By Jim Park Posted: May 30, 2017 12:37 PM | Last Updated: May 30, 2017 12:37 PM
There used to be good money in the liquid bulk business. The required equipment is so specialized that it presented somewhat of a barrier to entry into the market. That’s still the case, but there are more players in the game now, and competition is keeping rates at near-1980s levels. Fleets, both private and for-hire, are now trying to make up for the low rates by optimizing their trailer spec’s to increase utilization and carrying capacity.
“With fleets now having nearly exhausted ways of reducing cost, their only alternative is to carry more payload and hope the competition isn’t right behind them on upsizing,” says Robert Pahanich, vice president of maintenance and procurement at Transcourt, which specializes in leasing tanks. “This presents some real challenges for fleets that want flexibility, because sometimes the dedicated tank isn’t compatible with available backhauls.”
That’s the nature of the tank business in a nutshell. There are many different types of tank trailer, and many are designed to haul specific products or types of products. Spec’ing dedicated tanks will often preclude the carrier from carrying other cargo.
Take solvents, for example. They are a common commodity and widely distributed, and for the most part do not require specialized equipment. They can be carried in aluminum or stainless steel tanks. They are usually alcohol- or petrochemical-based, so they will require a trailer rated for flammable products, but they are usually not temperature-sensitive. In most cases, the trailer won’t require an insulated barrel.
Many of those types of product are very light, weighing somewhere around five or six pounds per US gallon. (By comparison, an imperial gallon of water weighs 10 pounds, whereas a gallon of some heavy corrosive products, such as nitric acid, can weigh as much as 16 or 17 pounds per gallon.)
Shippers want as much product as possible on the truck, so carriers are opting for ever-larger tanks. That means tackling related weights. Choosing aluminum over stainless steel can save as much as 6,000 pounds. Foregoing insulation can reduce weight by another 3,000 pounds. But this becomes a problem when carriers are looking to match the tank trailer to compatible backhauls.
Nabil Attirgi, president of Montreal-based Bedard Tankers, says the construction material for the tank barrel very much depends of the commodity being transported.
“There really is no such tank as a general-purpose tank,” he says. “Take a material like 316L stainless steel. It’s probably as close as we can get to general-purpose.” But its cargo temperatures are limited to around 150 Celsius (300 Fahrenheit). Transport Canada and the U.S. Department of Transportation have additional ratings and classifications that must be followed when hauling certain hazardous cargo, further complicating the spec’ing exercise.
“Before we take on a job for a customer, we get them to check with their customers or shippers to ensure that the tank will be compatible for their cargo,” Attirgi says.
You can now see where trying to optimize a tanker to carry solvents would create problems when sourcing backhauls. You can’t put hot product in an aluminum tank. You can’t put corrosives in an aluminum tank. You can load -solvent in a stainless tank, but if it’s insulated you might lose out on up to 10,000 pounds of payload your -competitor might be able to haul. Because of its weight, you’ll likely opt for a smaller barrel. So again, you limit your -carrying capacity. And even if you went for a largish stainless steel 316L tank, holding about 7,000 US gallons, drivers would be mighty unhappy about hauling 2,500 gallons (a full load weight-wise)
of heavy acid in a barrel that large. The surging equipment would beat them to death.
Whenever the conversation turns to lightweighting, bulk carriers are always held up as examples of the significance of every kilo of tare weight. Every liter of product is a billable commodity. The more you move, the more you make. What might be absent from those conversations is the potential cost of shortcutting your lightweight spec’. Lightweight equipment is expensive, and sometimes there is a tradeoff between weight and durability. Tank trailers often stay in service 20 years or longer. That’s no place for a flimsy spec’.
Despite fleets’ concerns over weight, Attirgi says he hasn’t built a trailer with a spring suspension in seven or eight years. “The air suspensions tend to be heavier, and there’s usually more maintenance involved, but the wear and tear on the frame and the barrel is a fraction of what it used to be,” he says. “There’s no give and no flexibility in a tank barrel, so all the roughness of the road comes right back to the barrel through the spring suspension. Springs are lighter, but they are harder on the equipment.”
Likewise for disc brakes. Attirgi says disc brakes are on about 20% of his orders now, and that’s up considerably in recent years. He notes that while disc brakes are slightly heavier and more expensive, they reduce maintenance costs and you don’t need to spec’ an automatic greasing system.
Fleets aren’t looking to cut 50 pounds here and 100 pounds there. They recognize that’s a mug’s game. But they are more than willing to look at big cuts, like switching from dual tires to wide singles.
