There has been a glaring omission for a while in conversations surrounding the future of public transport systems in the Gulf. There is a great fixation on the potential of electric or hybrid-electric public buses in the region, despite the well-known limitations of today’s battery technology in the face of the Gulf’s extreme temperatures and the burden this puts on bus air-conditioning systems. The discussion has simultaneously overlooked the alternative to diesel found in compressed natural gas (CNG).
Franz von Redwitz, MD for MAN Truck & Bus Middle East and Africa, is a man currently on a personal mission to change the imbalance in this perspective and he comes armed with a case study. He explains: “There are more than 2,000 public buses running with MAN CNG engines in Tehran. The city has a big emission problem. I was there this winter, and most of the time the schools were closed, because the air was so bad. With CNG you have a solution to that problem, and CNG is available, clean and very cheap in Iran. The fuel cost is $0.02 per kilogram — so it is logical to use it.”
The UAE has been dabbling in the idea of a similar solution for much the same reasons. In its 2014 paper entitled Enhancing Air Quality in Abu Dhabi, the Environmental Agency for Abu Dhabi (EAD) stated: “Abu Dhabi’s main concerns with ambient air quality pertain to high concentrations of particulate matter and ground level ozone, which exceed federal limits.” Ground ozone was cited as “largely” originating from the “incomplete combustion of fossil fuels” in transportation and industry.
As the Gulf’s vehicles lag a decade behind European emission standards, there is little doubt as to the source of much of this incomplete combustion, nor in the fact that diesel engines of heavy vehicles are a significant culprit. CNG, on the other hand, dispenses with two of the primary concerns associated with diesel: the high level of particulates associated with diesel and the rising cost of upgrading infrastructure to accommodate the fuel and vehicles required to meet higher European emission standards.
MAN was first commissioned by Abu Dhabi’s Department of Transport to conduct a trial of its CNG-powered Lion’s City bus back in 2011. MAN trialled a vehicle for eight months alongside regular diesel-powered buses to achieve a direct comparison, to the point that the authorities affirmed their readiness to operate CNG buses in the UAE. Unfortunately for MAN at the time, the global credit crunch brought the project to a halt.
Von Redwitz recalls: “Because of the crisis, they didn’t expand their fleet at the time. That was the main reason. They were convinced: they had built a fuel station and started with the taxis — which are widely used around the world, in countries like Sweden and Iran.”
Five years later, however, MAN is once again pitching CNG to a UAE transport authority, Dubai’s Roads and Transport Authority (RTA). Von Redwitz details: “Now, we are testing it again with a new vehicle with the RTA, which, in the framework of approaching the 2020 Expo, is looking to have something new and more green — and our technology is proven and as reliable as diesel vehicles: we have supplied 8,000 units over the last 10 years.
“Maybe 15 years ago it could be said a CNG bus was not as reliable as the diesel bus, but this has changed, and now, because we have all the experience, we are the market leader by far when it comes to modern CNG buses.”
He adds: “For the region, it’s the most viable available solution. If you want to go electric, imagine the energy you need to cool the vehicles: either the range will be nothing or the infrastructure costs will be tremendous.”
A CNG solution does indeed hold broad appeal for Dubai as it heads towards Expo 2020, both as an opportunity to showcase its environmental credentials and reduce its carbon footprint — to which the obvious objection is that CNG is a hydrocarbon, just like any other, but this is just where Von Redwitz really gets into his stride.
He explains: “With CNG, you have a technology that you can, without changing anything in the vehicle, convert into a carbon-neutral system by switching to bio-gas, and that has been practiced in Stockholm, where the two main sewage plants are producing the bio-gas — so that can be done practically in any big city. We are living more and more in big cities, and we need more and more public transport, so why don’t we do that? Why don’t we copy and paste that to other cities?”
Von Redwitz adds that electric vehicles require dedicated infrastructure and are only as environmentally friendly as the power stations used to produce their electricity — which in the Gulf invariably also means the burning of hydrocarbons (until the launch of the Barakah Nuclear Power Plant in the UAE).
