Headlines

December 2, 2009
Yara Reins in Colonial Chemical for Sales, Distribution, Expertise

Diesel exhaust fluid (DEF) market powers Yara North America and Colonial Chemical Company combined forces today, announcing that Colonial will join Mansfield Oil Company in distributing Yara's Air1 brand of DEF throughout
North America.
  
Come Jan. 1, engines equipped with selective catalytic reduction (SCR) will require an aqueous automotive-grade urea solution (DEF) to meet EPA's 2010 nitrogen oxides (NOx) emissions reductions requirements, a market that industry estimates put at just under a billion gallons per year within 10 years. As "an agent" of the brand, Colonial will help Yara "penetrate the DEF market" and work with Yara to "sell Air1 and support Mansfield Oil Company and their DeliveryONE network of nationwide distributors," according to today's press release.
  
The partnership will polarize Colonial and Mansfield's roles under Yara, Colonial Vice President and General Manager Jim Spooner told OPIS. "We don't have a lot of assets for transporting packaged product," he explained. "We will be handling most of the bulk distribution ... [and] act as Yara's sales agents directly to the customer," Spooner clarified, noting that "where Mansfield has strengths, we'll use them. Their focus is primarily on fleets ... [and] the packaged product side. We're more focused toward the truckstop world -- not an area that Mansfield gets to."
  
"Mansfield, for Yara's purposes, is setting up a distribution-, jobber-,
oil- and lubricant-based network," Yara Air1 Director Chad Dombroski told OPIS. "Colonial is not a jobber, but more of ... a sales agent for Yara, bringing penetration to the Northeast market for Yara through DEF sales relationships to date," he explained. As for collaboration under the Yara banner, he added, Colonial will "fully work with Mansfield to fill orders for distribution. Larger haulers will utilize Colonial assets to help us do that distribution," whereas "Mansfield is doing the less than truckload and packaged products."
  
Dombroski said Yara had been communicating the intent to bring on a DEF "expert" to develop the Air1 brand and "feed the channels of distribution"
to ultimately reduce costs. "The Northeast is such a critical market with so many fleets and such density. [This] is going to take out a competitor and make them a partner pretty seamlessly, I think it's going to go forward very well."
  
Among Colonial's large-scale duties will be to continue to supply truckstop clients TravelCenters of America (TA) and Petro Stopping Centers, Spooner said, though Colonial will now do so with Air1 brand DEF from Yara. Whether the product will then remain "Air1" is up to the truckstop, he added, citing Pilot Travel Centers' desire for an eponymous brand.
  
Regardless of the badge on the final product, Colonial's NOx abatement experience lends the company the capability to augment Yara's DEF production.
While "what we don't do is make urea," Spooner said, "we'll see what other things might be needed as the market evolves," noting Colonial's ability to "start with a variety of raw materials anywhere backwards in the system."
  
"With this deal, Yara has added a tremendous amount of knowledge, experience and front line sales for its Air1 brand development," said Dombroski. "This type of arrangement is going to help the North American market be prepared for the demand as we close in on Jan. 1, 2010," he added.
  
Spooner noted that Colonial "chose Yara and its Air1 brand because of the strength of its domestic production, its distribution approach through Mansfield's DeliveryONE, and its strong network of bulk haulers. To be part of the Air1 brand with its global recognition and scale guarantees supply and reliability. The power of their concept along with Colonial's expertise in handling, packaging and providing education to the market made our two teams the perfect fit." In closing, he added, "We took a look around at what we thought would be the best thing for us, to partner with someone who has great raw materials strength and a commitment to playing in this market. We're happy that that's now in place."

November 19, 2009
EPA Certifies First SCR Engines As Fully 2010 Compliant

Though EPA's stance on using selective catalytic reduction (SCR) and diesel exhaust fluid (DEF) as a means of meeting 2010 emissions standards is the subject of a current lawsuit, the case didn't prevent the agency from certifying Volvo Trucks North America's SCR-equipped engines as the first fully 2010-compliant heavy duty diesel engines earlier this week.
  
