Power plants energize ammonia hauling for niche specialist Grammer Industries
May 1, 2002 12:00 PM, By Charles E Wilson
FOR TANK truck carriers serving agricultural customers, ammonia hauling typically consists of several frenetic weeks in the spring and fall of each year, followed by months of inactivity. Dedicated ammonia trailers can spend most of their useful life parked against a fence.
However, managers at Grammer Industries Inc in Grammer, Indiana, believe things are about to change. They credit the Clean Air Act with opening up a new market for anhydrous ammonia in the electrical power generating industry. The ammonia is used in scrubbers to remove pollutants from exhaust gases at coal-fired power plants.
“We believe that by 2004, more anhydrous ammonia will go to power plants than is used on the corn crop in the United States,” says Charles L “Shorty” Whittington, president and owner of Grammer Industries. “Our studies show that 60% to 70% of the electricity produced in this country still comes from coal-fired power plants. We've identified 157 of these plants east of the Mississippi (River).
“Working with a partner, we've spent three years on this project. We have determined that this could be a very good business opportunity. We've been pleasantly surprised to find that price isn't the primary concern for power plants. They want a knowledgeable carrier that can satisfy their concerns about safety, service, and professionalism.”
Use of anhydrous ammonia in emission control systems will enable power plants to meet federal Clean Air requirements. Ammonia-based scrubber systems are the most efficient and cost-effective answers for the power plants. Whittington points out that one group of power plants is spending $500 million on start up and construction. Demand for ammonia will be highest during the ozone season, which runs from May through September.
Grammer Industries is working with anhydrous ammonia processors and a consultant who has specialized in promoting anhydrous ammonia-based scrubbers. The carrier currently is supplying six power plants, but managers stress that the operation is still in its infancy.
The opportunity to haul anhydrous ammonia to power plants comes at a good time. Overall agricultural demand for anhydrous ammonia has fallen in recent years. Changes in the farming sector make it unlikely that this trend will reverse.
“If the power plant opportunity grows as we would like, we might abandon parts of the ag market for anhydrous ammonia in some areas,” Whittington says. “Overall, though, the ag market is shrinking faster than we could abandon it.”
Finding niche business, like the power plants, is something that Grammer Industries does very well. This is the strategy that built the company into a diverse operation that includes tank trucks, rail tankcars, transloading facilities, and liquid storage.
“We can handle the entire distribution chain for specialty products,” Whittington says. “We tailor our services to customer needs. We don't force them to do things our way.”
Over approximately 25 years, the Grammer Industries truck fleet has grown to consist of 180 tank trailers, 150 owner-operator tractors, and 22 company tractors. The company also has 15 rail tankcars in dedicated anhydrous ammonia service.
Company power units are based in Grammer, Kitchell, Lafayette, and Mt Vernon, Indiana; and Vickery, Ohio. Owner-operators under contract to the tank truck carrier are spread throughout the operating region.
In addition to anhydrous ammonia, the company hauls LP-gas, nitric acid, liquefied carbon dioxide and nitrogen, and hazardous waste. “Ninety-nine percent of the loads transported by Grammer Industries are hazardous,” says John S Whittington, vice-president.
Anhydrous ammonia and propane clearly are the dominant cargoes. The carrier hauls 12,000 to 15,000 loads of anhydrous ammonia every year and 3,000 to 4,000 loads of propane.
Grammer Industries remains close to its roots as a regional player focused on customers in the Midwest and mid-South. Operations do take the truck fleet east into New York, Pennsylvania, Virginia, and the Carolinas. The carrier also has some activity in southern Ontario, Canada.
The company took its first step into the tank truck business in 1977 with the purchase of a couple of MC331 trailers to haul anhydrous ammonia for agricultural uses, and it now has 124 MC331 tanks. At the time of the first pressure-vessel purchase, Grammer Industries was primarily a grain elevator operator in its namesake community just south of Columbus, Indiana.
After exiting the grain elevator business to focus on trucking, Grammer Industries bought 15 MC331 trailers. The biggest move into anhydrous ammonia and propane came in 1988, when the carrier acquired 101 MC330 and MC331 tank trailers.
“A major agricultural supplier put their ammonia fleet up for sale,” John Whittington says. “We saw it as a good opportunity to expand our operations. While we sold some of the trailers in the acquisitions, we've also added new equipment in the years since. New purchases include 66 MC331 trailers from Mississippi Tank Co.”
Although the initial focus was on the agricultural market for anhydrous ammonia, Grammer Industries managers realized the importance of a broader customer base. In an early diversification effort, the carrier started hauling anhydrous ammonia to water treatment plants and industrial accounts. The campaign to develop power plant business started in 1998.
The carrier also began pursuing opportunities beyond ammonia. In 1988, Grammer Industries purchased a nitric acid fleet of seven tractor-trailer rigs from a chemical company. Under Grammer, the fleet now has grown to 12 company rigs plus owner-operator equipment.
The same year the nitric acid fleet was purchased, the company signed an agreement to operate the CSX Transflo rail transloading facility in Lafayette, Indiana. With 75 railcar spots, the facility handles liquid and dry bulk chemicals, edibles, and petroleum products.
