Ryder consumes approximately 3 million gallons of engine oil each year. We leverage both Chevron and Shell as providers for our bulk program, with Chevron being the primary provider, Scott Perry, Ryders vice president of supply management and global fuel products, told Lube Report. Perry confirmed that Ryder has previously used primarily 15W-40 bulk oil. He said there is no change in service intervals for their vehicles using the lower viscosity product.

As a leader in the industry, we have a unique opportunity and ability to improve cost efficiencies and reduce the environmental impacts of our operations, as well as those of the tens of thousands of customers we service, he noted in a news release last week.

Ryders preventive maintenance service has a nationwide network of 800 locations and 5,000 trained technicians. According to Ryders November 2014 company overview presentation, the company maintained 209,500 vehicles during 2013. This includes units they lease and others they service on behalf of contract customers. Our fleet is primarily comprised of medium-duty and heavy-duty (Class 3-8) commercial vehicles, Perry said.

The total number of Class 3-8 commercial vehicles in the U.S. and Canada combined was estimated at about 7.9 million vehicles in 2013, according to the company overview. The Class 3-8 lease and rental market in the U.S., Canada and United Kingdom was estimated at about 1.1 million vehicles total.

George Morvey, industry manager for Parsippany, N.J.-based Kline & Co.s Energy Practice, said Kline estimated that SAE 10W-30 heavy-duty motor oil accounted for 5.1 percent of total demand in the U.S. HDMO market in 2014, while 15W-40 accounted for 82.7 percent.

By 2023, we estimate that 10W-30 will increase to 6.6 percent, and 15W-40 will decline to 81.2 percent, Morvey told Lube Report. This is an HDMO market that we forecast to grow by only a compound annual growth rate of 0.3 percent from 2014 to 2023.

Morvey said the announcement by Ryder is significant and aligns with what Kline has observed in the U.S. market.

It is our understanding that end users most likely to convert to lower-visgrade HDMO are fleets with fleet maintenance managers that understand the value proposition of improved fuel economy and follow OEM product and maintenance recommendations to maintain warranty coverage, he said. However, he noted that Kline believes that there is a considerable amount of sales, marketing, and field trials necessary to convince individual fleets to make the switch.

Now Ryder, which falls into the lease-rental segment according to Kline, and handles the service and maintenance side of numerous fleet operations, will have a much broader impact on the industry and the penetration of lower-visgrade HDMO, Morvey asserted. Moreover, from what we have observed, this visgrade shift should be a relatively easy transition to make in the sense that one is moving from a conventional formulation to, at best a semi-synthetic formulation, while realizing fuel economy benefits at a manageable price point as compared to moving to a full synthetic. I would also expect that this move to a lower-visgrade HDMO will not interfere with Ryders established and proven preventative maintenance schedules. Its hard to find any downside here, and it should be a win-win for all parties involved from Ryders HDMO supplier to the individual vehicle operator.

Morvey said he would not be surprised to see similar announcements from Ryders competitors as they, too, seek to benefit from improved fuel economy in the vehicles they lease and service. Perhaps the segment of the market least likely to move to lower-visgrade HDMOs is the owner-operator segment, which tends to be very brand/supplier loyal and committed to SAE 15W-40 HDMO, at least for now, he noted.