WHEN IT comes to transporting biofuels, Minnesota petroleum haulers are among the most experienced in the United States. They have been handling gasoline with 10% ethanol since it was mandated in 1997 and diesel with 2% biodiesel since 2005.
Kane Transport Inc in Sauk Centre is one of the largest petroleum haulers in the state, and it was hauling biofuels even before the mandates. Today, biofuels account for at least 13% of the cargo transported by the fleet, and the percentage is growing steadily.
“We have 10 transports hauling biodiesel right now, and approximately 15 moving ethanol shipments,” says Paul Kane, Kane Transport general manager. “It has more than made up for the business we lost two years ago when we stopped hauling chemicals.
“We think there is a great future ahead for biofuels. So far, the biofuel mandates are accounting for annual growth of around 3% a year for petroleum haulers in Minnesota, and we should get a sizable bump when a statewide requirement for gasoline with 20% ethanol takes effect in 2012. Kane Transport grew 21% in 2006, and a significant amount of that came from the biofuels.”
Regional carrier
The fuels are transported statewide by Kane Transport, which has become one of the largest for-hire petroleum haulers in Minnesota. In addition, the company serves customers in Iowa, Illinois, Wisconsin, North Dakota, and South Dakota.
A fleet of approximately 100 transports operates out of seven terminals in Minnesota and Wisconsin. The largest facility is in Inver Grove Heights, Minnesota, and serves the Twin Cities area. Besides gasoline and diesel, the fleet hauls asphalt, propane, and anhydrous ammonia.
“At one time, we also were hauling chemicals, but we decided to refocus our operation two years ago,” says Bob Kane, chief executive officer of Kane Transport. “We decided that we were better as a petroleum hauler. That's how Kane Transport started out, and it was still our core focus. So, we sold off the chemical hauling.”
That decision was easy compared with the one that had to be made in early 2000. The family-owned carrier reached a crossroads when Bob's brother Tom died suddenly in 1999. Tom was president of Kane Transport at the time.
“We got the family together to talk about the company's future,” Bob says. “We had two options: Bring in the next generation of family members to help manage the operation, or sell off the company. We decided to keep the family focus.
“This company was started in 1949 by Joe and Louie Kane, and it remained a one-truck petroleum transport operation for its first 14 years. Tom and I joined the company in the 1960s, and we helped build a fleet that now includes as many as 120 tractors and close to 200 tank trailers.”
Third generation
Today, the third generation of Kanes are now involved in management of the carrier. They include: Paul (Tom's son), who has been with the company since 1994 and has worked in dispatch and sales; Pete (Bob's son) joined the company in 1999 and serves as safety coordinator; Pat (Bob's son) came on board as a dispatcher in 2000 and is coordinating the fleetwide rollout of PeopleNet's on-board tracking and communication system; and Angela (Bob's daughter) joined the fleet in 2001 and is chief financial officer.
“Even though we have a strong family team, this company couldn't be as successful as it is today without the other managers who have joined us,” Paul says. “A family company always has to balance the skills of family members with those of non-family managers. We have to use skill sets effectively and delegate management responsibilities. We believe we've done so, and that is one reason this company has achieved solid growth.
“We're very optimistic that this company will continue to prosper and grow. Biofuels certainly are one reason, but we also see good opportunities for asphalt. We're growing with the customers we serve, not through acquisitions.”
Biofuels are still very much in their infancy, according to Paul, and nobody really knows how much that market will grow in coming years. He says he believes fleets such as Kane Transport will be crucial in building the transportation infrastructure needed to ensure the long-term viability of biofuels.
One downside of the surge in biofuels is that the petroleum hauler is now handling even more boutique blends. “We're transporting biodiesel blends ranging from B2 to B100,” Paul says. “On the ethanol side, shipments range from E10 to E85. It has made the job somewhat more complicated.”
Turning to asphalt, Paul credits it with providing a great boost in seasonal business. “We have 92 trailers in asphalt service, and it accounts for nearly 20% of our activity,” he says. “Traditionally, asphalt has been a summer business, but we've seen growing demand for winter shipments.”
Most of the fleet activity has been directed from the Sauk Centre headquarters terminal in the past, but that is changing. More than half of Kane Transport's fleet activity is now focused on the Twin Cities area, and most of that is being coordinated by the Inver Grove Heights terminal, which the carrier moved into last year. Kane family members based at the terminal include Angela and Pete.
“We've had a terminal in the Twin Cities area since 1987, and our business in this area has grown tremendously,” Pete says. “We have our primary maintenance operation at the terminal, because most of our fleet comes through here at one time or another. We dispatch all of the biofuel loads out of the terminal. In addition, our driver safety and recruiting programs are now based at the terminal.”
Dispatchers at the Inver Grove Heights terminal, as well as the other facilities in the Kane Transport system, do their best to keep the fleet busy. Across the system, trips average 65 miles, and a driver will handle up to four loads per shift.
Kane Transport runs a mix of company drivers and owner-operators. “We employ about 80 company drivers, and we have approximately 30 owner-operators working with us year-round,” Pete says. “Another 40 owner-operators come on board during the summer just for the asphalt business.”
He adds that the fleet has a ratio of slightly more than one driver per tractor. “We do some slipseating in our company trucks,” he says. “We'd like to do more of that, but our biggest difficulty is finding truck drivers willing to work a night shift.”
