Regulatory Proposals Create Uncertainty About Future Cargo Tank Specifications ALTHOUGH tank trailer sales have been off through much of 2000, industry spokesmen are predicting a rebound in 2001. The past couple of years produced robust sales, which contributed to market saturation that finally came to a head this year.
The year 2000 has been a tough one for the industry. Looming regulatory issues that could affect various aspects of cargo tank design and construction may have contributed to the slowdown in new tank sales. All of this means that for now through the end of the year, buyers may be taking a wait-and-see attitude before making purchases. Despite the slowdown, though, builders remain confident about the near-term future.
According to estimates by the US Census Bureau, 4,436 new trailers had been registered through June 2000. The numbers are preliminary and will likely be adjusted as the year progresses. That number is down by 133 from the same period in 1999. By June of last year, approximately 4,569 new tanks trailers were on the road. The total number of new trailers registered last year was about 9,305. If the trend for the first half continues, total production for 2000 should be around 9,030.
Because the Census Bureau lists dry bulk trailers with hopper-type trailers, it is difficult to determine the exact situation for that category. However, industry spokesmen have said pneumatic sales are off significantly, particularly those trailers used to transport petrochemical pellets.
Sales of chemical and dry bulk trailers have been slow for the first half of 2000, agrees Jack Olsta of The Jack Olsta Company, Huntsville, Texas. The need for chemical tank trailers and pneumatic petrochemical trailers has been reduced, partly because of improvements in rail service, he points out. A rail crisis crippled chemical shippers throughout the Gulf Coast area in 1997 and 1998, and lingered into 1999, shifting a large percentage of shipments from rail to truck. But the railroads have largely recovered, and shippers wasted no time in hopping back on board.
Petroleum tank trailer sales, on the other hand, have remained steady, Olsta says, and the statistics reinforce his estimates. Last year, the trailers numbered 1,017 registered in the first six months of the year. This year, for the same time period, the count was 1,022.
Bob Foster of Heil Trailer International, Chattanooga, Tennessee, notes that Heil sales this year are up in both petroleum and stainless steel trailers. Only dry bulk sales have been lackluster.
"We have ramped up petroleum production and increased our model offering," he says. "We also have a significant leadership in all areas of the United States, including the West Coast with truck and pulls - as well as Mexico and Canada with B-trains. Our other international operations, especially Europe, are busy now and improving."
At Polar Corporation, St Cloud, Minnesota, Jim Jungles says he suspects the numbers industrywide may be lower than the statistics indicate. However, he notes that the industry is familiar with the ups and down of the market. "We've been through this before," he says. "It is a cyclical business." Like his colleagues, he predicts 2001 will probably find production leveling out.
Mike O'Donnell of Stuart Tank Sales Corp, Elkhorn, Wisconsin, predicts the market will recover after the first of next year when the political races will be settled and more will be known about OPEC's decisions on crude oil production.
He reports new orders were off the first part of this year in chemical and dry bulk trailers, and adds that sanitary sales have been off, as well. Part of the lull comes from customers who are concerned about the vacillating price of diesel, which prevents them from making accurate expense projections. At the same time, service and parts sales have picked up, he says.
Mike Pitts at Mississippi Tank Company, Hattiesburg, Mississippi, reports the early 2000 market reduced for pressure vessels. "The combination of the short supply of propane and warm winters has impacted the market," he says.
David Rohr of Acro Trailer Co, Springfield, Missouri, notes that sales for his company in 2000 are expected to increase by 5% over 1999, and the company is predicting a 5% to 10% increase for 2001. The exact number of sales depends on purchases made by the major carriers. "At the current time, it appears that due to mergers and recent purchases, the major carriers will not be adding the number of new tanks to their fleets that they did in the past years.
"The main factor affecting sales for us this year has been increased sales on ASME (American Society of Mechanical Engineers) -code tanks," he says. "Many customers were, and are, concerned that tanks currently operating with exemption numbers may not be allowed in the future due to proposals being considered by DOT (Department of Transportation)."
The customers aren't alone in wondering just what new tank rules will be adopted - and how the changes will affect rules currently in place. Among the regulatory issues tweaking concern are movements to establish third-party inspectors in the design and manufacturing of cargo tank trailers. Other concerns include a possible retrofit of overturn hardware, and the establishment of minimum clearance between overturn protection devices and the components they are intended to protect. The list doesn't stop there. Also at the forefront are elimination of wetlines on petroleum trailers, new regulations regarding the transportation of propane, and moves to standardize vapor recovery systems for chemical trailers.
