DEF Industry Says It Can Meet Rising Demand
By Frederick Kiel, Staff Reporter
This story appears in the Jan. 31 print edition of Transport Topics.
Businesses involved in supplying diesel exhaust fluid needed for about 75% of the nation’s newest heavy-duty trucks say they easily will meet the expected 300% increase in demand this year.
DEF has turned out to be so much more plentiful and less expensive than early estimates that Integer Research, a London-based company working with producers of the engines that require the fluid, said that manufacturers can increase the percentage of DEF used in their systems — which, they say, would boost both the torque and the fuel efficiency of trucks.
“Right now, DEF is selling for much less than expected and is plentiful, while [the price of] diesel looks like it’s going to stay very high for a long time,” said Tim Cheyne, Integer Research’s director of emissions. “So by increasing DEF use, they can optimize torque and fuel consumption, with little extra DEF cost.”
Those benefits and the increased availability of DEF have proven to be a real boon for U.S. trucking companies.
“We’re very fortunate in having no trouble getting DEF because nearly all of our trucks come into one of our home terminals every night, ranging from Signal Hill, Calif., to Albany, N.Y.,” Dean DeSantis, president of Heritage Transport, told Transport Topics. “We bought DEF storage equipment for every one of our seven terminals, ranging from 330-gallon tote containers to 1,100-gallon tanks.”
Heritage Transport is a subsidiary of Heritage Environmental Services, Indianapolis.
DeSantis said that 52 of the private fleet’s 217 trucks use selective catalytic reduction technology to meet the Environmental Protection Agency’s mandate to cut nitrogen oxide emissions. DEF boosts the effectiveness of SCR technology.
Steve Duley, vice president of purchasing for Schneider National Inc., Green Bay, Wis., told TT that the carrier, which ranks No. 9 on the Transport Topics 100 list of the largest U.S. and Canadian for-hire carriers, has “approaching 1,000 SCR tractors, all but 10 of them Freightliners.”
“We worked with our engine supplier, Detroit Diesel, our main truck stop, Pilot, and other truck stops to tell them what we were doing and asking them what their plans were for DEF,” Duley said.
Both Freightliner and Detroit Diesel are subsidiaries of Daimler Trucks North America. They and all other truck and engine manufacturers except Navistar Inc., decided to use SCR technology to meet EPA requirements.
Navistar, which uses exhaust gas recirculation technology in its engines and doesn’t require DEF, had 25.1% of the Class 8 market in 2010, according to WardsAuto.com.
Because of the planning by DEF proponents, the fluid is available already at about 3,000 locations across the United States. The abundance of DEF also has grown because of less-than-expected demand in 2010.
As a result, fleets have had few supply problems, and many fleets have invested in their own DEF storage facilities.
DeSantis said Heritage buys all of its DEF from Brenntag North America, Reading, Pa., a subsidiary of Brenntag AG, Mülheim an der Ruhr, Germany.
Brenntag distributes a DEF brand called TerraCair, jointly produced by Terra Industries and CF Industries.
“We’re certainly seeing the hockey-stick effect for DEF: flat for a long period and then ramping up quickly,” said Alan Smith, DEF business development manager for Brenntag North America. “During the first six months of 2010, demand was relatively flat. Diesel exhaust fluid sales ramped up quickly during the second half of the year.”
Brenntag said it is preparing for an increased demand for diesel exhaust fluid in 2011.
Other leading producers of DEF are Old World Industries, which makes BlueDEF; Yara North America, which makes Air 1 DEF; and Airgas Specialty Products, which makes AiRx.
Schneider National, which already has nearly 1,000 SCR trucks, decided not to invest in storage tanks at its own terminals. The carrier, which operates 13,000 company tractors and 2,300 owner-operated tractors, depends mainly on truck stops for access to DEF.
“We’ll probably consider DEF storage facilities in our terminals, once volume picks up a lot more,” Duley said. “For now, we’ve relied mostly on truck-stop networks, with some of our facilities storing 1-gallon or 2.5-gallon jugs as backup.”
Duley said that despite the relatively easy availability of DEF, not all truck stops offer the fluid.
If needed, the drivers can purchase a jug and top off the tank. On a per-gallon basis, DEF sold by the jug is more expensive than from bulk containers — but lower than many pre-2010 estimates.
“We found DEF everywhere, except in a few routes we don’t generally travel in the Plains states,” Duley said. “We worked with truck stops in those areas, and they quickly stocked DEF for us.”
DEF caused no slowdown in Schneider’s business, Duley said: “We never had any truck delays. DEF did freeze in the trucks’ tanks below 12 degrees Fahrenheit, as we were told, but the tanks had heaters that defrosted the fluid rapidly so that the SCR process was never affected.”
The fuel savings that all the SCR producers projected did materialize, he said.
“With new trucks, you have to wait a while to make sure, but the ones we worked in did deliver the 5% increase in fuel savings consistently that we were promised,” Duley said.
Challenger Group, based in Cambridge, Ontario, has 150 SCR trucks in service and has ordered 250 more trucks for 2011 delivery. It operates 1,500 tractors and 3,500 trailers and ranks No. 63 on the for-hire TT 100.