“It’s hard to skinny up a trailer,” Pahanich says. “You can spend a lot of money and not really get a substantial weight reduction. Fleets will spend money on components that will last longer, such as galvanized steel or aluminum instead of carbon steel for subframes, cross members and even landing gear. That will keep the trailer out of the shop longer and lighten it up a bit.”
Given the long life expectancy of a tanker trailer, there’s often a mid-life rehab or replacement of the undercarriage. So fleets are looking to keep the trailer in service as long as possible, and that often conflicts with the weight-reducing strategies.
If you’re new at tankers, or maybe a good customer has asked you about providing that service, you’ll need to ask a lot of questions about the product being hauled before shopping for a trailer. It all begins with product compatibility. Once you have the right material for the tank, then the spec’ing process begins. And if you’re considering food-grade or milk transport, that’s a whole other story. Attirgi says those tanks are in a category unto themselves.
“They are built to a different code than a chemical tanker, and they are even required to be built in a separate clean bay with specially trained welders,” he says. “Food-grade is not something you take lightly.”
With so many different types of tanks in service today, from basic bulk liquids to compressed gasses, hot products, oil tanks, and glass-lined acid tanks, just making the equipment choice is a process in itself. Your customer will know what they need, but you can make a lot of mistakes along the way if you’re not an expert at spec’ing tanks. Rely on the advice of professionals.
EXTRA: The rise of liftable axles
Tank carriers tend to travel a lot of empty miles. Whether they are fuel haulers returning from service station deliveries, businesses that use dedicated tanks for food-grade products, or asphalt haulers returning from road building jobs, the trip back to the terminal is almost always unladen.
Enter the opportunity for a new generation of lift axles.
Lifting unneeded axles improves fuel economy by eliminating some tire-induced rolling resistance. It also improves tire wear by putting more weight on the deployed axle. Running lightly loaded on fully inflated tires induces uneven wear. There are also said to be safety benefits to running with the minimum number of deployed axles. It’s thought to improve traction in wet and snowy conditions.
According to Robert Pahanich, vice president of maintenance and procurement at Transcourt, which leases tanks, these liftable axles are a hot item on customer wish lists in selected applications.
“You won’t see us approving three liftable axles on a quad-axle trailer, but tridems and tandems are fine,” he says. “Much of North America already allows these axles, or at least does not prohibit them. Ontario, being one of those notable exceptions, is now looking into the feasibility of allowing them – and they will sooner or later. They aren’t there yet, but having said that, we are already leasing a lot of equipment in Ontario with the so-called smart lift axles.”
In today’s hyper cost-sensitive world, the spec’ could be worth the few extra pounds incurred by adding a lift kit.
by John Kipp,
I thought it was an odd comment to make at that morning’s weekly sales conference call. It was early 2013, and we were discussing what stock aluminum, 407 crude trailers, we should be making to satisfy the steady demand in Western Canada. One of our big sellers at Advance Engineered Products Ltd. (AEPL), was a 37.5 M3, single compartment, TC 407 tridem trailer. When I asked the Territory Manager (TM) covering the Saskatchewan and Manitoba markets how many he wanted built for his market, he responded; “Not a one.”
I asked the TM why he didn’t want new inventory to sell and he told the group that his customers in Southern Saskatchewan and Manitoba were no longer purchasing aluminum crude trailers. They were now asking for stainless steel models instead. This was a shock of course; Southern Saskatchewan was AEPL’s second largest market for aluminum crude equipment. And now, after a ten-year run, demand for these trailers was drying up. What was going on?
We had seen another transition to stainless crude in Northern Alberta and B.C., but believed that phenomena was due to tougher terrain which was beating the hell out of aluminum trailers. But then again, we were still selling plenty of aluminum crude equipment to some of the largest carriers operating in that basin, and they were not reporting significant structural issues, yet. In fact, some of our aluminum crude equipment was being deployed to the Wabasca AB area, which had developed a reputation for the most punishing terrain on the continent.
The base economic case for stainless versus aluminum crude made no sense at the time either – and even less so now, because of rising steel costs. Today, a similarly sized and equipped 407 stainless crude tridem is priced approximately 30% higher than its epoxy lined, aluminum counterpart, and hauls about 1 MT less payload. In some traffic lanes like petroleum, that’s a carrier’s total profit margin!
In fact, during the first Western Canadian crude renaissance in the early-2000’s—driven by the advent of horizontal drilling and multi-stage fracturing—aluminum crude wagons were flying off our assembly lines. Given their cost and weight, why would anybody want stainless, except to haul milk, and chemicals?
Early in the renaissance, the trucking industry understood that some crudes would be corrosive, but there was a “fix” for that. Line the aluminum trailers with an epoxy coating, then load and go. Life was great at AEPL in those days!
