The bulk transfer system is the pre-rack world where fuel moves in large volumes and untaxed: refineries, pipelines, barges and ships, and terminal storage tanks.
Before fuel ever reaches a truck, it travels through a network built for huge volumes. A refinery turns crude oil into finished products. Pipelines and water vessels carry those products across long distances. Terminals store them in big tanks until they are needed. All of that, taken together, is the bulk transfer system.
The defining trait of this system is that fuel inside it moves untaxed. The per-gallon tax is held off until the fuel leaves the bulk world by crossing the rack onto a delivery truck. As long as it stays in pipelines, vessels, and terminal tanks, traded between registered parties, the tax has not yet attached.
This is the same ground covered by the term above the rack, seen from the plumbing side. Above the rack describes the stage, and the bulk transfer system names the pipelines, vessels, and tanks that the fuel actually moves through during it.
For anyone in the fuel trade, knowing where the bulk system ends matters because that boundary is where the tax bill begins. The company holding the fuel at the terminal, the position holder, is generally the one on the hook when it crosses the rack.
In useA barge load of gasoline moves through the bulk transfer system from refinery to terminal untaxed, and the tax only attaches when a jobber loads it across the rack.
See also Above the rack, Terminal, Position holder