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Budweiser Going Green With Transport

Budweiser Going Green With Transport

Anheuser Busch Inbev SA (ADR) (NYSE: BUD), like most companies, knows that going green has many benefits. They include reduced waste, a cleaner environment and positive public perception, to name just a few.

That's why Anheuser-Busch recently announced that it planned to replace its Houston fleet of 66 of diesel-powered semi-trucks with brand new ones that run on compressed natural gas (CNG).

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Going Green to Save Green

James Sembrot, A-B’s senior transportation director told Forbes that the motivation behind the move was to reduce carbon emissions and fuel costs, while at the same time doing something green.

According to Forbes, each of the trucks in the Houston fleet puts in an average of 140,000 miles per year hauling beer to wholesalers. In a year’s time, those 66 trucks haul 17 million barrels of Budweiser and related product.

The new CNG trucks come from Ryder System, Inc. (NYSE: R), A-B’s longtime transportation partner. A-B said the new 12-liter lighter-weight CNG engines in the trucks were expected to reduce greenhouse gases 23 percent compared to diesel. The company said that was the equivalent of taking “420 passenger vehicles off the road.” 

Taxpayers Pitch In

The new vehicles come through Ryder’s participation in the Texas Natural Gas Vehicle Grant Program, funded by the Texas Emissions Reduction Plan.

Forbes reported that the program would award $45,000 toward the purchase of each new natural gas powered vehicle. In total, A-B would receive about $3 million in subsidies from the state of Texas.

Expansion is Possible

Company officials told the Houston Chronicle it might eventually expand the CNG project in other regions, including St. Louis and Columbus, Ohio.

The Houston launch was done in part because of the region’s robust CNG refueling infrastructure. The Houston area has 15 CNG fueling stations.

A-B’s Sembrot told the newspaper, "We feel we won’t have trucks stranded on the side of the highway."

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Role of New Engine Technology

Richard Kolodziej, president of NGV America, a national trade organization, said the long-term viability of using CNG vehicles would depend on the number of miles driven. According to Kolodziej, the 140,000 logged by A-B’s trucks every year was probably enough to make the switch pay off.

It’s worth noting that powering such large trucks on CNG wouldn’t even be possible without a new type of engine from Cummins Inc. (NYSE: CMI) called the ISX12 GT. The new Cummins engine, which only went into production last year, can provide enough power to haul tractor-trailers carrying 80,000 pounds.

Each of A-B’s fully loaded tractor-trailers, Forbes said, weighed about 50,000 pounds.

At the time of this writing, Jim Probasco had no position in any mentioned securities.


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