Another niche market opened up in 1998 when Grammer Industries purchased a hazardous waste hauling operation in Vickery, Ohio. The carrier now has vacuum trucks and vacuum trailers that are used to transport leachate waters, pickle liquor from steel mills, and other waste acids. A deep injection well is part of the operation, as is a rail transfer site.
“The hazardous waste and the acid hauling have turned out to be very complementary niches,” Charles Whittington says. “We haul virgin acid in the front door and waste out the back.”
Grammer Industries moved into its next niche area in 1999 when it contracted with a large gas processor to transport carbon dioxide. In addition to pulling customer trailers, the carrier has added four of its own cryogenic tanks. The carrier began hauling liquefied nitrogen in 2001.
From time to time, Grammer Industries has owned small- to medium-sized storage terminals, and management continues to see potential in the storage sector. Currently, the company owns a small terminal with a 7-million-gallon tank in Van Wert in western Ohio. Inactive at this time, the Van Wert facility could be used for a variety of products, including fertilizer or vegetable oil.
“To a degree, we see a future in storage terminaling distribution,” Charles Whittington says. “It fits with our overall strategy to serve the entire distribution chain for the niches we have targeted. We'll probably develop mini terminals (90,000 to one million gallons) for ammonia.”
Safety and security
With the company's emphasis on hazardous materials handling, security and safety were important concerns long before the terrorist attacks in New York City and Washington DC on September 11, 2001. Company employees have redoubled their efforts to safeguard shipments in the wake of the terrorist incidents.
The threat of terrorism isn't the only driving force. Like every tank truck carrier in the United States, Grammer Industries has been hit with significant insurance rate increases. “Insurance is tough right now for tank truck carriers,” Charles Whittington says. “Shippers don't seem to have a clue about how deeply this insurance crisis has affected the tank truck industry. We've been fortunate in aligning ourselves with reliable insurance providers that understand our operations, and we are under the level of increases reported by other carriers. However, we're only getting one-year rate quotes at this time.”
Security and safety were tightened significantly in recent months. On the safety side, for instance, a speeding ticket now brings a week off with no pay. Safety and security are key themes in Grammer News, the company newsletter. Security also has been enhanced in other ways.
“We began beefing up our security procedures two years ago due to a surge in anhydrous ammonia thefts tied to operators of illegal methamphetamine labs,” Charles Whittington says. “We're still concerned about that activity, but we're also much more aware of terroristic risks.
“Our drivers are our frontline security soldiers. Training and retraining are very important at our company, and we have included security procedures in that process. We've also taken other measures to make our company less attractive as a terrorist target.”
Drivers now carry photo identification cards that are produced in-house. Following the September 11 terrorism, the company conducted new Social Security and criminal background checks on all employees. Managers verified that driver physicals were conducted by valid, qualified doctors and clinics.
Operational changes also have been made to boost security. Communication with drivers out on the road is much more important today. In addition, some teams are required for nitric acid shipments that take more than a day. Other products don't present as much of a risk or aren't transported as far.
Technology-based security measures are being adopted on a case-by-case basis. Company tractors have been outfitted with Qualcomm satellite communications units, and five or six owner-operators are testing the equipment. Cellular telephones are carried in most of the tractors, including the 150 that belong to owner-operators.
The newest company tractors were ordered with the Cummins RoadRelay 4 on-board computer with the driver-access security option. “We're trying to evaluate the various security products on the market to see which ones actually deliver on their promises,” Charles Whittington says.
Training and technology also have played a big role in the Grammer Industries safety program. The effort to ensure incident-free transportation service earned the carrier a Grand Award in the National Tank Truck Carriers 2001 Personnel Safety Contest.
Safety starts with finding the right truck drivers. Most of the recruiting is by word of mouth through the carrier's existing driver force. Charles Whittington points out that the company hasn't run newspaper ads for drivers since 1977.
With its own in-house recruiting effort, the carrier can take a much closer look at candidates. The selection process is designed to ensure that Grammer Industries chooses the most professional candidates available. Anyone with a record of frequent job changes is rejected.
Regardless of prior experience, newly selected drivers go through product qualification training before hauling the first load. Qualification training is required for each of the products transported by Grammer Industries, and it's not just a one-time process. In fact, some drivers attend as many as seven product training sessions in a year. Special training is conducted anytime the company enters a new product area.
Ninety percent of the drivers are qualified on anhydrous ammonia, which isn't surprising considering the carrier's level of involvement with that product. The ammonia training is repeated annually. Close to 50% are qualified for propane.
The annual ammonia training gears up in the last week of January and runs through mid March to ensure that drivers are ready when agricultural demand for the chemical begins to surge. Meetings are held in areas where Grammer Industries drivers are concentrated, such as Terre Haute and Columbus, Indiana, and Celina, Ohio.
All new-driver training is conducted at the Grammer Industries training center in Columbus, and makeup training also is scheduled there. New-driver training lasts a week, followed by a couple of weeks of on-the-job training working next to veteran Grammer Industries drivers.
