Propane Resources serves LP-gas retailers with mix of logistics, marketing programs
Jul 1, 2003 12:00 PM, By Charles E Wilson
AS WITH all small propane distributors, managers at Energy United Inc must juggle a multitude of responsibilities to ensure that the business runs smoothly. However, keeping the bulk storage tanks full isn't one of them.
The company's two 30,000-gallon storage tanks at the office in Gastonia, North Carolina, are monitored remotely by a third party — Propane Resources Inc. Even during the busiest times of the year, propane transports arrive several times a week to replenish the supply.
Bulk plant monitoring and LP-gas transportation are part of a wide range of logistics and management services available to Energy United and other propane distributors from Propane Resources, Mission, Kansas. The company works with several hundred retail propane marketers, most of them spread across the Midwest and southeast.
Over a decade ago, Dwaine Willingham started Propane Resources as a one-man consulting firm with a single goal: help retail propane marketers with anything they want or need. Newsletters were one of the first services he offered to propane marketers. Willingham knew that the typical propane marketer lacks the in-house capability to produce professional marketing newsletters.
Today, Propane Resources employs four staffers who turn out newsletters for about 40 propane marketers to mail to their customers. Each marketer gets two to three newsletters a year. Propane Resources also publishes a monthly marketing newsletter that goes to the propane marketers themselves.
The business grew quickly, and in 1995 Marty Lerum came on board to develop supply side services that include wholesale buying and selling of propane and the ability to act as a consultant/buyer to marketers. Propane Resources has developed into a significant operation with five divisions: retail services, support and consulting, information and development, marketing and communication, and supply and transportation.
In the support and consulting unit, Propane Resources helps clients with the process of buying and selling businesses. Information and development services include certified propane training and Propane University, which provides a wide range of management and customer-service training. Staffers in the marketing and communication unit provide customer newsletters, direct mail lists, web sites, advertising and media positioning, brochures, and logos.
The objective of the supply and transportation division is to ensure that customers never run out of propane. Specialists in the supply operation help ensure stable prices for wholesale purchases of LP-gas. Propane Resources supports customers with market updates four times a day, a monthly supply intelligence newsletter, and detailed cost monitoring.
LP-gas purchased through Propane Resources is stored at major third-party facilities in Mont Belvieu, Texas; Conway, Kansas; and Hattiesburg, Mississippi. “These are well-established propane storage locations, and we have no reason to set up our own facilities,” says Denny Carroll, Propane Resources transportation manager.
Most of the propane purchased through Propane Resources is hauled to retailer locations by its own fleet or by contract carriers. Those shipments make up about half of the loads hauled by the Propane Resources fleet. The in-house carrier also provides for-hire service to other propane shippers.
“We arrange transportation for virtually all of the propane we buy and sell,” Carroll says. “A large percentage of our customers want one-stop shopping. They don't want to worry about transportation. Having our own fleet gives us a lot of flexibility.”
The transport unit serves Propane Resources customers with a truck fleet that includes 30 MC330/331 trailers, five leased company tractors, and 25 owner-operator tractors. The fleet is scattered across the company's operating area.
“We don't have terminals, because we need the flexibility to move equipment around as business demands change,” Carroll says. “In many areas, we put the equipment near or at loading facilities.”
Petroleum transports generally stay close to the loading points, especially during the winter. The average haul is 150 miles, and a 250-mile shipment is a long haul. Propane Resources rigs average three loads a day during the busy heating season.
At most propane supply points, drivers face a 15- to 30-minute wait before reaching the loading rack. It takes about 20 minutes to load and approximately an hour to unload into the retail marketer's storage tanks.
In many cases today, the shipment to a marketer is scheduled automatically. Propane Resources has partnered with many of its transportation customers to install remote level monitoring on storage tanks.
“The remote monitoring is a great tool, and we split the cost with our customers,” Carroll says. “Our customers benefit because their tanks are kept full during the times of the year when it matters most. For us, it assures better fleet utilization and fewer wasted trips.”
At the heart of the LpgCentral remote monitoring system is the SmartSignal unit that uses DSSS wireless technology to report tank level and outside temperature. The unit attaches to the tank magnetically and requires no field calibration.
