By Joe Petrowski
Annual on road diesel consumption in the United States is almost 5 billion gallons annually, and is sold primarily through seven major truck stop chains operating 1,550 of the 2,000 total truck stop travel centers. They are:
- Pilot Flying J 600
- Loves 350
- Petro/TA 250
- Roady’s 150
- Ambest 110
- Wilco/Hess 90
- Single sites 450
So with 4 billion gallons going through these 2,000 truck stops the average truck stop is doing 2 million gallons per year with a range of 1 million gallons to 10 million gallons (diesel only—some travel centers like TA and Pilot have additional significant gasoline sales).
These truck stops/travel centers primarily serve the major trucking/shipping/logistics firms who have generally dominated the shipping and on road diesel consumption in US: They are:
- JB Hunt
- Schneider
- UPS
- Federal Express
- YRC World Wide
- Conway
- Landstar
- Werner
- Swift
- Roadway
- APF Freight
- FF&E
Total trucks: 80,000
So the average truck is using 60,000 gallons per year purchasing 80% on the road and the other 20% at hub fueling centers (or terminals). This mix has fluctuated over time depending on whether the trucking firm or the driver was pushing the fueling choice, the availability of high quality full service truck stops at key demand points and whether the sales point was through a term contract from a central office or ad hoc posted pump with limited discounts and incentives.
Deregulation in the early 1980s was a major factor in the upheaval and growth of the major chains like Pilot and the old Unocal (now TA/Petro). We are facing another inflection point in trucking and wholesale fuel distribution, driven by internet retailing, big box merchants like Walmart, Costco and BJs deciding they are really logistics and shipping companies as much as they are retailers, and controlling their own freight and distribution has significant advantages. Walmart already owns 7,000 trucks and Costco 6,000. Even Amazon has 3,000 trucks, and intends to buy and operate more.
There are several significant implications from this inflection point that go beyond the pressure on rates and long haul trucking firms. The biggest is retailers will look to wholesale suppliers to:
- Procure, store hedge and fix long term fuel supply
- Help manage terminal supply or allow trucks to be parked and fueled at existing terminals
- Manage fuel at retailer owned facilities including environmental and safety
- Help educate, supply and transition to clean fuels including natural gas, bio-diesel and hydrogen
This market has the potential to develop into a $2 billion gallon wholesale opportunity generating $80 million a year in margin for the wholesaler who gets in front of this opportunity.
Joe Petrowski has had a long career in international commodity trading, energy and retail management and public policy development. In 2005, he was named President and CEO of Gulf Oil LP and elected to the Gulf Oil LP Board of Directors. In October of 2008 he was named CEO of the now combined Gulf Oil and Cumberland Farms whose annual revenues exceed $11 billion and that now operates in 27 states. In September 2013, Petrowski stepped down as CEO of The Cumberland Gulf Group. He is now managing director of Mercantor Partners, a private equity firm investing in convenience and energy distribution, and a member of the Gulf board.