“Currently, what we’re doing is using the lowest-cost solution for right now, given the relatively low volumes of DEF that we consume,” Bryan Burningham, director of maintenance for Challenger Group, told TT, “which means that we’ve ordered totes with proper pumps for indoor fueling.”
“As our volume of SCR trucks go up, we’ll be adding to those totes and nothing more,” he said. “We don’t want to put a whole lot of new infrastructure yet, because we want to wait until the industry settles and see whether fuel companies or others will be doing it.”
The company has experienced a few DEF problems.
“We had some issues with temperature sensors that caused the DEF to freeze up in one or two trucks, and if a heater fails, it’ll go into derate,” Burningham said, meaning the EPA-mandated controls severely cut the engine’s power and therefore speed. “The truck still runs, though,” he added. “They’ve done a fairly good job, given the short time they’ve had to produce them.”
Some truck-stop chains have announced expansion plans for 2011.
TravelCenters of America and its subsidiary, Petro Stopping Centers, which together have 228 truck stops, already carry 1-gallon and 2.5-gallon DEF jugs at all locations.
In December, TA announced that it would install DEF dispensers at fueling islands at 50 of its locations this year, with bulk containers planned for most as volume grows.
“We’ll have the DEF fuel dispensers working at five locations by the end of February,” Tom Liutkus, TA’s director of advertising and public relations, told TT in January. “They’ll be linked to 2,000-gallon aboveground containers located away from the fuel islands. When we put in all 50, we’ll have the most extensive bulk DEF capacity of any truck stop chain in America.”
On Jan. 5, Atlas Oil Co., Taylor, Mich., said that it would become a “master distributor” of BlueDEF, the brand name for the fluid it said was produced by Old World Industries, Northbrook, Ill. Atlas also will distribute DEF dispensing equipment.
“We are excited to offer a turnkey DEF program for customers,” Bob Kenyon, executive vice president of sales and business development at Atlas Oil, said in a statement. “At Atlas, we are always looking for ways to provide greater value to our customers. Diesel exhaust fluid is a critical component for fleet owners, and we believe we have the highest quality, lab-tested product to offer.”
Kenyon told TT that Atlas waited because “we do expect DEF demand to build slowly as customers become aware of the mandate and the product and as fleets begin to purchase new SCR-equipped trucks that need the DEF. After that we expect demand to build significantly.”
Integer Research’s Cheyne said that the success of building the DEF infrastructure has provided an opportunity for engine manufacturers to increase the fuel efficiency of their SCR power plants even further.
“There were two main reasons why our projections for DEF demand was 45% lower than [a 2008 estimate by] the Engine Manufacturers Association, even through 2019,” Cheyne told TT. “EMA estimated significantly higher Class 8 truck sales over this 10-year period [2010-19] than we did after the recession hit.
“Truck sales were particularly strong in 2007 and the first half of 2008, compared to historical trends, so that we did a recalibration of truck sales, which did include a rebound and restocking in 2011 and beyond but were still below earlier years.”
Cheyne said that EMA estimated that engines would need about 4 ounces of DEF for every gallon of diesel used. DEF generally costs less than $2.50 a gallon, many sources said. That price would mean 100 gallons of diesel fuel would require 400 ounces of DEF — and the cost of that DEF would be a little more than $7.50.
EMA estimated that 2010 DEF demand would amount to 54.6 million gallons, with most sales made in the second half of the year. The association said that demand would more than triple to 172.3 million gallons this year and increase to 316.1 million gallons in 2012 and 1.34 billion gallons in 2019.
After the recession, the SCR Stakeholders Group asked Integer Research to put together new projections.
Integer cut its 2010 estimate of DEF demand to 21.6 million gallons, rising to 91.1 million gallons this year and 160.1 million in 2012. Even by 2019, Integer still puts DEF demand 542 million gallons below the EMA estimate.
“However, we were seeing some of the engine makers getting increasingly worried at the beginning of the [SCR] launch that there would not be enough DEF available, so that most of them reconfigured their engines to reduce the amount of DEF needed,” Cheyne said.
Integer based its new estimate on about 3 ounces of DEF to a gallon of diesel.
“That may not seem like much of a decrease, but it makes up a full 30% of the decrease in our projections,” he said.
“But because most customers found DEF pretty easily available last year, some engine manufacturers could refine their engineering to increase DEF use and thereby use the SCR technology more intensely, which would make the engines even more fuel efficient,” Cheyne explained.
He said that some farm machinery with SCR, such as combines, already have been re-engineered to run on a ratio of about 10.5 ounces of DEF for every gallon of diesel, “and they are getting a 12% increase in fuel savings.”
Ed Saxman, Volvo Trucks North America’s powertrain product manager said his company has not received any complaints about the availability or price of DEF.
David McKenna, Mack Truck’s director of powertrain sales and marketing, said, “One customer told me he had some real reservations about . . . the commercial availability of DEF. But after six months in service, it has been no big deal.”
Everett Seymoure, a Paccar Inc. manager, said, “Sales [of DEF] have increased as SCR trucks have increased.”
