Truck Stops, Fleets Respond to DEF Demand by Installing More Bulk Filling Dispensers

With demand for diesel exhaust fluid expected to double this year, truck stops and carriers say they are responding by installing bulk filling dispensers that will save fleets time and money.

North American DEF consumption will increase to 140 million gallons in 2012 — twice the consumption in 2011, said Monica Baker, research manager at Integer Research, with headquarters in London. At the end of January, 394 truck stops offered bulk DEF at the pump in North America, Baker said.

All the major truck-stop chains have bulk DEF available, and many small and midsize operators are following suit.

The smaller truck-stop operators “realize they have to get into the DEF sales at the pump in order to not lose their diesel sale,” said David Polak, president of DEF equipment manufacturer Blue1-USA, Duluth, Ga. “They don’t want that carrier going to one of the big three [truck-stop chains] because they have it on the island and [the smaller ones] don’t.”

What’s more, many carriers are installing their own bulk dispensers.

Gilbarco Veeder-Root, which has been providing DEF dispensers globally since 2005, entered the North American market in 2009, said Chad Johnson, marketing manager of the Greensboro, N.C.-based company’s Encore dispensing products. He said there are more than 1,000 Gilbarco DEF dispensers currently in use across the United States and Canada — located both at truck stops and carrier facilities.

“The growth is coming fast and furious,” said Chad Dombrowski, director of Air1 DEF for its producer, Yara North America, Tampa, Fla. He added that equipment and DEF suppliers are well-positioned to handle the demand.

The growth follows increased Class 8 sales. All new trucks — other than those produced by Navistar Inc. — apply selective catalytic reduction (SCR) technology to meet 2010 federal engine emissions standards. These trucks require the use of DEF to run properly.

Integer Research estimated that more than 300,000 SCR-equipped Classes 4-8 trucks were on the road in North America at the end of 2011.

Tom Rhein, president of Rhein Associates Inc., Canton, Mich., estimated that 185,000 Class 8 trucks are using DEF on the road.

“It becomes an interesting number because — at least halfway through 2010 — they were still using the old engines,” Rhein said.

Baker said that, based on an Integer Research model, DEF consumption was 65 million gallons for 2011, a 727% increase over 2010. She expects demand to continue increasing in 2012, she said.

“This is the year we’ve all looked forward to,” Polak said.

Bulk distribution can mean anything from 250-gallon totes that sit on or near the island to underground storage tanks that hold thousands of gallons. Truck stops still have 2.5-gallon jugs on their shelves, but they are making up a smaller percentage of sales. Bulk DEF eliminates the need for drivers to lift the 25-gallon jugs, saves time and costs less.

Truck-stop operators told Transport Topics the price difference between jugs and bulk can be anywhere from $2.50 to $3.40 a gallon. Integer Research said the average price of DEF at the pump was $2.75 a gallon in February.

Integer launched its DEF Tracker monthly price reporting service in October 2011. It reports figures for truckload and less-than-truckload deliveries, tote refills and 2.5-gallon jug price benchmarks for a handful of cities and reports pump prices at truck stops in North America.

The price of DEF fluctuates because the price of the urea used to make it changes daily, just as gasoline and diesel prices are based on the cost of crude, said John Lounsbury, a spokesman for DEF-maker Terra Environmental Technologies, Deerfield, Ill. He added that some regional price differences are based on proximity to plants and the source material.

Baker said carriers installing their own bulk-fueling dispensers will see even greater savings. For less-than-truckload deliveries of DEF, fleets can expect a 68% savings over jugs and a 53% discount over bulk DEF at truck stops, she said.

C.R. England Inc., Salt Lake City, has about 1,200 trucks that require DEF and installed bulk dispensers at five of its terminals. Corey England, executive vice president of operations, said the carrier that ranks No. 21 on the Transport Topics Top 100 list of the largest U.S. and Canadian for-hire carriers saves about $1 per gallon on its own DEF, compared to buying in bulk at a truck stop.

Lounsbury said the real savings from bulk deliveries is in the shipping costs.

“If you can move a full tanker of DEF from one of our terminals or plants, it has a much more efficient freight rate,” he said.

Of course, that price-per-gallon discount means carriers and truck stops have to make hefty investments in equipment.

Pilot Flying J, Knoxville, Tenn., said that it will have invested $90 million on its bulk DEF offerings by the end of the year. So far, the national truck-stop chain has rolled out on-island bulk DEF at 270 locations with 1,450 lanes. Pilot Flying J said that by June, it will have more than 300 DEF locations with more than 2,000 lanes — and by the end of the year, the chain will have 2,500 lanes at about 340 locations.

As C.R. England has done, Penske Truck Leasing, Reading, Pa., and Marten Transport, Mondovi, Wis., also have installed bulk DEF at their terminals.

“Here at Marten Transport, we are looking at close to $350,000 worth of equipment just to dispense it,” said Chuck Remington, maintenance manager for the carrier, which ranks No. 43 on the for-hire TT 100.