"The two areas of concern to our industry are related to collaborative efforts of the DOT and the American Society of Mechanical Engineers," says John Cannon of Brenner Tank Inc, Fond du Lac, Wisconsin. "One is the possibility of third-party inspections, although the year 2000 has been a tough one for carriers. Rising fuel and insurance costs, coupled with a driver shortage, have preoccupied the industry's attention - and are expected to continue well into 2001. DOT has indicated that new inspection requirements generated by this collaboration will be `transparent' with existing regulations. The second is the risk that existing cargo tank requirements will become more constraining."
ASME is drafting a new Section XII to cover the design and manufacture of transport tanks. The section will result in future changes to hazardous material tank specifications, including those for DOT400-series tank trailers.
"Perhaps the new requirements will be more accepted than current ones, especially if our industry representatives continue to contribute to the formulation of this document," says Cannon. "Or, the new code may have requirements that negatively impact manufacturers and carriers."
Cliff Harvison, president of the National Tank Truck Carriers, says: "For years, the tank truck industry has lived with ASME requirements in the construction of certain specification trailers. To the extent that revised ASME codes are reviewed by DOT engineers, and deemed applicable for highway use, we have no problem. However, NTTC will oppose any move to impose ASME inspection requirements on non-ASME cargo tanks."
Third-Party Inspections The third-party inspector issue springs from DOT fears that some repair facilities are not following their own published quality assurance manuals in repair of DOT specification cargo tanks.
"The third-party inspections would be a tremendous burden, cost-wise and operationally, for both manufacturers and carriers," says Ed Mansell of Polar Tank Trailer Inc, Holdingford, Minnesota. Mansell serves as chairman of the Truck Trailer Manufacturers Association's (TTMA) Engineering Committee. "But, inspectors are still required, and inspection will still be an integral part of the code."
DOT has stated that it would continue to oversee and certify inspectors. In addition, if and when the rules change, extensive training and testing could be required to qualify inspectors. Mansell estimates training and testing could range from $1,500 to $2,000 per year per inspector.
Cannon predicts that third-party inspection could cost the industry $4 million more annually for repairs and $3 million additionally for newly manufactured tanks. He offers several reasons for the expense: efficiency lost waiting for the inspector to come to the facility; inspection fees of $500 per unit; inspector travel fees; and administrative fees for inspector coordination and paperwork. Added to that list is the time required to qualify new inspectors and a shortage of qualified individuals.
So far, NTTC and TTMA officials have been successful in their efforts to oppose third-party inspections.
"The system we have now is working," says Harvison. "The individuals performing the required tests, inspections, and repairs are qualified and experienced. No one has shown me any good reason to change that."
NTTC has supported the basic concept of registered inspectors from its inception, Harvison adds. "We believe it has been a positive step for the tank truck industry and public safety."
Overturn Protection Also catching the industry's eye is the issue regarding overturn protection devices and possible changes to their design. The devices are used to protect fittings, such as manholes, vents, and valves that can be sheared off in an accident. Overturn protection devices are structural members such as tombstone overturns, inverted "v" rail overturns, and singe box type overturns. They are installed on cargo tanks in order to protect components such as pressure-relief devices (vents), manholes, valves, and piping.
"It is anticipated that the distance between the devices and the components they are intended to protect will be far greater than current industry standards," says Mansell. "The addition in weight and cost of the devices will increase. It is difficult to state conclusively what the increase will be without knowing each and every design, or what the dimensions limitations will be.
"The weight could easily range from 100 pounds to up to 300 pounds, depending on the design, and an increase in cost of anywhere from $500 to $1,500, depending on the design type and complexity."
The regulations are not specific on how high the protection device should extend above the components that they are intended to protect. "I would guess that the current standard is anywhere from 1 11/42-inch up to four inches, depending on the design type," says Mansell. "The higher the overturn protection device, the higher the moment the designer has to design to. That determination causes the devices to, perhaps, become heavier in the future."
A hypothetical clearance of six inches - from the top of the overturn device to the components that it is intended to protect - was posed at a past governmental meeting with industry representatives. The increased design moment associated with this clearance could be anywhere from 4 11/42 inches to two inches. "Thereby resulting in increasing the weight of the existing devices," says Mansell.