Truck and engine maker Navistar is the only major manufacturer using improved exhaust gas recirculation (EGR) instead of SCR as its method of compliance with EPA's latest and most stringent nitrogen oxides (NOx) and particulate matter (PM) standards, effective Jan. 1, 2010. The maker of International brand trucks filed suit against EPA in March, claiming the agency failed to follow proper rulemaking procedure in establishing compliance guidelines that Navistar argued effectively allow SCR systems to evade emissions standards when out of DEF.
  
Before the court could rule on EPA's recent request for 60 days in which to reconsider its guidance (that would push the case past Jan. 1), the agency certified Volvo and subsidiary Mack Trucks' 2010 SCR-equipped diesel engines as fully compliant with the upcoming standards.
  
When asked whether the outcome of the case might affect SCR makers'
emissions compliance mid-manufacture if EPA were to revise its guidelines, Volvo Trucks North America Media Relations Manager Jim McNamara told OPIS, "We've already gotten the compliance certificates." As a result, "we're confident that SCR will be an approved method of meeting the 2010 emissions standard," he added. The heavy-duty truck maker is also the first to be certified compliant by the California Air Resources Board (CARB), which maintains its own standards.
  
As for Navistar, said McNamara, "they were challenging the rulemaking process. We have absolute confidence that SCR works and that our engines meet the standard and that our engines will deliver to our customers improved fuel economy and near zero emissions."
  
When asked if Navistar had filed for its own 2010 compliance certification, Navistar spokesman Roy Wiley told OPIS, "Not yet, but we will be on time."

November 3, 2009
EPA Brings SCR, DEF Ruling Down to the Wire in Navistar Suit

EPA will have 60 days to either revise its guidance letter to truck and engine manufacturers using selective catalytic reduction (SCR) and diesel exhaust fluid (DEF) to meet 2010 emissions standards, or issue binding regulation to specify proper compliance, sources tell OPIS. The agency's latest, most stringent nitrogen oxides (NOx) emissions standards drop Jan. 1 --  less than 60 days away.
  
The suit was brought in March by Navistar, the only major truck and engine manufacturer to choose exhaust gas recirculation (EGR) instead of SCR as its method of compliance with 2010 NOx cuts. Navistar claimed that EPA's Feb. 18 guidance document effectively establishes regulation -- compliance requirements for operating SCR systems -- without following proper rulemaking proceedings or seeking public comment, and that those guidelines allow SCR users to pollute in excess of the upcoming standards.
  
On Oct. 23, EPA motioned to be granted 60 days to consider "whether to revise its guidance letter 'to clarify that the guidance was not intended to change existing regulations or be binding or regulatory in nature,' or to issue regulations relating to the subject matter of the guidance letter," Daimler AG spokeswoman Maria McCullough told OPIS, quoting EPA statements from the agency's court motion. Daimler is a major manufacturer of engines equipped with SCR through its Detroit Diesel subsidiary and its BlueTec brand.
  
Navistar's main point of contention is that in EPA's guidance, the agency specified that operators of SCR-equipped trucks "could drive up to 1,000 miles without a full tank of urea [DEF]," Navistar spokesman Roy Wiley told OPIS. Navistar argues that drivers could evade upcoming emissions regulations and additional fueling expenses by repeatedly abusing the DEF-free allowance, effectively disabling the SCR system and its NOx abatement for up to 1,000 miles at a time and rendering the SCR system non-compliant.
  
Therefore, explained Wiley, "We filed a suit because EPA didn't follow the rules of establishing guidance" -- the crux of Navistar's case. The company cited that without an opportunity for comment, the SCR guidance:
   --Improperly amends the 2001 rule establishing the 0.2-gram NOx standard
   --Reverses the 2001 "infeasibility" finding in a way that requires another rulemaking
   --Approves a control technology that causes or contributes to an unreasonable risk to public health, welfare or safety
   --Authorizes operation of diesel engines with their emissions control devices bypassed, defeated or rendered inoperative
   --Ignores EPA's own "not-to-exceed" emissions standards.
  