With CNG, he contrasts: “You use a simple three-way catalyst converter, without AdBlue and all the complicated systems that need to be maintained and cost money in modern diesel vehicles, and you have very clean vehicles — especially when it comes to particles, because it’s a particle-free combustion process.
“And then you have a much simpler after-treatment, with the same three-way catalyst converter that we have used for many years in passenger vehicles, and so — from day one — any CNG vehicle is a clean vehicle.”
And the technology has another trump card beyond the already convenient solution of biogas from various organic waste sources, and that is the emerging technology of producing gas from primary power. Synthetic methane can be produced via a process called ‘power to gas’ that can draw upon renewable sources, the same as electrically powered vehicles.
Von Redwitz annotates: “After Fukushima, Germany has decided to switch completely to renewable energy by 2050 — we’re not going to have coal power plants or nuclear plants; it’s all going to be photo-voltaic and wind.”
Indeed, given both the comparably low cost of CNG and its many advantages, it is almost remarkable in many ways that none of the GCC countries have made more headway towards its adoption — especially in the case of Qatar — a large natural gas producer.
The technical objections are few. “For the range you need for the full day of operation a public bus or passenger vehicle, it is enough to compress it to 250bar,” Von Redwitz explains, “and it is always cheaper to get CNG than diesel fuel, because the route from crude oil to modern diesel fuel is very energy intensive: the process costs a lot of money and it releases a lot of pollution and CO2 into the atmosphere.”
Indeed, returning to Abu Dhabi’s air quality report, 41%–48% of the PM2.5 particulate matter found in Abu Dhabi are “secondary aerosols of sulfate and ammonia, originated from oil production and refining activities in the UAE and across the Arabian Gulf”.
Grounded in the Gulf
While the fresh CNG bus trial is a promising lead for MAN, however, the manufacturer’s core business remains firmly entrenched in its diesel trucks — a segment which this year is now feeling the strain of constricted government budgets as they translate into late payments to the region’s contractors and subsequently late payments to vehicle importers and a drying up in vehicle orders.
Von Redwitz explains: “Our main product is heavy trucks and the heavy-duty TGS range accounts for 80% of the business. The Gulf is by far our most important market, and here we see, in this financial year, the full impact of what we’ve been talking about. Whereas last financial year, we were delivering more or less what we’d planned for and were quite astonished by how well it was still going so well — we are now feeling the full impact.
“There’s a severe drop in the size of the market size for heavy commercial vehicles, and there’s even a drop in the aftersales service that is required, because fleets are grounded.
“This is because many government projects are stopped, or on hold, until further notice, and many construction companies have not been paid for their work towards the end of last year and the beginning of this year, so the money flow has really come to a halt.
“If a company like Binladin, the biggest construction company here in the region, is laying off 100,000 people, or half of their staff, then it means the equipment that they were using is no longer being used — and this has a severe impact, both on the service business and on the new vehicles business.”
For MAN, the strategy to deal with this is simple: “In a weak market, we maintain market share. If you try to grow, you destroy prices. We are there for the customer, and we will maintain infrastructure,” says Von Redwitz.
“It’s going to be a bad year, for our importers and for us, because the volume is dropping so hard — but that applies to all our competitors — and our clear strategy for this year is to use the time to sort out the little things and make them better. You always have things that you can optimise in your processes.”
A key development for MAN in the year ahead will be the strengthening of its regional infrastructure with the inauguration of a new regional head office in the Jebel Ali Free Zone.
This will also house a regional training centre for vehicle-servicing technicians — the first since a similar facility was run a decade ago in the Dubai Airport Free Zone but subsequently closed due to the lack of suitable accommodation for the workers being trained.
Von Redwitz notes: “If you send a worker here for training on servicing trucks, you need reasonably priced accommodation for them, otherwise it was not viable for the importers.
