******* **E.O. 12866 Review**  **– REVISED**  **– Do Not Cite, Quote, or Release During Review ** ***

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## Chapter 1: **Industry Characterization 1.1**  **Introduction** The proposed fuel consumption and CO 2 emissions standards described in the preamble of this NPRM would be applicable to three currentl y - regulated categories of heavy duty vehicles: ( 1 ) Combination Tractors ; (2 ) Heavy - dut y Pickup Trucks and Vans; and (3) Vocational Vehicles, as well as gasoline and diesel heav y - dut y engines . The industry characterization for these sectors can be found in the RIA f or the HD Phase 1 rulemaking. 1 With this proposed rulemaking, the agencies would be setting standards for combination trailers for the first time. T he characterization laid out in this chapter focuses solely on trailers as this subcategory would be the o nly

newly - regulated industry . 

### 1.2 **Trailers** A trailer is a vehicle designed to haul cargo while being pulled b y another powered motor vehicle. The most common configuration of large freight trucks consists of a Class 7 or 8 tractor hauling one or more trailers . Vehicles in th e s e configuration s are called “combination tractor - trailer s ” or simply “tractor - trailer s ”. A trailer may be constructed to rest upon the tractor that tows it , or be constructed so part of its weight rests on an auxiliary front axle called a “converter dolly ” between two or more trailers. Trailers are attached to tractor s by a coupling pin (or king pin ) on the front of the trailer and a horseshoe - shaped coupling device called a fifth wheel on the rear of the towing vehicle or on the converter dolly . A tractor can also pull international shipping or domestic containers mounted on open - frame chassis, which when driven together on the road function as trailers. The Truck Trailer Manufacturers Association , an industry trade group prima rily

for manufacturers of Class 7 and 8 truck trailers, offers publications of recommended practices, technical bulletins and manuals that cover man y aspects of trailer manufacture, and serves as a liaison between the industry and government agencies. 2 To date, federal regulations for the trailer industry

are limited to those issued by the Department of Transportation ( See 49 CFR ). These regulations govern trailer dimensions and weight, as well as trailer safety requirements (e.g., lights, ref

lective mate rials, bumpers, etc. ) . In addition, DOT requires that each trailer, like other on - road vehicles, must have a Vehicle Identification Number (VIN) 3

. The VIN is display ed on a label that is permanentl y - affixed to the trailer. It is required to contain the manufacturer identification, make and t ype of vehicle, model year, t yp e of trailer, bod y t ype, length, and axle configuration. Trailer manufactures are responsible for reporting each trailer’s VIN information to NHTSA prior to the sale of the trailer. 1.2.1 **Tra iler Types**  Class 7 and 8 tractors haul a diverse range of t railer ty pes. The most common trailer ty pe is the box trailer , which is enclosed and can haul most ty pes of mixed freight. The general rectangular shape of these trailers allows operators to maxi mize freight volume within the regulated dimensional limits, since the majority of freight shipped b y truck cubes - out (is volume - limited) before it grosses - out (is weight - limited). Despite considerable improvements******* **E.O. 12866 Review**  **– REVISED**  **– Do Not Cite, Quote, or Release During Review ** ***

2 of 9 in suspension, material, safet y, durabil ity , and other advancements, the basic shape of the box trailer has not changed much over the past decades, although its dimensions have increased incrementall y from what used to be the industry’s standard length of 40’ to today ’s standard 53’ long van tra iler. Today , box vans are commonly found in lengths of 28’, 48’, and 53’and widths of 102” or 96”. The 28’ vans (“pups”) are often driven in tandem and connected b y a dolly . Current length restrictions for the total combination tractor - trailer vehicle l imit tandem operation to 28’ trailers. However, some members of the trucking industry are pushing to increase the length limits to allow trailers as long as 33’ to be pulled in tandem , and arguing that these “less than truckload” (LTL) operations could in crease capacit y per truckload, reduce the number of trucks on the road, reduce the fuel consumption and emissions of these tractor - trailers, and remain within the current weight limits. 4 , 5 Trailers are often highl y customized for each order. The general s tructure of the box trailer t ype is common and consists of vertical support posts in the interior of the trailer covered b y a smooth exterior surface. However the exterior of the trailer may be constructed of aluminum or a range of composite materials. H istorically , floors were constructed of wood, however man y trailer customers are requesting aluminum floors to reduce weight. Semi - trailer axles are commonly a dual tandem configuration, but can also be single, spread tandem (i.e., two axles separated to maximize axle loads), tridem (i.e., three axles equally spaced), tri axles ( i.e. , three axles consisting of a tandem and a third axle that may be liftable), or multi - axles to distribute very heavy loads. Axles can be fixed in place, or allowed to slide to adjust weight distribution. Doors are commonly located at the rear of the trailer. The most common door is the side - by - side configuration, in which each door opens outward. Roll - up doors, which are more costly , allow truck drivers to pull up to loading docks without first stopping to open the doors. Roll - up doors are common on trailers with temperature - sensitive freight. Additional variations in trailers include side - access doors, or use the underside of the trailer for belly