Drivers learn about product hazards and company policy and procedures during the classroom sessions. Drivers are provided with gloves, goggles, and other safety equipment. They also receive a loose-leaf binder with directions to customer facilities and another for permits and other documents.
A specially modified training trailer is on hand to teach drivers about pressure-vessel operations. The cutaway unit gives drivers a chance to see how an MC330/331 trailer is constructed, its safety features, and how the pumps and valves operate.
Hoses and fittings receive a lot of attention during the training. Drivers are taught to protect hoses by supporting them with sections of old hose and foam swimming pool noodles. “Hoses vibrate when product is pumped off, and that results in abrasion and other wear,” says Paul Baute, Grammer Industries safety & training director.
Refresher training typically takes about four hours. New product training takes two to three days. “We want to make sure that our drivers fully understand the hazards of any product that they are going to handle,” Baute says.
Along with extensive training, Grammer Industries uses a variety of incentives to promote driver safety. Clean roadside inspections bring a bonus, and the carrier paid out $20,000 to drivers for roadside inspections last year.
Mileage-based safety awards initiated in 1995 combine merchandise and cash. Divided into 100,000-mile increments, the program starts with gift certificates, pocketknives, and multipurpose tools.
At 500,000 miles of accident- and incident-free driving, the driver qualifies for a $1,000 bonus, and this is the amount for every half-million-miles increment. The bonus jumps to $2,500 at a million miles, $5,000 at two million miles, and $7,500 at three million miles.
Drivers also compete in the driver-of-the-year program. To qualify for participation, a driver must run at least 20,000 miles, generate $20,000 in revenue, or haul 75 loads.
Over half of the Grammer Industries drivers (both company employees and owner-operators) receive votes in the competition. These votes come from four departments: safety (30 votes total), maintenance (30 total), dispatch (10 votes per dispatcher), and accounting (30 total). Drivers must receive at least one vote from each department.
Votes are generated for a variety of performance factors. At the safety department, for instance, votes are given to drivers who turn in error-free logbooks that are easy to read. Non-DOT reportable accidents bring a reduction in the vote total. DOT-reportable accidents, out-of-service citations, and severe moving violations result in disqualification.
On the equipment side of the safety effort, the carrier makes sure that owner-operators keep their tractors in top shape. Mechanics also keep a close eye on company equipment. In addition, the carrier follows a trade cycle for company tractors that is designed to ensure that the vehicles are in peak operating condition.
Company tractors are replaced on a three- to four-year schedule, and the equipment is kept busy during that time. Looking at annual mileages for the entire tractor fleet (company-owned and owner-operator), the average is 35,000 miles. For some products and locations, annual mileage can be as low as 5,000 to 6,000 miles. The nitric acid business is at the other extreme, averaging 110,000 to 120,000 miles per tractor.
The carrier is purchasing 10 new tractors this year, all of them Peterbilt Model 379 conventionals with a 258-inch wheelbase. “We decided on Petes because our studies show that they have a resale value $10,000 to $15,000 higher than other comparable makes,” Charles Whittington says.
Driver amenities include a 63-inch sleeper that provides more overhead space. This group of tractors is the first that Grammer Industries has ordered with the Sirius satellite radio.
The tractors are specified with Cummins' ISX engine rated at 475 horsepower and Eaton's Super 10 Top 2 transmission, which provides automated shifting between the ninth and tenth gears. “We think the Top 2 feature will let us pick up 2/10 to 4/10 miles per gallon,” Charles Whittington says.
Weight is a concern to the fleet, and the new tractors were specified with various lightweight components, including aluminum wheels and hubs. Tare weight for the new tractors is 16,623 pounds.
In the trailer fleet, MC330/331 pressure vessels predominate. The 124 trailers range in capacity from 9,100 gallons to 11,600 gallons. All of them have Fisher valves and pressure-relief vents, Blackmer pumps, and Betts Industries' Snap Seal lighting.
“We have a solid relationship with the Blackmer people,” says Scott McKeand, Grammer Industries fleet maintenance director. “We participate in a lot of research and development work with them.”
A passive shutdown system from Base Engineering has been installed on 20 of the MC330/331 trailers in the fleet. “We selected the Base system because we like the quick shutdown of valves when a leak is detected in the product transfer system,” McKeand says. “The system constantly monitors for pressure drops. The system also serves as a brake interlock during loading and unloading.”
Installation takes about four hours on a new trailer. Older units that require modification of the electrical system can take up to six hours.
Grammer Industries has been adding around four new DOT412 trailers to its acid fleet each year. The 5,000-gallon Brenner trailers are constructed of 316 stainless steel. Tank hardware includes Betts internal valves and Girard pressure-relief vents.
Brenner also supplied two rubber-lined 5,000-gallon DOT407/412 vacuum trailers used in the hazardous waste operation. The carrier bought two Comptank 5,500-gallon fiberglass vacuum trailers lined with Derakane.
Westmor Industries and Mississippi Tank each built two of the four liquefied carbon dioxide trailers in the fleet. The 5,600-gallon trailers have perlite insulation.
The Grammer Industries fleet seems almost certain to become more varied. The focus on specialized niches continues to take the company into new areas of the bulk logistics sector.
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