Environmental Maneuver?s Total Impact Still Uncertain

Companies that own diesel tractor fleets — such as J.B. Hunt Transport Services Inc. in Lowell, Wal-Mart Stores Inc. in Bentonville and Springdale’s Tyson Foods Inc. — face even more than a potential fuel-price hike related to a 2006 diesel sulfur reduction mandate by the Environmental Protection Agency.r

The EPA is also requiring that all on-road diesel engines add catalytic converters by 2007.r

Additional requirements are expected for off-road tractors, construction equipment and diesel trains within the next 10 years. High sulfur limits, which were allowable up to 20,000 ppm prior to 1994, damage catalytic converters and therefore contribute to the urgency for cleaner fuel. The sulfur ceiling was reduced to 500 ppm in 1994.r

Without catalytic converters, diesel engines produce the well-known pollutant SO2 (sulfur dioxide), which was linked 20 years ago to acid rain and watershed destruction.r

Dan Moore, a transportation analyst at the Little Rock securities firm Stephens Inc., said it’s too early to know exactly how the EPA mandate will impact other industries. With no big rigs yet on the road that comply, he said it’s still “anybody’s guess.”r

“There’s a certain return that’s required in my industry for companies to reinvest in and grow their fleets,” Moore said. “If the cost of equipment and/or fuel increases, then that could and likely would have a negative impact on their margins. The only way to recoup that is by raising rates, which means shippers pay more and ultimately pass that on to the consumer or absorb some portion of it themselves.”