boxes or to store on - dema nd items such as ladders or spare tires. The most common box trailer is the standard dry van, which transports cargo that does not require special environmental conditions. I n addition to the standard rectangular shape, dry vans come in several specialt y variants, such as drop floor, expandable, and curtain - side. Another t ype of specialt y box trailer is the refrigerated van trailer (reefer). This is an enclosed, insulated trailer that hauls temperature sensitive freight, with a transportation refrigera tion unit (TRU) or heating unit mounted in the front of the trailer powered by a small (9 - 36 hp) diesel engine. Figure 1 - 1 shows an example of the standard dry and refrigerated vans.******* **E.O. 12866 Review**  **– REVISED**  **– Do Not Cite, Quote, or Release During Review ** ***

3 of 9 **Figure 1**  **- 1**  **Exam ples of dry and refrigerated van**  Many other trailer ty

pes are uniquel y designed to transport a specific t ype of freight. Platform trailers carry

cargo that may

not be easily

contained within or loaded and unloaded into a box trailer, such as large, nonuniform equipment or machine components. Platforms come in diffe rent configurations including standard flatbed, gooseneck, and drop deck. Tank trailers are pressure - tight enclosures designed to carry liquids, gases or bulk, dry solids and semi - solids. Tank trailers are generall y constructed of steel or aluminum. The plumbing for intake and discharge of the contents could be located below the tank or at the rear. There are also a number of other specialized trailers such as grain (with and without hoppers), dump (frameless, framed, bottom dump, demolition), automobil e hauler (open or enclosed), livestock trailers (bell y o r straight), construction and heav y - hauling trailers (tilt bed, hy draulic). A sizable fraction of U.S. freight is transported in large, steel containers both internationally

via ocean - going vessels an d domestically via rail cars. Containers are constructed with steel sidewalls and external support beams, which results in a corrugated exterior. These containers haul mixed freight and are designed with similar dimensions to box trailers. Ocean - going i nternational shipping containers are ty picall y 20 - feet or 40 - feet in length. Domestic containers, which often travel by rail, are 53 - feet in length. Transport of these containers from ports or rail to their final destination requires the container to be loaded on a specialt y piece of equipment called a chassis. The chassis, which is attached to the fifth wheel of a Class 7 or 8 tractor, consists of a frame, axles, suspension, brakes and wheel assemblies, as well as lamps, bumpers and other required safet y components. Fixed chassis vary in length according to the ty pe of container that will be attached, though some chassis adjust to accommodate different sizes. When the chassis and container are assembled the unit serves the same function as a road trail er. 6 However, under customs regulations, the container itself is not considered part of a road vehicle. 7 ACT Research compiles factory shipment information from a Trailer Industry Control Group that represents 80 percent of the U.S. trailer industry . Figure 1 - 2 shows the distribution of trailers sold in the U.S. based on ACT Research’s 2013 factory shipment data. The most common ty

pe of trailer in use today

is the dry

van trailer, followed by

the******* **E.O. 12866 Review**  **– REVISED**  **– Do Not Cite, Quote, or Release During Review ** ***

4 of 9 refrigerated van. Together, these box vans make up greater than 70 percent of the industry . Trailer Bod y Builders’ annual trailer output report estimates there were over 240,000 trailers sold in North America 2013.

**Figure 1**  **- 2**  **ACT Research’s 2013 U.S. factory shipments** 1.2.2 **Trailer Manufacturers** Trailer Bod y Builders’ annual trailer output report estimates there were over 240,000 trailers sold in North America in 2013. Th e diverse van, platform, tank and specialty trailers are produced b y a large number of trailer manufacturers. EPA estimates there are 114 trailer manufacturers . Trailers are far less mechanically complex than the tractors that haul them, and much of trai ler manufacturing is done by hand. This relatively low barrier to entry for trailer manufacturing accounts, in part, for the large number of trailer manufacturers. Figure 1 - 3 shows that over 70 percent of the manufacturing output of the industry comes from just five manufacturers. **56%**

**15% 9%**  **2% 3%**  **2% 3%**  **1% 4%**  **4% 1%**  **ACT Research**  **2 013**  **Fa ctory Shipments**  Dr y Va n Refrigerat ed Van Plat fo rm HeavyLowbed Mediu mLowbed Dump Ta nk L iqu id Ta nk B ulk Grai n Oth er Tr ailer Chas sis******* **E.O. 12866 Review**  **– REVISED**  **– Do Not Cite, Quote, or Release During Review ** ***

