UPS First in Industry to Purchase Hydraulic Hybrid Vehicles

As part of a public-private partnership to increase the commercial availability and use of alternative fuel vehicles, UPS (NYSE:UPS) today announced its first purchases of a little-known technology – the hydraulic hybrid vehicle -- that promises dramatic fuel savings and environmental benefits.

The technology, originally developed in a federal laboratory of the Environmental Protection Agency, stores energy by compressing hydraulic fluid under pressure in a large chamber. UPS was the only company in its industry asked to road-test the technology two years ago and now becomes the first delivery company to place an order for hydraulic hybrid vehicles (HHV).

"There is no question that hydraulic hybrids, although little known to the public, are ready for prime time use on the streets of America,” said David Abney, UPS’s chief operating officer. "We are not declaring hydraulic hybrids a panacea for our energy woes, but this technology certainly is as promising as anything we’ve seen to date.”

Disclosing the results of its road testing on Detroit routes for the first time, UPS and the U.S. Environmental Protection Agency (EPA) said the prototype vehicle had achieved a 45-to-50 percent improvement in fuel economy compared to conventional diesel delivery trucks. UPS believes similar fuel economy improvements and a 30 percent reduction in CO2 are achievable in daily, real-world use. The EPA believes the technology can perform equally well in other applications such as shuttle and transit buses and refuse pick-up trucks.

Abney was joined by representatives of the EPA, the Eaton Corporation (NYSE:ETN) and Navistar (NYSE:NAV) at a news conference in Atlanta’s Centennial Park in announcing UPS’s decision to place an order for seven of the hydraulic hybrids.

UPS will deploy the first two of the new HHV’s in Minneapolis during the first quarter of 2009. Eaton, which helped develop and refine the vehicle’s hydraulic hybrid power system, will monitor the vehicle’s fuel economy performance and emissions in the Minneapolis area. The additional five HHV’s will be deployed later in 2009 and early 2010.

With a diesel "series” hydraulic hybrid of the type being purchased by UPS, a high-efficiency diesel engine is combined with a unique hydraulic propulsion system, replacing the conventional drivetrain and transmission. The vehicle uses hydraulic pumps and hydraulic storage tanks to capture and store energy, similar to what is done with electric motors and batteries in a hybrid electric vehicle. In this case, the diesel engine is used to periodically recharge pressure in the hydraulic propulsion system. Fuel economy is increased in three ways: vehicle braking energy is recovered that normally is wasted; the engine is operated more efficiently, and the engine can be shut off when stopped or decelerating.

The EPA estimates that when manufactured in high volume, the added costs of the hybrid components can be recouped in less than three years through lower fuel and brake maintenance costs.

Eaton began working with the EPA in October 2001 under a Cooperative Research and Development Agreement involving hydraulic hybrid systems and components. As part of Eaton’s role in designing and developing hybrid technologies, the company’s engineers were co-located at the EPA’s Ann Arbor facility. Eaton also earned a number of hybrid power system patents and continues to work on a number of other hybrid vehicles initiatives with UPS and others.

"We continue to be pleased with the progress and potential of the hydraulic hybrid system,” Eaton Chairman and CEO Alexander M. Cutler said at the press conference. "The market for this technology is truly global, and it can provide significant improvements in fuel economy and emission reductions for trucks, buses and off-road vehicles of many shapes and sizes.”

"EPA and our partners are not just delivering packages with these UPS trucks, we’re delivering environmental benefits to the American people," said EPA Administrator Stephen L. Johnson. "With this investment in fuel-efficient technology, UPS is doing what is good for our environment, good for our economy and good for our nation's energy security."

"The diesel hydraulic hybrid vehicle has the potential to offer our truck customers something very unique – performance and reduced emissions with dramatic improvements in fuel economy,” said Steve Guillaume, Navistar General Manager, Medium Trucks.

UPS’s current "green fleet” totals more than 1,600 low-carbon vehicles, including all-electric, hybrid electric, compressed natural gas (CNG), liquefied natural gas (LNG) and propane-powered trucks.

In addition to the hydraulic hybrid, UPS has road-tested hydrogen fuel cell delivery trucks. UPS began deploying alternative fuel vehicles in the 1930’s with a fleet of electric trucks in New York City.

The HHV vehicle order follows the May 2008 purchase of 500 hybrid electric and CNG vehicles and the April 2008 deployment of 167 new CNG vehicles in Atlanta, Dallas, Los Angeles, Ontario, San Ramon, Fresno and Sacramento. With UPS’s new purchases, the company’s "green fleet,” already the largest private fleet in the transportation industry, will total more than 2,100 vehicles.

About Eaton Corporation

Eaton Corporation (NYSE:ETN) is a diversified power management company with 2007 sales of $13 billion. Eaton is a global technology leader in electrical systems for power quality, distribution and control; hydraulics components, systems and services for industrial and mobile equipment; aerospace fuel, hydraulics and pneumatic systems for commercial and military use, and truck and automotive drivetrain and powertrain systems for performance, fuel economy and safety. Eaton sells products to customers in more than 150 countries. For more information, visit www.eaton.com.

About Navistar

Navistar International Corporation (NYSE: NAV) is a holding company whose subsidiaries and affiliates produce International® brand commercial and military trucks, MaxxForce™ brand diesel engines, IC brand school and commercial buses and Workhorse® brand chassis for motor homes and step vans. It also is a private-label designer and manufacturer of diesel engines for the pickup truck, van and SUV markets. The company also provides truck and diesel engine parts and service. For more information, visit www.navistar.com.

About UPS

UPS, the world’s largest package delivery company, pursues a wide range of socially responsible and sustainable business practices designed to reduce its impact on the environment and improve communities around the world. UPS is included in the Dow Jones and FTSE4Good Sustainability Indexes. For more information, visit www.pressroom.ups.com.

To watch a live webcast of the announcement, visit:

http://www.triplepundit.com/pages/ups-alternativefuel-vehicle-pr- 003668.php. (Due to its length, this URL may need to be copied/pasted into your Internet browser's address field. Remove the extra space if one exists.)