Driver supply
Finding drivers in general hasn't been too difficult so far for Kane Transport. Some of the drivers hired recently have come out of construction, and the carrier still draws a significant number of recruits from the farm sector. Many of the recent driver applicants have been middle-aged.
Minimum age for drivers at Kane Transport is 23, and the carrier wants applicants to have at least two years of over-the-road truck driving experience. New-hire training is done at the terminal where a driver will be based.
When possible, Kane Transport starts new hires on asphalt, and the training lasts about a week. Fuel hauling comes later because it is a more complex activity, and the training takes approximately three weeks.
Regardless of experience, company drivers are assigned to premium tractors. Kane Transport has standardized on Peterbilt Model 386 conventionals with 450-horsepower Caterpillar C13 engines and Eaton Fuller 13-speed transmissions.
All of the tractors in the fleet run on at least a B2 biodiesel blend. “Mixed with ultra-low sulfur diesel, the B2 blends are working well for us as a year-round fuel,” Paul says. “We've even run some B50 blends during the summer with no difficulty.”
Biodiesel experience
That's not to say there were no problems initially when the Minnesota biodiesel mandate took effect in 2005. The first winter with biodiesel was a challenging time for anyone in the state with a diesel-powered vehicle. Problems started cropping up in November and December and reached a crisis level in January 2006.
“Some parts of the state experienced more trouble than other areas, and it was very hard to isolate the specific origin of problems,” Bob says. “There were quality problems, such as high levels of glycerine in some shipments of biodiesel.
“Within our own fleet, we saw quite a few plugged fuel filters. Over the course of a month, 50 of our tractors went down. We had to change the filters more than once in some of them.
“However, we feel like the problems have been resolved now. Biodiesel quality was improved to the appropriate level, and the National Biodiesel Board worked hard at promoting the BQ 9000 quality program with producers. Our tractors made it though the past winter with no fuel-related problems.”
Besides replacing filters, Kane Transport has taken a number of steps to safeguard the fuel system on its tractors. It purchases fuel during the winter with low-temperature additives. Tractors are specified with both fuel line heaters and Arctic Fox fuel tank heaters.
Replacement schedule
Tractors are replaced on an eight-year cycle, but that could change due to the increasing amount of boutique biofuel blends that are being transported. The boutique blends are bringing longer hauls, which is putting more wear on the tractors. “We ay have to increase our replacement frequency,” Pete says.
Most years, Kane Transport replaces at least 12 tractors, but that schedule was set aside for the time being due to the rollout of the Environmental Protection Agency-mandated lower emission engines and ULSD. Kane Transport was one of many fleets that prebought extra tractors in 2006 to delay the shift to the EPA '07 engines.
“We bought 17 tractors in 2006 hoping that would be enough to carry us through to 2008,” Pete says. “However, it looks like we may have to buy some tractors this year just to keep up with the growth of our business.”
The replacement schedule gives the carrier an opportunity to constantly refine the tractor specifications. The carrier has the opportunity to try out some of the newest technologies and componentry.
For instance, the new tractors purchased last year were specified with the Bendix roll stability system. Haldex roll stability also is being installed on tank trailers in the fleet.
Tracking system
Kane Transport is in the midst of an ambitious program to install PeopleNet's tracking and communication system in its entire tractor fleet. “We hope to finish the project by the end of this summer,” Pat says. “The system will enhance communication with the fleet and should make it possible to eliminate the need for cell phones in the tractors. We should be able to handle all dispatch activity through the on-board system.”
Pat adds that the ultimate objective at Kane Transport is to use the PeopleNet system to bill freight directly from the driver to the customer. “We want to reduce paperwork,” he says. “We want to use PeopleNet for our driver logs. We also believe the system should meet any federal hazmat security requirements that might be announced in the near future.”
About half of the tractors in the fleet carry hydraulic systems from Stac Manufacturing that are used to power trailer mounted product pumps. The hydraulic drive systems are needed on all of the tractors used in asphalt service, as well as those hauling fuels in rural areas.
Trailer fleet
Tank trailers in the fleet are supplied primarily by Polar Tank Trailer LLC, but the carrier does run a few from LBT Inc. “We began to standardize on Polar in 1999,” Bob says. “Basically, they earned our business with the way they handled our first big asphalt trailer order. We had a tight deadline to get up and running when we launched the asphalt service, and Polar dedicated an entire production line to our order.”
The typical petroleum trailer in the fleet has four compartments and holds 9500 gallons. Compartments are separated by double heads for greater versatility. Kane Transport's management team has worked with Polar engineers to determine the best hardware and seal combinations for biofuels hauling.
The newest DOT407 tankers in the fleet were ordered with the full Civacon System 3 componentry. This includes the CivaControl air actuation system, API adapters, internal valves, vapor recovery, and overfill protection. The carrier also specifies Dixon Bayco elbows and Titan product hoses that are compatible with all biodiesel and ethanol blends.
Asphalt trailers also come from Polar. The newest tanks in the fleet have a 7500-gallon capacity and are insulated with six inches of fiberglass. Hardware includes Betts valves, Knappco manhole and domelid, and grip-strut platform around the spill dam. For running gear, the trailer has a Hendrickson Intraax air suspension, Meritor WABCO antilock braking, and Michelin X One single tires.
Good fleet specifications, skilled drivers, and a dedicated management team give Kane Transport the ability to provide customers with consistently high levels of service. It's a strategy that has brought the carrier success through three generations.