5 of 9 **Figure 1**  **- 3**  **2013 Trailer Output Report from Trailer Body Builders**  Table 1 - 1 I llustrates the vary ing revenue among trailer manufacturers and further distinguishes the very

different roles in that market play ed b y small and large manufacturers. The revenue numbers were obtained from Hoovers online company database. 8 Over 80 percent of trailer manufacturers meet the Small Business Administration’s (SBA) definition of a small business (i.e., less than 500 employ ees), yet these manufacturers make up less than 25 percent of the overall revenue from the industry . In fact, a majority of the small business trailer manufacturers make less than $10 million in revenue per y ear. **Table 1**  **- 1**  **Summary of 2013**  **Trailer Indust ry Revenue**  **by Business Size**

Revenue Range Business Size

All Sizes Large Sm all a > 1000M 1 1 0 $500M - $999M 0 0 0 $400M - $499M 1 1 0 $300M - $399M 0 0 0 $200M - $299M 3 3 0 $100M - $199M 3 3 0 $50M - $99M 13 7 6 $40M - $49M 14 2 12 $15M - $19M 9 1 8 $10M - $14M 3 0 3 $5M - $9M 26 0 26 < $5M 41 1 40 Total Companies 114 19 95 Total Revenue ($M) 4965 3799 1166 Average Revenue ($M) 44 200 12******* **E.O. 12866 Review**  **– REVISED**  **– Do Not Cite, Quote, or Release During Review ** ***

6 of 9 Box Trailer Mfrs 14 9 5 Non - Box Trailer Mfrs 109 17 92 Note : a The Small Business Administration (SBA) defines a trailer manufacturer as a “ small business ” if it has fewer than 500 employees The trailer industry

was particularl y hard hit by the recent recession. Trailer manufacturers saw deep declines in new trailer sales of 46 percent in 2009; some trailer manufacturers saw sales drop as much as 71 percent. This followed overall trailer industry declines of over 30 percent in 2008. The 30 largest trailer manufacturers saw sales decline 72 percent from 282,750 in 2 006, to only 78,526 in 2009. Several trailer manufacturers shut down entire production facilities and a few went out of business altogether. Trailer production has steadil y grown across the industry since 2010 and , although historic production peaks have not been repeated to date, it has now returned to levels close to those seen in the mid - 2000s. Figure 1 - 4 shows the ACT Research’s annual factory shipments, which il lustrates the unstead y production over the past 17 years.

**Figure 1**  **- 4**  **Annual Factory Shipments Tracked by ACT Research** 1.2.3 **Trailer Use** In order to determine the appropriate tractor t yp e for each trailer, the agencies investigated “primary

trip length” results from the V ehicle I nventory and U se S urvey database to determine the distribution of trailers in short - and long - haul applications. 9 Using a primary trip length of 500 miles or less to represent short - h aul use, the agencies found that, of the reported vehicles, over 50 percent of the 53 - feet and longer dry vans were used in long haul and over 80 percent of the shorter vans were used in short - haul applications. Over 70 percent of the reported 53 - feet and longer refrigerated vans were long - haul trailers, with 65 percent of the shorter refrigerated vans used in short - haul applications. The survey found that 0 50000 100000 150000 200000 250000 300000 350000 400000199619971998199920002001200220032004200520062007200820092010201120122013**T o** **t a** **l F** **a c** **t o** **r y** **S h** **i p** **m e** **n t** **s (** **A l** **l T** **r a** **i l** **e r** **T y** **p e** **s )**  **ACT Resear**  **ch Ann**  **ua l**  **Fact or**  **y Shi**  **pments********* **E.O. 12866 Review**  **– REVISED**  **– Do Not Cite, Quote, or Release During Review ** ***

7 of 9 non - box trailers are most frequentl y used for short - haul. Figure 1 - 5 summarizes these findings.

**Figure 1**  **- 5**  **2002 Vehicle Inventory and Use Survey Considering Primary T rip Length for Tractor**  **** **Trailers** Truck drivers and trucking fleets frequentl y do not control all or even an y o f the trailers that they

haul. Trailers can be owned b y freight customers, large equipment leasing companies, third part y logistics companies, and even other trucking companies. Containers on ch assis, which function as trailers, are rarel y o wned b y truck operators. Rather, they are owned or leased b y ocean - going shipping companies, port authorities or others. This distinction between who hauls the freight and who owns the equipment in which it is hauled means that truck owners and operators have limited ability to be selective about the trailers they carry , and very

little incentive or ability

to take steps to reduce the fuel use of trailers that they neither own or control. For refrigerated tra ilers, the story is slightly

