US logistics firm opts for hydrogen trucks after testing and rejecting battery electric fleet

IMC has recently placed a substantial order amounting to $22 million with Nikola for the acquisition of 50 fuel-cell trucks. As the largest company in the United States specializing in transporting containers from ports to warehouses, IMC's decision to opt for hydrogen-powered vehicles comes after a less-than-ideal experience with battery-electric trucks during a two-year testing phase. The order is intended for deployment in IMC's operations across California, Arizona, and Nevada.

In September 2022, IMC had acquired six Class 8 battery-electric trucks from Volvo and installed charging infrastructure capable of supporting a fleet of 30 vehicles. However, the results were unsatisfactory, primarily due to the limited productivity of battery-electric trucks under load. According to Joel Henry, CEO of the marine drayage firm, these trucks could only operate for four to six hours within a 12-to-14-hour period, posing a challenge for trucking companies that typically operate diesel tractors for 20 to 24 hours a day.

The decision to turn to hydrogen fuel-cell trucks aligns with California regulations requiring all new drayage trucks registered from January 1st to be zero-emission vehicles, part of an initiative to phase out fossil-fuel trucks from ports by 2035.

Jim Gillis, IMC's President of the Pacific region, expressed caution about first-generation technology, despite acknowledging the necessity of transitioning away from diesel for certain routes. He emphasized that the 300-mile round trips between ports and warehouses, a routine part of IMC's operations, are beyond the reach of battery-electric vehicles. The expectation is that Nikola's hydrogen trucks, 20 of which are scheduled for delivery this quarter, will offer significant improvements in terms of reduced weight, improved fuel efficiency, and lower operational costs over the next few years.

However, Henry pointed out a substantial challenge related to refueling infrastructure for hydrogen fuel-cell trucks. Currently, there is a lack of public fueling stations, and building permanent hydrogen fueling at their facilities is not feasible. Consequently, IMC is contracting with a hydrogen fuel supplier to deliver tanker loads of hydrogen to their facilities for powering the trucks.

In terms of refueling infrastructure, it's worth noting that Shell operates three refueling stations in California, including one at the Port of Long Beach. However, IMC has not clarified why they are not utilizing these existing sites. The order with Nikola is valued at over $22 million, translating to an average cost of over $440,000 per truck.

Despite Nikola's recent announcement of selling 35 trucks since serial production commenced in September, the exact revenue from these sales is yet to be confirmed, with the company planning to disclose more details during its Q4 earnings call in February. Nikola, with accumulated losses of around $2.9 billion over the past decade, continues to navigate challenges in the competitive market.