Don’t Ignore the Storage Capacity You Already Own

by Joe Montroy, Bergquist, Inc.

Technology opens up new business and profit avenues

The trouble with propane storage capacity is you have too little when it’s critical and too much when you don’t need it. Cold winter temperatures bring a crush of demand, stretching your supply until the next transport arrives. Adding more bulk storage would help, but it’s an expensive option when demand is low the rest of the year. The good news is you already own a solution.

Your tanks at customer locations provide an opportunity to add to your storage capacity. This could be thousands of gallons worth of storage you already own. Every sixty 500-gallon tanks are the combined capacity of another 30,000-gallon storage tank in your yard. Fill them up in the off season when you have more time. Know that you are going into the heating season with customer tanks topped off. This way your drivers pick up additional time in the winter to make other deliveries. And you and your customers have some peace of mind.

This type of storage solution isn’t typically used. It’s common to invoice customers for all of the gas placed in the tank at the time of delivery. It’s a good system that has worked well for our industry for a long time. It’s simple to manage and easier on cash flow. But new technology is providing opportunities to do things differently. And sometimes that makes sense.

Tank monitors allow you to track the available capacity of your tanks in the field every day. This tool is commonly used to coordinate schedules so that delivered gallons per stop are maximized. It’s a great efficiency enhancer. Generating customer loyalty by preventing runouts is another benefit. But don’t overlook the opportunity to create peak-shaving deliveries based on the data reported from tank monitors. The idea is simple. Let your monitor provider’s software identify deliveries you can pull from fall and winter to spring and summer. You’ve now moved deliveries from busy and expensive months to the more economical seasons.

Another device to consider adding are vapor meters. Metering customers’ gas consumption has several advantages. A favorite of mine is that you only bill the customer for what they use each month. That is an option many competitors don’t match. It eliminates the big bill many people struggle with after a delivery. That creates the kind of loyalty that reduces customer churn.

Billing from a meter also allows marketers to invoice in cubic feet. Now it’s not so easy for customers to price shop when they have to compare your price to the rate per gallon from the competition.

Now back to the storage argument. Meters give you more control over your tanks. Customers don’t care when you fill them because they pay as they go. You get to move gallons into the field during the summer, when drivers have time and the gas is less expensive. Most of that gas is then invoiced during the more expensive heating season. You take some of the burden off your team and improve margins at the same time.

Smart meters are new technology that makes metering easier. The primary benefit is you no longer need to send meter readers into the field to gather data. The smart meter reports the reading on a regular schedule over cell signals. It’s a lot like a tank monitor. You get the information you need sent to your computer automatically.

Using new technology like tank monitors and smart meters may not be a solution for everyone. You have to be comfortable with investing up front in technology. And like all other equipment you have to maintain what you put in place. But with help from your equipment provider and a little effort you can create an opportunity to take advantage of your storage capacity at customer
locations.

Joe Montroy is Vice President, Sales for propane equipment supplier Bergquist, Inc. He can be reached at 616-724-6460 or joe.montroy@bergquistinc.com.

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