March 29, 2024

You’re the Boss Blog: Can ATDynamics Get Trucking Fleets to Go Green?

ATDynamics claims TrailerTails pay for themselves in as little as six months.Courtesy of ATDynamicsATDynamics claims TrailerTails pay for themselves in as little as six months.

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The adventure of new ventures.

This is the second in a series of quick profiles of start-up companies.

Since 2008, ATDynamics has been selling the TrailerTail, an aerodynamic device that retails for $2,000 and mounts on the back of a semi-trailer to reduce drag and boost fuel efficiency.

Employees: 30 full time.

Location: South San Francisco, Calif.

Founder: Andrew Smith, 35, started ATDynamics in 2006 as an M.B.A. student at the Tuck School of Business at Dartmouth, where he met his first employee, the engineer Jeffrey Grossmann. That year, his company also took the grand prize at Rice University’s Business Plan Competition, bringing in more than $135,000 in winnings.

Pitch: “The least aerodynamic shape – and therefore the least fuel-efficient shape – to pull down the highway at 60 miles per hour is a big rectangular box, yet there are two million of these big boxes being pulled around on U.S. highways on a daily basis,” said Mr. Smith. “Our company is fixing that error. We’re basically changing the shape of the trucking industry and putting aerodynamic tails on the back of long-haul trailers.” TrailerTails, he said, can boost fuel efficiency by more than 6 percent and pay for themselves within six to 18 months, depending on mileage.

His goal is ambitious: getting TrailerTails on two million trailers, which he asserts would save $20 billion worth of diesel fuel in a decade.

Traction: Last year, after testing the technology, Mesilla Valley Transportation of Las Cruces, N.M., purchased 3,500 TrailerTails. “They were the first to make the jump,” Mr. Smith said. Earlier this year, three of the largest trucking companies in the country – Swift Transportation Corporation, Werner Enterprises and Schneider National – ordered tails to try out on their trailers as part of formal demonstration programs.

ATDynamics is also participating in the Energy Department’s “super truck” program, collaborating with Indiana-based Navistar and other companies as part of a $115 million, federally financed initiative to cut tractor-trailer fuel use in half.

Revenue: ATDynamics does not disclose its revenue but has sold nearly 5,000 TrailerTails so far and became profitable last year, according to Mr. Smith. He projects that the company is on track to sell between 20,000 and 25,000 of them next year, more than quadrupling its revenue.

Financing: So far, the company has raised about $3 million with three rounds of angel investment, Mr. Smith said. Two primary angel groups — the GOOSE Society of Texas and Angeli Parvi — were joined by individual investors.

Marketing: Mr. Smith relies primarily on the fact that his product doubles as a mobile billboard, emblazoned with the words “TrailerTail” and “ATDynamics.”  “Because it sticks four feet off the back of the trailer,” he said, “we have to invest very little in marketing.”

Competition: The Environmental Protection Agency’s SmartWay Technology Program publishes a long list of approved drag-reducing accessories for tractor-trailers, some of which can be used in tandem with each other. These include the SmartTail, an inflatable rear-mount device from Aerodynamic Trailer Systems, a company in Bedford Heights, Ohio, which brought the product to market in 2010 and claims it reduces fuel consumption by 4.45 percent. SmartTruck, a company in Greeneville, S.C., sells plastic pieces truckers can install in several configurations beneath and to the rear of their trailers for fuel efficiency gains the company claims can top 11.5 percent. When the company’s latest model, the UT-6 UnderTray System, was released last year, initial customers included Con-way Truckload, Frito-Lay and PepsiCo.

Challenge: Truckers wanna keep on truckin’. In other words, it’s hard to shift the status quo in an established industry dominated by big corporations. In the words of Mr. Smith, “The rate of adoption in the trucking industry is slow because people have a lot of fixed assets.”

Another challenge is split ownership of trucking components. “There are some trucking fleets that don’t own the trucks as well as the trailers,” he said. “If you own a bunch of trailers and you hire people with trucks to pull them, you don’t get the savings.”

Now’s your chance to weigh in. Would you consider investing in this business?

Article source: http://feeds.nytimes.com/click.phdo?i=c7ccce63e9061d74d418426bf788bc0b