Marten Transport has installed bulk underground storage for DEF at four of its terminals and will add one more by the end of the year.

“The rest of our locations will have containers that hold 1,000 gallons along with a pump. They’re all being hooked up with a card reader, so the drivers swipe their cards and we can keep track of what truck and how much they get,” Remington said.

Marten Transport has about 80 trucks that require DEF and will take delivery of 580 more throughout this year and into early 2013, he said.

“Within three more years, pretty much every piece of equipment that we have will require DEF,” Remington said.

Dombrowski said that how fleets purchase DEF tends to mirror how they purchase their fuel — either from truck stops or local distributors — but more and more carriers are installing bulk DEF sites, even if they don’t distribute their own fuel.

“They’re saying, ‘I’m able to do this economically on-site. It is safe, and it is easy,’ ” Dombrowski said.

Yara offers equipment assistance programs to help truck stops and carriers purchase the tanks, dispensers and pumps that best meet their needs.

Penske Truck Leasing Co. said it will equip 370 of its major U.S. fueling locations with bulk diesel exhaust fluid by the end of 2012. They will house anywhere from 330-gallon to 2,000-gallon DEF on-island systems. Penske currently operates and maintains about 25,000 trucks with SCR technology, which is up from over 6,000 at the start of 2011. Mike Hasinec, vice president of maintenance systems and support, estimates that Penske can save its customers about 20% by offering DEF in bulk.

Penske Logistics, a subsidiary of Penske Truck Leasing, ranks No. 9 on the for-hire TT 100.

The return on investment for bulk distribution equipment varies, based on the size of the fleet and its location. Distribution solutions range from $2,000 to $20,000 per lane, Dombrowski said.

“The higher costs are in the northern climates because they need more insulation and heating for the units themselves. You can get away with more inexpensive operations where temperature is not as much of a concern,” he said.

The amount of DEF a location sells in a month determines which equipment is necessary. Dan Alsaker, president of  Broadway Truck Stops, Spokane Valley, Wash., sells about 1,000 gallons in bulk DEF a month. He uses DEF totes stored in a heated shed near the fuel islands, and Broadway employees use a reel to reach trucks in the first two fuel lanes. While the totes meet Alsaker’s needs now, he expects to shift his strategy as demand continues to increase.

“We all know it is a Band-Aid, and there is not one of us who thinks those are going to go forever and ever,” he said, adding that he still sells 2.5-gallon jugs. “We’re talking in Montana, and there are long stretches of roads, so drivers are filling up in bulk and buying a couple of 2.5-gallon jugs [to carry] with them in the truck.”

Truck-stop operators said their goal is to create convenience for drivers. TravelCenters of America, Westlake, Ohio, has bulk DEF dispensers at 62 of its TA and Petro Stopping Center locations and expects nearly all locations to have on-island dispensing equipment by the end of the year, said Tom O’Brien, CEO of TravelCenters of America.

Love’s Travel Stops & Country Stores has DEF at 125 locations now and will have it at all of its 220 locations by the end of 2012, said spokeswoman Kyla Turner.

To make finding bulk DEF even easier, several companies, including Air1, TA and BlueDEF, have launched mobile apps.

The on-island installations at the chains use new dispensers that handle both diesel fuel and DEF. Pump-manufacturer Gilbarco Inc. has a dispenser that allows users to dispense DEF and diesel from one pump. The pump keeps the two fuels completely separate.

“Ultimately, the big challenge for DEF is that it is 67% water. Water freezes at 32 degrees Fahrenheit, so the dispenser has a heating element that maintains the temperature,” said Chad Johnson, marketing manager for Gilbarco Inc., Greensboro, N.C. The pump also uses a retractable hose that goes inside the pump to maintain its temperature.

Underground storage also helps with temperature concerns.

“When you go below ground, the ambient temperature stays the same,” said Terra’s Lounsbury.

Blue1USA has double-wall insulated storage units and will roll out a noninsulated version for warm weather later this year.

Both Blue1USA and Gilbarco have recorded significant growth in equipment sales.

“We’ve seen growth in both at the travel-plaza side as well as on the home-based or commercial-based fueling location,” Johnson said, but he declined to comment on sales figures.

In addition to installing the equipment, operators have had to make some back-office system changes. For example, Pilot has made DEF purchased along with fuel a single transaction, so there are no additional transaction fees. “If your fee is $1.50, and you’re going to get 10 gallons, then you have 15 cents a gallon on your product. All of that is taken care of now,” said Executive Vice President Mark Hazelwood.

Penske also launched a new point-of-sale system that provides detailed information on the amount of fuel and DEF that is consumed to help its customers keep accurate records, Hasinec said.

Whether carriers and truck stops dispense DEF in jugs, totes or from underground storage tanks, Pat O’Bryan, product manager for BlueDEF, Northbrook, Ill., stressed how important it is to keep DEF free of contaminants.

“As closed of a system you can have through production to distribution to dispensing is what you want to try and have,” he said.