And then, one day in April 2013, the answer to my question appeared in a box dropped off at my office. Inside was the sump out of a two-year-old Advance aluminum 407, crude B-Train. It had been cut-out by our Service Department in Regina and replaced at a cost of $5,000. Two other sumps were also cut-out and replaced in the lead and the pup.
The sumps were severely corroded and pitted, despite having an epoxy liner. Somehow the liner had failed near the “heat-affected” areas of these multi-piece sumps, where the epoxy’s bonding properties would be sub-optimal. But, why were the linings failing after just two years?
One theory was that dosing methanol into the trailer by service centers in the winter might be the key. Hazardous materials trailers need to be emptied of residue and steamed before interior shop work can be undertaken. There is always the potential for explosion caused by flammable vapors inside the tank. Methanol is often use as “antifreeze” after service in the winter, to prevent the plumbing and valves from freezing-up after steaming, while the trailer sits outside waiting to be picked-up.
Dosing trailers with methanol would likely pool at the sumps causing the epoxy to soften. A breach of the lining could occur when offloading, because crude containing abrasive materials (sand) would wear down the softened lining at the sump. Once the aluminum was exposed, the residual fracturing acids and other chemicals would rapidly attack the material. The result? Expensive re-sections, complete sandblasting of the interior, and re-lining with epoxy! On a two compartment tridem trailer, the carrier was looking at $20,000 worth of repairs.
Some carriers were asking themselves whether they should be planning this kind of maintenance expense every couple of years? Could they defer service to the Summer or only use shops that had explosion proof bays?
Not quite. Methanol was also showing up in the crude oil they were hauling.
Approximately 150,000 liters of chemicals are used on a typical well frac. Proprietary chemical “cocktails” are developed by the oil well services industry and sold as effective, yield producing formulas. Typical chemical additives can include hydrochloric or acetic acids, used in the pre-fracturing stage. Ethylene glycol is used to prevent the formation of scale deposits in the pipe. But, some of the most common chemicals used for hydraulic fracturing are methanol, isopropyl alcohol, 2-butoxyethanol, and ethylene glycol.
Observation # 1: Every barrel of crude that comes out of a producer’s holding tank has some residual of the chemical cocktail used to frac it. That’s the epoxy softening and corrosion part of the equation.
About five years ago, oil well service companies discovered that using (much) more sand in a frac job equaled more crude yield: Low cost – higher profits. The result? Back in 2012 the amount of frac sand used in a well averaged about 1,000 lbs./foot. Today, it averages 1,500 lbs./foot, with some producers going to 3,000 lbs./foot. That’s a 50% to 300% increase in frac sand use. In other words, a one kilometer deep well in 2012 would have consumed 1,500 metric tonnes of frac sand. Today, that same well consumes between 2,200 and 4,400 metric tonnes of sand. That’s 50 to 100 B-Train loads headed to a single well.
Observation # 2: Every barrel of crude that comes out of a producer’s holding tank has some residual frac sand in it. That’s the abrasion part of the equation.
Last year, I visited several customers in S/Saskatchewan and North Dakota to determine, among other things, whether the theory held true. As I toured one shop, this workbench caught my eye:
“What happened here?” I asked. The Shop Manager told me that tearing out and replacing sumps was becoming a great revenue stream for his shop, but wasn’t sure what was happening. He blamed it on poor linings and installations.
In Northern Alberta, sales of stainless crude equipment had been outselling aluminum versions since the late 2000’s. In one shop, I asked the owner whether he had seen the pitting and corrosion that was happening in other parts of Western Canada. His answer was “not really” but, he stated that crude carriers were buying stainless equipment for other reasons.
“What other reasons?” I asked. He told me that aluminum trailers were lasting five years at most; “Not tough enough for this market.” Conversely, he was seeing stainless trailers coming in for maintenance that were 10, and sometimes 12 years old. At that moment, I flashed back to another conversation with a shop manager in Weyburn SK, who told me that stainless crude trailers were lasting 5 – 7 years longer than their aluminum counterparts.
Trailer engineers will tell you that, unlike stainless steel, aluminum does not have “fatigue strength” and will eventually fail from small stress amplitudes. Translation? Stainless trailers are better able to absorb punishment than their aluminum cousins.
But, what about those aluminum trailers being employed in the Wabasca area? Were they new? Was the reporting accurate? I couldn’t tie it together and since retiring from AEPL at the end of 2014, could not get updates.
Observation # 3: Crude oil hauling is very tough trucking with a lot of short, off-road hauls, to access holding tanks located on oil leases. In straight highway hauling, chemical stainless trailers can remain in service for 25 years or more. Aluminum units hauling petroleum, typically retire after 18 – 20 years of service.
