Things to consider as we all move into 2018.
Our industry landscape is changing quickly and the old familiar equipment, fuels, energy sources, compliance regulations and technology is quickly becoming “the way we used to do things”.
2018: Looking Ahead - Opportunities and Challenges
Whether you are an owner of fuel storage systems or a PEI distributor that provides services and equipment to fuel storage system owners, 2018 will be full of both challenges and opportunities. Our industry landscape is changing quickly and the old familiar equipment, fuels, energy sources, compliance regulations and technology is quickly becoming “the way we used to do things”. Both fuel system owners and PEI distributors alike have to learn about all of the changes with equipment and regulations that will affect how we run our businesses in 2018. It can be a bit like drinking water from a fire hydrant at times! So what should we be paying attention to as we enter 2018? Here are the things I am thinking about and encouraging my team and our clients to think about as we start 2018:
This is without a doubt both and opportunity and a challenge for both retail oriented fuel system owners and PEI distributors alike. The original deadline of October 2017 was “pushed out” 3 years to October 2020 by the EMV council, meaning Europay, MasterCard and Visa. The compliance deadline was extended by EMV rule makers citing “technological and regulatory challenges” for implementation of chip-card technology on various fuel pumps. For the major retail chains that had already began their upgrades and completed their scheduling and budgeting for the remaining upgrades, there has been little if any impact to their plans for completion. They are continuing with their upgrades and many are either completed or nearing completion of their upgrade cycle. For the rest of the retailers, this 3-year push gave them some breathing room to get a handle on their planning, budgeting and scheduling for their equipment upgrades.
As we enter 2018, I anticipate the large retailers to continue their upgrade plans and for the rest of the retailers to begin their upgrades. For retailers these upgrades represent a significant capital demand and likely interruptions to their businesses plans as they put off other capital needs in order to get their equipment EMV compliant. For PEI distributors and service contractors, the capital demands and business disruption will be equally painful. Much of the existing service inventory that the service contractors carry in their warehouses and on their service trucks will have to be replaced with much more expensive service inventory in order to service the new EMV compliant equipment. The investments in technician training on the new EMV compliant service parts is another significant capital spend that must be made in order to service the new equipment base. For some of the larger PEI distributors and service contractors, the capital investment requirements in EMV related training and parts will be substantial, in some cases several million dollars. Much of the legacy service parts inventory will be useless once the EMV equipment has been installed, meaning millions of dollars of parts will simply have to be “trashed”. These are a few of the challenges that we as an industry all face as we get closer to the EMV deadline.
So what are the opportunities? If you are a retailer you will benefit from having more secure payment transactions and less credit card fraud once you have invested in EMV compliant equipment at your sites. Retailers will also get the benefit of having new equipment at their locations which will be under warranty for several years helping offset maintenance expenditures. Retailers should also benefit from having new equipment at their locations from increased volumes and the increase in customer satisfaction levels from them being able to use newer, more user-friendly equipment while they conduct their fueling. For PEI distributors, the opportunity will present itself in the way of increased demand for new equipment sales to their retail clients, which in many cases should lead to revenue growth between now and the end of 2020. I encourage both retailers and PEI distributors to spend time learning the rules for compliance and getting themselves very familiar with the various options that are available to the market place.
Evolved Fuel Blends and Electric Vehicles:
As our industry continues to evolve, so do the various fuel-blend options and energy sources that retailers are selling. Whether it is the wide variety of ethanol blends, bio-fuels and DEF (diesel exhaust fluid), electric vehicle charging stations or the complexity of the equipment options for dispensing the many different fluids or energy, things are getting a lot more complicated! Retailers are having to get very sophisticated as they have to learn the various rules of selling the wide variety of fuel-blends and electricity for EV’s. There are tax rules, local rules, equipment compatibility concerns, vehicle compatibility concerns and some cases opportunities for retailers to get significant financial assistance from federal and state government for adding various fuel-blends or EV charging stations to their retail locations. For PEI distributors, the same challenges affect them because their sales representatives and service technicians have to be experts at understanding the wide variety of equipment and applications in order to sufficiently support their clientele. Because of the growing number of equipment variations being installed today, the variety and cost of repair parts and newly required technician certifications is driving capital needs of PEI distributors and service contractors through the roof. I encourage both retailers and PEI distributors to know your markets and do your best to understand the complexity of the various fuel-blends and equipment offerings that are available to your retail businesses.
As the options for fuel-blends continue to grow, so will the costs for making mistakes when you choose the wrong fuel type or equipment type for storing and dispensing these products. Retailers- make sure you understand the many benefits that are available to you for selling various ethanol blends, bio-fuels or electricity for EV’s. In some cases your PEI distributor may be able to help you with federal, state or local incentives that will save you a tremendous amount of money on installing new equipment or selling new fuel-blends. PEI distributors- make sure your sales reps and service technicians understand the many variations of benefit for your clients and the applications for equipment. I encourage all interested parties to spend 30 minutes a week reading industry news or trade publications that highlight these challenges and opportunities. It is also very important that both fuel system owners and PEI distributors understand the new challenges that come along with new fuel-blends. These challenges include ensuring equipment compatibility, understanding the causes and prevention of corrosion, phase separation and the importance of maintaining fuel quality standards within your storage tanks.
Revising Underground Storage Tank Regulations
Revisions to Existing Requirements and New Requirements for Secondary Containment and Operator Training: I strongly encourage both fuel system owners and PEI distributors/contractors to read the EPA revised rules for storage tanks, secondary containment and operator training requirement at the following link: https://www.epa.gov/ust/revising-underground-storage-tank-regulations-revisions-existing-requirements-and-new
There are a wide variety of new regulations that are going to affect nearly all of us in the industry beginning this year. New revisions of EPA rules around operator training requirements, secondary containment installation and/or periodic testing, periodic walkthrough inspections of facilities, release detection, spill prevention and system compatibility requirements with blended-fuels/bio-fuels, will all go into effect this year. As a fuel system owner or operator, you do not want to ignore these new rules or you will face heavy financial penalties and you could be shut down until your system is compliant.
For PEI distributors and service contractors, your team needs to be properly trained and made well aware of the new requirements if you plan to be a reliable resource for your clients. There are both challenges and opportunities galore related to these new rules for both fuel system owners/operators and PEI distributors. Educate yourselves. Take the time to read the new rules and if necessary look to industry professionals to help you and your clients understand the rules. Though these new rules may seem burdensome and expensive to comply with, the result should be that we are installing and working on fuel systems that are safer and less likely to release fuel or other hazardous chemicals into our environment and our drinking water.
I hope that the information I am sharing has been helpful to all of you. If you find yourself needing training or additional information on any of the topics discussed, feel free to reach out to our team at Guardian Fueling Technologies by contacting one of our offices which can be found HERE on our LOCATIONS page.