Introduction

A renewable energy company sought to evaluate the feasibility of establishing compressed natural gas (CNG) trucking operations in northern Illinois and southern Wisconsin to support their biogas business. The company needed expert logistics guidance to determine the most efficient and cost-effective approach for collecting biogas from multiple landfill sites and delivering it to processing facilities. They required detailed operational and cost models that would account for all aspects of fleet management, regulatory requirements, and industry challenges specific to hazardous materials transportation. Understanding the complexities of the CNG trucking market was critical for making informed decisions about their supply chain strategy.

At A Glance

Our experts provided comprehensive analysis and strategic recommendations for optimizing CNG trucking operations across multiple landfill collection points in a two-state region.

Requirements

  • Build operational models for fleet requirements (tractors, trailers, drivers) across 12 landfill origins with varying load volumes
  • Develop detailed cost models for three business approaches: internal fleet, outsourced carrier, and hybrid model
  • Navigate complex regulatory, safety, and operational requirements specific to hazardous CNG transportation

The Challenge

The client planned to collect compressed natural gas from twelve landfill sites across Wisconsin and Illinois, with daily load volumes ranging from 5 to 22 loads per site and one-way hauling distances averaging 64 miles. This operation presented several significant challenges:

The transportation of compressed natural gas involves extensive regulatory requirements, including hazardous materials permits that can take up to a year to obtain. Specialized trailers were needed for transportation and temporary storage at collection sites, with 1.5 to 4.5 hours of fill times.

The client faced a critical strategic decision: establish their trucking fleet, outsource to specialized carriers, or implement a hybrid model. Each approach involved different capital investments, operating costs, and management requirements.

Further complicating matters, the trucking industry was experiencing significant challenges, including driver shortages, rising wages, and increased vehicle maintenance downtime for newer, more complex engines. For a company without prior trucking operations experience, navigating these industry-specific hurdles presented substantial risk.

PraxiChain Solution

Our team delivered comprehensive logistics consulting services that included:

  • Detailed operational models determining exact requirements for tractors, trailers, and drivers across both hub locations
  • Analysis of three business approaches (internal fleet, common carrier, hybrid model) with precise cost breakdowns
  • Comparative financial analysis of CNG vs. diesel tractor operations, demonstrating significant operational savings
  • Thorough assessment of regulatory requirements, including DOT compliance, hazmat permitting, and safety protocols
  • Strategic recommendations balancing operational control, capital investment, and management complexity
  • Custom route planning and optimization across all landfill sites using industry-standard software

Results

The analysis revealed that an internal fleet would offer the lowest operational costs ($3.03-3.06 per mile) compared to outsourced options ($3.48-3.52 per mile). Still, it would require significant capital investment ($37.9 million) and additional management complexity. The hybrid approach offered a balanced middle ground ($3.33-3.36 per mile) with reduced capital requirements ($32.8 million).

Beyond the financial analysis, our team identified critical implementation challenges, including the year-long timeline for obtaining hazmat permits and the extensive training and compliance requirements for handling CNG as a hazardous material.

The client used our detailed models to make an informed decision, to begin with the hybrid approach—purchasing their own specialized trailers while contracting with carriers to provide tractors and drivers. This strategy allowed them to maintain greater control over their specialized equipment needs while minimizing regulatory complexities and staffing challenges. The solution provided approximately $780,000 in annual operational savings compared to full outsourcing while significantly reducing their initial capital investment and management burden.