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MARKETING & SUPPLY BY KEITHREID The market is developing slowly, but surely with no chance of turning back DIESEL EXHAUST FLUID MARKET UPDATE P OTENTIALLY STRONG PROFIT CENTERS regularly move in and out of the industry space. For every one that takes hold, many others fall by the wayside. The concept might be strong, but few things are certain in life or inexpensive relative to the risk. This can lead to a fitful development process as customers hold back watching and waiting until their peers climb on board in numbers that validate the con- cept. And sometimes the ball never really gets rolling strong enough for that to happen. dreds of gallons and aboveground or below ground storage tank/dispenser solutions offering thousands of gallons. Jugs provide a convenient entry-level solution for just about any business model short of large, high-volume truck stops. And long-term they certainly should be a staple on convenience store shelves for consumers that drive diesel automobiles and smaller commercial truck operators without more for- mal supply and service arrangements and for "emergency" use by any SCR engine operator. Totes are generally serv- ing moderate DEF needs often with home-fueled fleets. The travel plaza operators have already jumped on board in a big way, generally going from jugs to larger bulk above or underground tank solutions and bypassing mid-range tote solutions. THE MARKETER MARKET Just where should a marketer be today if they do diesel business, but not at travel plaza volumes? An aggres- sive Midwest marketer (speaking anonymously) that is heavily committed to DEF noted that generally for most marketers, it's probably still too early in the game to have considered a serious investment in DEF. "Volumes are growing—and they're growing rapidly—but you have to remember that you start- ed from zero," he said. "We have truck stops of our own, and we're hauling for other truck stops and we're selling to other truck stops and we're selling into the commercial market and we have a signifi- cant number of jobbers buying from us in bulk and packaged. I wouldn't call it profitable—let's put it Working to provide customers using low emission Selective Catalytic Reduction Diesel engines (what the mar- ketplace has determined to be the solution of choice for the USEPA Tier 4 mandates) generally follows that pattern, but with one big exception—the market is guaranteed to devel- op. The major questions remaining for diesel and lubricant marketers and retailers are how soon to get on board and what commitment needs to be made. A truck will typically consume DEF at a rate of approxi- mately 3 percent of its diesel consumption. Current DEF solutions include 1 or 2.5 gallon jugs, totes that offer hun- 38 SEPTEMBER 2012 that way. I think the problem's going to come down with most marketers to how much money they want to put into the commercial distributions side of it. It's not inexpensive to outfit the stainless steel equipment that you need in order to distribute." As diesel fleets rollover, engines requiring this fluid will continue to build in numbers and profits should grow. "In our view it is still in the infancy stage," said F. Scott Jackson, product manager—Americas, for Grand Rapids, Mich.– based DEF pump manufacturer Blackmer. "It's growing and we are selling solutions for bulk storage. You have some NPN Magazine n www.npnweb.com