reduce their carbon footprint. When they came to know that there is somebody ready to invest, deploy such vehicles on the ground, and reduce their Scope-three emission levels (emissions that are not produced by the company itself and are not the result of activities from assets owned or controlled by them, but by those that it’s indirectly responsible for up and down its value chain) they were happy to consider us as their vendor partner to deploy such vehicles and help India go green. 

How is this financed? At this point? 

Majorly through equity is what it has been financed. 

You have enough cash accruals because you have revenue, but where are you in terms of profitability and so on? 

We are a profitable company. Today’s date whatever the trucks have been financed, it has been majorly done from equity because debt takes a little time. The institution bankers on alternate fuels, giving debt as a support, as a normal truck financing which happens in diesel vehicles, is not so easy. 

But you’re not able to get the trucks independently financed, you’re saying. 

Yes…The truck financing on account of alternate fuel is a little slow is what I’m saying, by the institutions. 

But that somewhat runs counter to what you would think the policy thrust is right. 

Yes. Even we are requesting all the necessary offices to look into it and help and support in getting the truck financing on alternate fuels. 

Is it because there’s a cost difference between, let’s say, what they’re usually used to financing, which could be an Ashok Leyland Tata? 

Exactly. They have to venture out for alternate fuels. Certain profile of risk mitigation is also required at their end, which they need to get cleared internally and come in for truck financing. Whether you say all these big truck financing companies, are yet looking at alternate, they’re very slow in giving clearances for alternate fuels.

Do you have, or I’m assuming you do, some embedded subsidies in the purchase price or the price of a truck today which is running on?

No, there are no subsidies that we have ever gone and requested also to the government. We believe if you have to have a sustainable company in the long term, there is no need for subsidies, or support that can be requested. But if you go and ask for subsidies and build a company based on subsidies, then it is not long-term. From a long-term point of view, you have to ensure that your working model itself is sustainable. That’s how you can grow and build the… 

But if you were to buy an electric truck, which you say you will, there will be a subsidy built into that, or at least in cars there is. And scooters or whatever. There is, isn’t it? 

Well, I don’t see any subsidies so far being given by the government for the trucks, except for the reduction of GST (Goods and Services Tax), which they have already done, which is all across. But besides that, on today’s date, I don’t see any other subsidy that is there. And I think it’s okay. 

A company like this is competing with other companies in the same space, even though you may have higher capital costs, but of course, slightly lower operational costs on the fuel part. You’re running on par with any other company in this space today. I mean, there’s no real advantage. I mean, there’s no external advantage that’s given to you. Could be a tariff advantage, or a subsidy advantage. 

When we are going to our customers, we are asking them to allow us to deploy such vehicles at no extra cost than diesel. They are also very happy because, in every corporate or every working system of any company, diesel is already a baked-in fuel for a very long time. And when he realises that if he could give me the same price and help the reduction of carbon dioxide by 30%,  I mean, they are all so conscious today that they are so happy and they’re welcoming. LNG being, having a higher calligraphic value helps me with better fuel mileage and everything, which helps me to compensate for my higher capital costs and returns towards that. 

And so when we are deploying these vehicles, we are finding the equation to be done on a win-win scale between the customer and us and enhancing the whole portfolio of our vehicles more largely. 

Do you see people wanting to get into this space? I mean if it sounds fairly attractive?

Yes, I would say that I meet a lot of my logistics friends and partners around in this community. They ask me about all the benefits. I welcome them to come, see and understand because we believe that something, what we are doing if we all do it together, I think we all can help our country decarbonise very soon. All my friends in the logistics industry understand this, watching it very closely and I’m sure slowly buying a few sets of vehicles and would be deploying them continuously. 

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