Now, the economics of aluminum versus stainless crude was starting to make more sense to me. The up-front costs for stainless are much higher and the payload penalty is significant. But, the lifecycle cost of a stainless unit appeared to be much cheaper than aluminum, particularly from a maintenance and longevity standpoint.
Some carriers argue that proper inspections of aluminum epoxy lined equipment (stainless does not need lining) should be sufficient to ensure protection against barrel pitting and corrosion. That’s true, however proper lining inspections require cleaning and downtime – which is costly. And, even if you find a breach in time to prevent the residual acids from attacking the aluminum, you’re looking at a $10,000 reline, and a week of downtime. Do that every couple of years and you’ve cut the aluminum initial cost advantage to 5% over stainless but, you still have that 1 MT payload advantage!
Now, factor in the observations from the field that stainless crude trailers last ten years while aluminum crude trailers last five on average, and the economics become much clearer. As Foghorn Leghorn once said: “You can argue with me but you can’t argue with mathematics!”
Does aluminum still have a place in the crude fields? Of course, but the carrier needs to understand what it is he’s hauling, where to, and how he will handle ongoing maintenance, to assess the total lifecycle costs of the equipment he is buying. Hauling sweet crude from a terminal to a pipeline injection station over the highway is likely more profitable with aluminum, than it is with stainless. It’s all about properly assessing the hauls when planning your fleet.
This is an article written By Steve Graham and produced by FTR Reports.
production again in February. Some reports place the compliance rate closer to 86%. Efforts to lower inventories and raise prices have run into a wall in the U.S., where inventories have increased for the world’s biggest oil consumer for an eighth week in early March at a record 520.2 million barrels. Oil production in the shale belt is indeed increasing. U.S. drillers added rigs for the seventh straight week in early March, according to Baker-Hughes. Rig counts rose to over 600, the most since October 2015. Rig counts were over 1,300, peaking in mid-2014., before starting to decline.
When senior executives in the oil industry met a year ago in Houston, Saudi Arabia’s energy minister has harsh words for U.S. shale drillers struggling with the worst price crash in a generation. “Lower costs, borrow cash, or liquidate,” said Ali Naimi, who managed the world’s largest energy exporting business for more than two decades. In the year since, the drillers have largely taken Naimi’s advice. While more than 100 have gone bankrupt since the start of 2015, the companies that survived have reshaped themselves into fitter, leaner and faster versions that can thrive on oil at $50 a barrel. Now it is OPEC seeking solutions, trying to drive up prices to repair the economies of the nations it serves. “The shale business is rejuvenated because of the difficulties it has been through,” said Ben van Beurden, the chief executive officer of Royal Dutch Shell.
After the two year downturn spurred by oil’s plunge from more than $100 to $26, U.S. oil production is on the rise again. The number of drilling rigs have grown more than 90% to 609 in just over nine months. Production has gained more than 550,000 barrels a day since last summer, rising just under 9 million barrels a day for the first time since April. And as shale returns with a vengeance, it’s not just the pioneer cowboys that dominated the first phase of the revolution in the Bakken of North Dakota. This time, Exxon Mobil Corp. and other major oil groups are joining the rush. It’s a new reality that OPEC and Russia, the main force behind the production cuts as a solution to re-balance the global market, are beginning to acknowledge. “With $55 a barrel, we see everybody is happy in the U.S.,” said Didier Casimiro, a senior executive at Moscow based Rosneft PJSC.
Long a leader in multi-million dollar oil developments that took years to build and even longer to profit. Exxon is diverting about one-third of its drilling budget this year to shale oil fields that will deliver cash flow in as little as three years. Add to the mixture, the election of Donald Trump, who promises fewer regulations, added pipelines and energy independence and the mood at CEREWeek, the conference that was so gloomy the last two years, was much brighter this year. “North American oil companies are going to increase their spending by 25% in 2017 compared to last year,” said Daniel Yergin, the oil historiancum-consultant who hosts the CEREWeek conference. “The increase reflects the magnetism of
So far this year, U.S. energy companies have raised $10.5 billion in fresh equity, with shale and oil service groups drawing the most investment, the best start of the year since 1999. The growth in activity is more than matched by growth in productivity. Oil companies can drill a well for about $5.5 million, down 56% from 2013. Thanks to new fracking techniques, the wells are yielding more barrels than ever. The average Permian well gushes 668 barrels a day, compared to 98 four years ago. “The bottom line is we think they can produce as much oil out of the Permian as they want to,” said Greg Armstrong, boss of Plains AllAmerican Pipeline. “It’s a matter of rigs, just a manufacturing process. And the revival isn’t just confined to the Permian, which stretches from Texas to New Mexico. Drilling is increasing in other shale pastures, such as Scoop and Stack in Oklahoma and in the deep water oilfields.
