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Apr 1, 2008 12:00 PM, By Charles E Wilson

Federal mandates call for the United States to use nine billion gallons of renewable fuels in 2008. The mandated volume climbs to 36 billion gallons by 2022.

That's a lot of ethanol and biodiesel, and it offers prime transportation and distribution opportunities. Virtually all biofuels must be moved by truck and rail at this time, which means new business for many of the companies involved with these transport modes.

Kenan Advantage Group Inc (KAG) of Canton, Ohio, is one tank fleet operator working to build a leading role in the transportation and distribution of these biofuels. As part its strategy, the company launched its ambitious KAG Ethanol Logistics operation under the KAG Logistics Group umbrella in 2006.

“This is an exciting time for us, because we are really on the cutting edge with this,” says Dennis Nash, KAG president and chief executive officer. “We believe we've hit a grand slam with the ethanol logistics and Manly Terminal operations. Two years from now, this will be a significant piece of the KAG enterprise. This is an investment in American farmers and in the heartland of our own country. It's the new oil patch.

“We believe the renewable fuels market will move well beyond the 36 billion gallons mark set for 2022. Ethanol use is still in its infancy, and the feedstocks are bound to change and expand. I think we'll see crops that are grown just for production of renewable fuels. We are convinced that this will be a big industry.”

Critical player

KAG managers make it clear that they believe their company has the size and depth needed to play a critical role in serving the renewable fuels industry as it expands across the United States. It is an increasingly diverse liquid bulk transport provider.

KAG itself is the largest fuel hauler in the United States with a fleet of more than 3100 power units and 4100 trailers dispersed among KAG subsidiary carriers including Advantage Tank Lines, KAG West, Bulk Express Inc, Kenan Transport, Klemm Tank Lines, North Canton Transfer, and Petro-Chemical Transport. Vehicles are based in 35 states.

Diversification took a big step forward in February with KAG's acquisition of Transport Service Company, a $130-million-plus chemical and foodgrade hauler. KAG plans to consolidate all of its chemical hauling activities with Transport Service, which will continue to operate under its own name.

“We now have three distinct platforms that will drive future growth for this company,” Nash says. “These platforms include our core business of distributing bulk petroleum and renewable fuels, specialty products such as chemical and foodgrade cargoes, and the KAG Logistics Group with its ethanol logistics operation. Even the specialty products group will play a role in serving the renewable fuels sector.”