“In Jebel Ali, we have relatively affordable housing facilities, so we will offer a package of training including accommodation — which is good for getting quality into our workshops.”
The decision to build the facility was made before the tenure of Von Redwitz, but the timing of the facility could hardly be better, given the need for MAN to reach out to its customers and work to maintain market share.
Von Redwitz notes: “We have to cast our presence in the region in concrete, and hence we decided to build a new headquarters in the biggest free zone of the region, Jebel Ali. The decision was made based on the fact that it proved the cheaper solution in the long-term for providing enough space for our HQ, regional training centre and TopUsed centre.”
Meanwhile, the assembly plant that MAN opened in Saudi Arabia in 2008 is running well (if at slightly lower levels this year), and the plant produced its 10,000th unit in 2015.
From product to application
Product-wise, Von Redwitz is content that MAN is providing what the region wants, from the 7.5t to 250t payload trucks in its TGS heavy range to the medium-duty TGM range, which provide a further 10% of the business in municipal waste and firefighting applications.
“The customers are happy and the feedback that I am getting is absolutely positive,” he notes, and on the heavy range he adds: “The current TGS product is the most reliable MAN ever, fuel consumption and warranty costs are low — so we’re really happy with the product.”
Von Redwitz cites Almarai in Saudi Arabia as one of MAN’s biggest customer, with the fleet of 1,800 truck-tractor cooler trailer combinations its uses for food distribution operation — some 1,200 of which are MAN.
Beyond the product Von Redwitz explains: “We’ll use the year also to roll-out more solution-oriented projects around the vehicle. That’s a general trend and no secret — the business is increasingly going from the sale of the truck to the sale of the solution, and that starts with things like telematics and finance, where we’re rolling out a lot.
“In Iran, for instance, the Iranian and German governments were able to sort out their old debt issues, so that now export financing from Iran becomes available again. That is very important for the Iranian market, because there the interest rate is very high — so if we can finance the trucks through German financing, we can provide a very attractive offer for the customer.”
MAN’s rollout of its OEM telematics in the region last year is also receiving a positive response from customers, and discussions have begun over the possibility of introducing platooning in the region. Almarai has already expressed its interest in platooning, as they send a convoy of trucks from Riyadh to Salalah every day, and platooning would both make a fuel saving and allow its drivers to rest on rotation — making the journey much safer.
Their telematics system can also help MAN identify if any wear and tear is extraordinary — if some brake pads are wearing quicker than they should then a truck can be called in early, before a problem occurs, though Von Redwitz emphasises this is not a typical occurrence.
Von Redwitz comments: “Where you need the manufacturer involved in the telematics system is with preventative maintenance, and we do that on a national basis. The importer in Saudi Arabia is building up his network to serve, for instance, Almarai, whose vehicles are coming in for service on a regular basis according to our schedule. If there is an unplanned workshop stop, it is a red flag, because under normal conditions, an MAN should not come to the workshop unplanned.”
MAN is also complementing its TopUsed programme with Ecoline, an in-house line of refurbished OEM parts that are a potential solution for fleet operators who might otherwise not be persuaded to purchase new OEM spare parts for their used trucks.
Von Redwitz notes: “If you have an eight-year-old truck, and don’t want to buy a brand new engine, you can get a refurbished engine. We’ve rolled it out in all the countries, and it’s really picking up. On one hand it saves resources, and on the other, it is an affordable and reliable solution for the customer.”
He also reiterates MAN’s satisfaction with its partners in the region, many of whom it has had a relationship with for more than 20 years.
He notes: “They have very high standards when it comes to the whole sales, aftersales and warranty process — all of it is high level.”
Looking at the current dip in the market, Von Redwitz concludes: “If you would ask me how long this will last, I cannot say, because I cannot look into the future, but if I look at the last big crisis, 2008, it has taken more than two years to recover — so I don’t expect that this switch will come very quickly.”
