Manufacturing News

Natural gas trucks boom as Beijing curbs diesel

On a recent morning in Yutian, a dusty town bisected by the highway that connects Beijing to the sea, Su Meiquan strolled into a dealership packed with hulking trucks and prepared to drive off with a brand new rig.

After years of driving a diesel truck for a trucking company, he had decided to buy his own vehicle -- a bright red rig fueled with liquefied natural gas, capable of hauling as much as 40 metric tons of loads like steel or slabs of marble.

Su hopes the LNG truck, which is cleaner and cheaper to operate than diesel rigs, will be the cornerstone of his business as he plys the route to the western fringes of China.

“Everybody says gas is cleaner with nearly no emissions,” he said after signing a stack of paperwork in the dealer’s office. In front of him, photos of proud drivers posing in front of their own new LNG trucks had been taped to the wall.

Sales of large LNG trucks are expected to hit record levels in China this year as the government steps up an anti-pollution campaign that includes curbs on heavy-duty diesel vehicles.

LNG trucks account for about four percent of the six million heavy vehicles able to haul 40 to 49 metric tons of goods in China.

The vast majority of the 43 billion tons freight transported across China last year was by highway.

But demand for LNG trucks is soaring as shippers shift to cleaner vehicles in response to Beijing’s war against smog.

Sales of LNG heavy trucks surged 540 percent to nearly 39,000 in the first seven months of the year, according to Cassie Liu, a truck analyst with the IHS Markit consultancy.

That was partly fueled by a ban this year on the use of diesel trucks to transport coal at northern ports in provinces like Hebei and Shandong, and in the city of Tianjin.

“We are seeing a blowout in LNG trucks this year, thanks to the government’s policy push,” said Mu Lei, marketing manager for China National Heavy Duty Truck Group (Sinotruk), the country’s largest manufacturer of heavy trucks.

The shift to gas trucks has fueled demand for LNG as Beijing struggles to reduce pollution in the north, which is shrouded in a hazardous smog during the winter.

One major project is piping gas to 1.4 million households across the north for heating this winter, part of China’s shift away from coal.

China, already the world’s No.3 consumer of LNG, has seen imports jump 45 percent so far this year.

Chinese companies like Jereh Group and ENN Energy Holding, which build LNG filling stations, and Zhangjiagang CIMC Sanctum Cryogenic Equipment Co., Ltd, which specializes in LNG tanks, are expected to benefit from the gas boom.

Crackdown on diesel
Government restrictions on cargo overloading last year, for safety reasons, also has boosted truck sales as operators rush to buy bigger trucks.

Next month, Beijing also will impose restrictions on thousands of northern factories that use diesel trucks, forcing some to use railroads and others to consider LNG-powered lorries.

Sales of new heavy-duty trucks, including diesel and LNG vehicles, jumped 75 percent in the first eight months to 768,214, according to the industry website

The website did not break down the numbers, but companies say that growth of diesel sales is being dwarfed by that of the LNG trucks.

Last week, Sinotruk received orders for 1,371 heavy-duty trucks, 900 of which run on LNG, at an event that brought together coal transport companies from seven northern Chinese cities, Mu said.

In the first half of this year, Sinotruk sold 5,200 LNG trucks, up 650 percent year on year.

“Gas trucks are both more environmentally friendly and more economic,” said Lai Wei, general manager of Tianjin Shengteng Transport Company, a privately owned trucking company.

Lai is tripling his LNG fleet to more than 100 units by the end of this year, adding 65 new trucks made by Shaanxi Heavy Duty Automobile Co., the country’s largest LNG vehicle producer.

He also is cutting back his diesel fleet to 30 trucks, down from 50, to comply with new emissions rules in Tianjin that take effect this month.

Only vehicles meeting “National Five” emissions standards, similar to Euro V standards for trucks and buses in Europe, will be allowed to operate at the port.

Lai said he was also concerned that there might be further restrictions on diesel trucks in a few years.

Cleaner, cheaper
China wants natural gas, which emits half as much carbon dioxide as coal, to supply 15 percent of China’s energy demand by 2030, up from 6 percent currently.

That effort stalled in 2014 as an oil price slump lifted demand for diesel. But as oil prices rebounded to $50-plus, LNG sales have soared.

Diesel costs 10 to 30 percent more than natural gas at Chinese gas stations, according to truck companies.

For Su, the new truck owner in Yutian -- approximately 140 kilometers east of Beijing -- price is a major reason for making the switch from diesel.

He plans to hire two drivers to shuttle the 3,500-kilometer route from Yutian to Urumqi, in the northwestern region of Xinjiang. His trucks carry steel products west and coal or other goods on the way back.

“It really suits our journeys as the longer the trip, the more you save on fuel on an LNG truck,” he said. He is paying 390,000 yuan for a Sinotruk rig, about 60,000 yuan more than a diesel truck would have cost.

“On a return trip, we can save 3,000 yuan in fuel,” he added. “That means we’ll be able to recoup within a year the extra cost on the vehicle.”

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