EPA contends that its reconsideration of the guidance "may resolve or otherwise moot some or all of the issues that are the subject of Navistar's petitions for review ... [and] lead to the very result Navistar is requesting," the agency said in its motion. If EPA were to render the guidance unenforceable, Navistar might forfeit
its claim that the agency failed to follow proper rulemaking procedure, though
EPA would be left without enforceable requirements for emissions compliance using SCR.
  
The D.C. U.S. Court of Appeals scheduled briefings continuing into March 2010, with the possibility for a hearing and decision to follow. Even EPA's 60- day stay may expire after the new emissions standards' Jan. 1 start date. If EPA were to lose, truck and engine makers using SCR would be months into deployment of the technology based on compliance requirements that might change -- setting manufacturers back significantly.
  
Daimler's McCullough maintained, however, that the suit won't interrupt the deployment of SCR and DEF. "In either case, SCR OEMs [original equipment manufacturers] have developed and adopted monitoring standards and equipment that ensure vehicles are operated in compliance with the requirements of the Clean Air Act," she said, pointing to a willingness by manufacturers to ensure that SCR systems work as intended, and that many will de-rate to 55 mph when out of DEF.
  
Nevertheless, McCullough continued, "Detroit Diesel Corporation does not anticipate any delays in the certification of its 2010 engines." The company's DD13 and DD15 engines, both equipped with SCR, have been submitted to EPA and are awaiting 2010 emissions certification. Navistar's initial briefs to the appeals court are due Nov. 20.

October 29, 2009
Study: 80% of DEF Market to Hit Truckstops and Retail Stations

When EPA's 2010 emissions reductions take effect in two months, 80% of the vocational diesel exhaust fluid (DEF) market (trucks classes 3-8) will be served by truckstops and retail service stations, according to a recent study conducted by Quixote Group Research.
  
The objective of the research was to "determine fueling, service and maintenance, and fluids and chemicals purchase patterns for vocational trucks to better understand the distribution requirements for DEF," a press release accompanying the study stated. In an October presentation, Quixote Group President Chuck Mattina also detailed growing opportunities for automotive retail chain stores, fleet base refilling operations, dealer service networks, independent service centers, card key lots, worksite and mobile refueling operations.
  
"DEF distribution at both truck stops and retail service stations will satisfy the needs of 80% of the total vocational market," noted Mattina.

Quixote Group found that 46% of the industry refuels specifically at retail service stations, and are particularly important "among class 3-5 vehicle operators and fleets ... 71% currently refuel at retail service stations regularly," he specified. According to Mattina, class 3-5 vehicles are also the most likely to "purchase fluids and chemicals regularly or very frequently at retail stores such as NAPA or AutoZone (50%)."
  
Quixote Group's online survey was fielded to readers of Heavy Duty Trucking magazine in late July 2009, yielding 1,609 respondents representing a cross- section of vocational segments: Distribution and services (32.1%), specialized hauling (15.4%), construction (14.8%), government (9.7%), TL/LTL (9.5%), bulk transport (6.9%) and petroleum (6.1%), according to the press release. Almost 60% of respondents were class 8, with classes 3-5, 6 and 7 each accounting for between 11% and 16%.
  
According to the press release, the study was "conducted on behalf of more than 300 original equipment manufacturers (OEMs), DEF supply companies and related organizations involved in the North American Selective Catalytic Reduction (SCR) Stakeholders Group, an ad-hoc alliance committed to the introduction of SCR technologies for meeting 2010 emissions standards. Quixote Group manages the North American SCR Stakeholders' website, FactsAboutSCR.com, and communications and market analysis for the alliance.