Level and temperature data are transmitted via secure Internet links to the Propane Resources central dispatch in Mission. Deliveries are scheduled when storage tanks reach a preset level. Through the Internet, customers can check shipment details, including bills of lading.
Dispatchers schedule all loads by computer, using a system that was developed in-house about three years ago. Built around Filemaker Pro database software, the system also is used to record fuel tax reports, vehicle inspections, and other fleet information.
Propane Resources also hopes to incorporate Filemaker Pro in a Palm-based system. “Currently, drivers phone in bill of lading information after loading,” Carroll says. “The Palm system could be an economical way to speed the process. Customers want bill-of-lading information quickly. They want to know when a load will arrive, and they need notification of delays.”
Fleet managers also are evaluating the PeopleNet system as another option, and units have been installed in four tractors. “We need good communication more than anything else,” Carroll says. “We haven't been able to make full use of PeopleNet's online tracking features. It's not that difficult to find our rigs even without a tracking system.”
In addition to shipper communication, the propane hauler keeps a close watch on driver hours of service. Ensuring that drivers operate legally is a big part of the fleet safety effort at Propane Resources.
Even though many states grant hours-of-service exemptions during the winter, Propane Resources limits its drivers to 15 hours a day. All of the drivers working for the company are experienced LP-gas haulers with good driving records. Most of the transport drivers at Propane Resources are owner-operators.
While Propane Resources has no formal age limit for owner-operator tractors, most are less than seven years old. Vehicle condition is more of a concern than age, according to Carroll.
The handful of company tractors in the fleet are leased from Ruan Transportation Management Systems. “Ruan has a background in fuels transport, and they understand our business,” Carroll says. “We've been using Ruan for three years with excellent results. We prefer leasing because it gives us the ability to adjust fleet size quickly to meet changing customer needs.”
Tractors leased by Propane Resources include Freightliner, International, and Volvo conventionals. Most are sleeper cabs. Propane Resources tractors typically have 400-horsepower engines, nine- or 10-speed transmissions, and are geared to cruise at 70 miles per hour.
One challenge posed by leasing has to do with product handling systems. Carroll explains that leased tractors don't always come with a PTO to power a pump. “We have to install PTOs on the equipment,” he says.
On the leased tractors with PTOs, Propane Resources is combining them with hydraulic systems that use Drum and Stac Manufacturing's Therma Flow cooling units. Owner-operators are given a choice of hydraulics or the traditional PTO and prop-shaft arrangement. The tractor drive systems power Blackmer pumps that are mounted on the propane trailers.
“We prefer hydraulics because we find that pumps last longer and require less maintenance,” Carroll says. “Starting and stopping are much smoother. Hydraulics also has a lower lifecycle cost because systems can be transferred easily from one tractor to another. Finally, hydraulic pump drive systems are much safer for the operators than the PTO/prop-shaft arrangement.”
Propane Resources owns virtually all of the MC330/331 trailers in the fleet, although one owner-operator pulls his own LP-gas trailer. Capacities range from 10,500 to 11,500 gallons, with 10,500 gallons accounting for the majority. Most of the pressure vessels are purchased used.
In addition to Blackmer pumps, the trailers have Fisher valves. Propane Resources has selected the Smart Hose system for passive shutdown. “Simplicity was the key factor in this decision,” Carroll says. “We're equipping trailers with the Smart Hose system as tanks come due for their five-year test. We test five to six trailers a year.”
Tests and inspections are handled at a variety of code shops in the Propane Resources operating area. A key facility is DJ's Truck Repair in Godfrey, Illinois, which is well regarded as a propane tank specialist.
In addition to federally mandated tests and inspections, Propane Resources has been sending its older MC330/331 trailers to be refurbished. About 30% of the trailer fleet was overhauled in the past four years. The process includes replacing valves, repairing worn or damaged fenders and other components, and repainting.
The refurbishment program is designed to ensure that Propane Resources presents the best possible image when serving its customers. It's all part of the effort to help customers maximize their own performance in their marketing areas.
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