different. These trailers are used more intensely and accumulate more annual miles than other trailers. Over time, refrigerated trailers can also develop problems that interfere with their ability to keep freight temperature - controlled. For example, the insulating material inside a refrigerated trailer’s walls can graduall y lose its thermal capabilities due to aging or damage from forklift punctures. The door seals on a refrigerated trailer can also become damaged or loose w ith age, which greatl y affects the insulation characteristics of the trailer, similar to how the door seal on a home refrigerator can reduce the efficiency of that appliance. As a result of age - related problems and more intense usage, refrigerated traile rs tend to have shorter procurement cy cles than dry van trailers, which means a faster turnover rate, although still not nearl y as fast as for trucks in their first use.******* **E.O. 12866 Review**  **– REVISED**  **– Do Not Cite, Quote, or Release During Review ** ***

8 of 9 Tractor - trailers are often used in conjunction with other modes of transportation (e.g ., shipping and rail) to move goods across the country , known as intermodal shipping. Intermodal traffic t ypically begins with containers carried on ships, and then they are loaded onto railcars, and finall y transported to their end destination via truck. T rucks that are used in intermodal applications are of two primary ty pes. T railer - on - flatcar (TOFC) involves lifting the entire trailer or the container attached to its chassis onto the railcar. In c ontainer - on flatcar (COFC) app lications, the container is removed from the chassis and placed directly on the railcar. The use of TOFCs allows for faster transition from rail to truck, but is more difficult to stack on a vessel; therefore the use of COFCs has been increasing steadil y. B oth applications are used throughout the U.S. with the largest usage found on routes between West Coast ports and Chicago, and between Chicago and New York. 1.2.4 **Trailer Fleet Size Relative to the Tractor Fleet** In 2013, over 800,000 trailers were owned b y for - hire fleets and almost 300,000 were owned b y private fleets. Trailers that are purchased by fleets are typicall y kept much longer than are the tractors, so trucks and trailers have different purchasing cycles. Also, many trailers are owned b y shipper s or b y leasing companies, not by the trucking fleets. Because of the disconnect between owners, the trailer owners may not benefit directly

from fuel consumption and GHG emission reductions. The industry

generally recognizes that the ratio of the number of dry van trailers in the fleet relative to the number of tractors is ty picall y three - to - one. 10 Ty picall y at any one time, two trailers are parked while one is being transported. Certain private fleets may have ratios as high as six - to - one and owner - ope rators may have a single trailer for their tractor. The ratio of refrigerated vans to tractors is closer to two - to - one. This is partly due to the fact that it is more expensive to purchase and operate refrigerated vans compared to dry vans. Specialty tr ailers, such as tanks and flatbeds are often attached to a single trailer throughout much of their life. This characteristic of the trailer fleet impacts the cost effectiveness of trailer technologies. The annual savings achieved due to these technologie s are proportional to the number of miles traveled in a y ear and the analy sis for many of the trailers must account for some amount of inactivity, which will reduce the benefits.******* **E.O. 12866 Review**  **– REVISED**  **– Do Not Cite, Quote, or Release During Review ** ***

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## References 1 U.S. EPA and NHTSA, 2011. Regulatory Impact Analysis for the Final Rulemaking to Establish Greenhouse Gas Emissions Standards and Fuel Efficiency Standards for Medium and Heavy - Duty Engines and Vehicles. EPA - 420 - R - 11 - 901. Available at: http://www.epa.g ov/otaq/climate/documents/420r11901.pdf 2 http://www.ttmanet.org 3 49 CFR 565 4 “Both Sides of Truck Weight, Size Gear Up for Next Battle”. Szakonyi, Mark. February 25, 2014. Available at: http://www.joc.com/regulation - policy/transportation - policy/us - transportation - policy . Accessed: August 18, 2014. 5 “Wabash Shows What a 33 - Foot Pup Would Look Like”. Berg, Tom. He avy - Duty Trucking TruckingInfo.com. March 31, 2014. Available at: www.truckinginfo.com/blog/trailer talk/story/2014/03/w abas h - show s - what - a - 33 - foot - pup - wo uld - look - like.aspx . Accessed: September 23, 2014. 6 Per 4 6 CFR § 340.2. 7 19 CFR 115.3 8 Dun & Bradstreet. Hoover’s Inc. Online Company Database. Available at: http:// www.hoovers.com . 9 U.S. Census Bureau. 2002 Economic Census

– Vehicle Inventory and Use Survey. 2002. Available at: https://www.census.gov/prod/ec02/ec02tv - us.pdf 10 TIAX. LLC. “ Assessment of Fuel Economy Technologies for Medium - and Heavy - Duty Vehicles ,” Final Report to the National Academy of Sciences, N ovember 19, 2009. Page 4 - 49.