What does this mean to the price of oil, the OPECV cuts and shale increases, in a word, stability. As long as domestic producers don’t over-produce and OPEC doesn’t cut production too deeply, prices are likely to stay balanced in the $50-$60 dollar a barrel range. The chief risk is overproduction, whether it’s OPEC cheating, or too much domestic output, acts that would send prices falling again. There is of course, a possibility of a recession, either global or domestic, which would also send prices falling again. However, for the foreseeable future, the oil business looks fairly stable, good for domestic production, as long as prices stay range-bound. The very recent slide of WTI to below $50 does raise new questions about excess inventories and potentially lower prices that hurt the domestic market so forcefully in recent years. The one thing that we don’t have to worry about is shortages, at least for quite some time.
Superior Carriers is no stranger to innovative ideas and practices to help our customers. In the past, you have seen the different types of trailers we have in our fleet. Today, we are excited to introduce two new ones.
With the help of our trailer partner, ST&E, we have two new high heat tank trailers delivering a specific product for a valued customer. Now, this isn’t our first high heat tank, but it is the first to be fitted with their own engine.
The tanks are 6,000 gallons, designed for high heat products with a maximum temperature of 400 degrees. Heating the trailer is a 20,000 Watt, 240 Volt Durex heater powered by a Cummins, 148 cu in, 4 cyl diesel engine. While in the plant, the system can be connected to a 240-volt electrical outlet to power the heater cutting down on the need to run the Cummins engine. The system is circulating DowTherm J fluid to heat the product while intransit.
The tanks are fitted with the Gen II Fall Protection Railing System, and is riding on the Hendrickson Intraax air ride suspension with Michelin wide based tires, for weight savings and better stability.
It was late October, 2014 and I remember sitting in my office looking at the crude oil futures in free fall, week after week. By mid-November, I had come to the realization that the bulk trailer manufacturing company I was working for was not going to survive the consequences of this commodity disaster. The North American oil industry, and all those who served it, would be in for a very long and difficult winter. Hit hardest, would be companies like my own, who failed to recognize fundamental changes in the market and did not prepare or adequately diversify themselves for the leaner times ahead. What were these clues—besides the falling oil prices—that were being ignored?
STE is proud to announce the addition of Mr. Anthony Wurl as Director of Engineering based in Beloit, WI.
Mr. Wurl holds a degree in Nuclear Engineering and a minor in Mechanical Engineering from Purdue University. Following his graduation, he began his career as a Design Engineer at the Brenner Trailer facility, in Lafayette IN. Prior to joining STE, Mr. Wurl was the Engineering Supervisor for the Walker Group, a Division of Wabash National, at its New Lisbon WI headquarters.
“Anthony will oversee a highly skilled team of engineers and will be responsible for ongoing design improvements, and new product development in support of STE’s Mission as the industry’s best choice for tank solutions,” said Heidi Lundeen, Human Resources Manager at STE.
STE serves the chemical, food grade, crude, and sanitary industries. The company’s products are engineered to exacting customer requirements using the latest in three-dimensional modeling. All equipment is engineered and manufactured in the USA at STE’s Beloit, WI facilities.
“STE is passionate about engineering and manufacturing the finest stainless tanks and trailers in North America,” said Steve Mayse, STE’s President. “The addition of Anthony to our leadership team is certainly testament to that mission and we are looking forward to building on our reputation for quality and design innovation.”
By Ken Shafer, Director, Maintenance & Tank Cleaning, Superior Carriers
NEW Tank Safety Features, Including GEN II Folding Walkway!
Superior Carriers, working in conjunction with tank trailer manufacturer ST&E, has designed a Generation II folding walkway with ground-level operation, now featured on our newest trailer.
The innovative GEN II collapsible handrail folds down at the rear of the walkway in the same manner as the front section, allowing loading racks to be lowered all the way to the top of the crash box area. Incorporating the same excellent fall protection as prior designs, the GEN II controls are conveniently located at ground level, and is more loading and cleaning rack friendly.
Along with the GEN II railing, our newest trailer also features a Hendrickson Maxx 22T Disc Brake package with HXL7 wheel ends, warrantied for seven years. This is the first tank trailer in the Superior fleet to have disc brakes. We’re excited to road test them and benefit from safer stopping distances and reduced maintenance costs. Also new on this trailer is a Truck Lite sealed harness wiring system with no junction boxes. This feature carries a lifetime warranty on the connections.