Harvison points out that the issue arose from a report prepared by the National Transportation Safety Board (NTSB), which is putting pressure on the Research and Special Programs Administration (RSPA) to issue amended regulations. The report dealt with a limited number of trailers, all of which came from one manufacturer, Harvison says.
"Other than that very limited NTSB report, I'm unaware of any great concern regarding the strength and/or reliability of today's specification requirements," Harvison says. "Likewise, I'm unaware of any field reports indicating that the industry has a problem."
Cannon notes that if other recommendations spawned from the NTSB report (specifically those in a DOT-commissioned study of accident damage protection by the University of Michigan's Transportation Research Institute) are acted upon, the devices will have to sustain loads of five times that of existing equipment. "That will result in acute trailer tare weight increases," he says.
In addition, the industry fears that DOT may suggest that all MC300-series cargo tanks be retrofitted with DOT400-series accident damage protection.
"Obviously, this would be an expensive exercise, and would greatly reduce the productivity of our industry because of reduced payloads," says Cannon.
Addressing the safety issue, Cannon says it would be compromised with the retrofit (if required) to whatever extent workers would unknowingly be exposed to flammable vapors while welding on overturn reinforcements.
"On the other hand, the retrofitted accident damage protection would theoretically be able to withstand higher loads without allowing release of the contents of the cargo tank," he says. "This theoretical benefit may be negligible, as in our experience, code-compliant MC300-series tank overturn protection performs very well."
TTMA has compiled a survey, with NTTC assistance, addressing weight, cost, and safety as it relates to this issue. The survey results have been presented to DOT for consideration.
Wetlines Concern Industry representatives have expressed concerns about the wetlines issue. Several high-profile accidents brought renewed pressure from the NTSB to prohibit wetlines on tank trailers hauling gasoline. Tank trailers are constructed of aluminum and have external piping that retains 30 to 50 gallons of product. RSPA has drafted a rule related to the elimination of wetlines.
"It has been communicated to TTMA that the rule will be a performance-based rule," says Mansell. "This means performance criteria will be established for manufacturers and carriers to meet."
Depending on what method is used to meet the performance criteria, Mansell estimates costs could range from $5,000 to $8,000 - varying by number of cargo tank compartments.
"Obviously, any prohibition on wetlines would have a substantial economic impact on our member carriers and their shippers," says Harvison. "Today, the public has sticker shock over the price of gasoline. The cost of any wetline regulations, particularly one mandating retrofit of existing equipment, will push pump prices even higher."
Propane Regulations The projected increase in gasoline pricing isn't the only hike consumers may encounter as carriers and manufacturers face new regulatory mandates. Propane customers are likely to be paying more for the product after carriers comply with new rules, such as installing remote control shut-off devices and providing in-depth hose testing.
"Shippers know that propane carriers have no choice but to make the investment in new equipment, testing, and training," says Harvison. "Shippers and their consumers will pay the bill.
"Many liquid propane gas shippers have indicated to me that once the rule begins, they intend to supply hoses and other product transfer equipment at both the loading and unloading sites. It will be interesting to see how far that goes."
Shippers also will be involved in efforts underway to standardize vapor recovery systems on chemical trailers. "This is in anticipation that the Environmental Protection Agency (EPA) will release a mandate in the near future requiring DOT407 and MC307 trailers transporting organic chemicals to be equipped with a vapor return system," says Mansell.
In fact, more and more carriers are already installing the systems on their trailers. "I understand that today in Texas and certain parts of Louisiana, it is a reality," says Harvison.
The NTTC is currently working with both TTMA and the American Chemistry Council (previously called the Chemical Manufacturers Association) in an attempt to develop some uniform standards for vapor recovery lines. Key elements of this joint work are: the size of vapor hoses and connections, placement of appliances on cargo tanks and racks, and retrofit versus new construction.
Mansell estimates that additional weight to accommodate standardized systems could add 50 to 100 pounds, depending on the number of trailer compartments and the type of material required. "The cost for equipment could range anywhere from $1,500 to $3,500, also depending on the compartment and materials utilized."
Manufacturers are taking a hard look at what looms on the horizon. Regulations will always have an impact on this industry. However, tank builders remain optimistic that they can handle whatever the future holds for them.
"We are committed to serving our customers by redesigning our products to increase payloads, value, up-time on the road, and operation efficiency," says Foster. "In 2001, we expect to have an improved year with many new product niches coming out of our research and development departments. This will offer buyers lighter, lower, and more productive equipment in both aluminum and stainless steel lines worldwide."