FERRELLGAS LP, the second largest propane retailer in the United States, has initiated the biggest fleet renewal program in the company's history.
In this first year of the fleet renewal effort, Liberty, Missouri-based Ferrellgas is buying more than 400 new trucks, 230 plus of which are Class 7 propane bobtails. Service trucks also are part of the replacement program. After this year, the company is scheduled to purchase approximately 350 trucks annually during the next two years.
“An aggressive propane distributor acquisition program and two very busy winters brought us to the point where it was necessary to launch a major fleet replacement effort,” says Scott Beeson, Ferrellgas fleet manager. “After careful study of our current and future distribution needs, we presented a purchase plan to our board of directors, and they signed off on it.
“We're doing more than just replacing worn out trucks. We're also updating our specifications to reduce maintenance needs and improve efficiency. We've made some major changes in bobtail configurations, and there is more to come even when we get back to a more normal replacement schedule of approximately 350 trucks a year.”
Under the fleet replacement program, a majority of Ferrellgas' 550 branches are getting at least one new bobtail this year. The remainder should get new bobtails over the next two years. The branches are in 45 states, and they serve more than one million retail and commercial customers with a bobtail fleet of 1,900 trucks.
That's a far cry from the company's start in 1939 as a family-owned and operated propane marketer in Atchison, Kansas. More than six decades, two moves, and one name-change later, Ferrellgas has a nationwide market. However, the family touch hasn't been lost.
James E Ferrell, Ferrellgas chairman, president, and chief executive officer, remains at the helm of the company that his father founded. He says the company has succeeded by focusing on professionalism, efficiency, customer service, and safety.
Over the years, the company has grown both internally and through strategic acquisitions. “We're seeing steady market growth as people move out to rural areas from the cities,” Beeson says. “Overall, the future for propane looks very good.”
Acquisitions have brought some of the most dramatic growth for the propane marketer. In December 1999, Ferrellgas purchased Thermogas, the fifth largest US propane company, adding nearly 280 million gallons in retail sales. In December 2002, Ferrellgas added ProAm, the country's 17th largest propane company with a 42-million-gallon retail sales volume.
All of this growth significantly expanded the Ferrellgas retail distribution fleet over the past decade. However, the fleet growth coming from acquisitions was not without problems. Some trucks were worn out; others were inefficient by today's standards. Some branches had less than optimal delivery operations.
“We had to make some major changes in our delivery operations,” Beeson says. “Fleet renewal and replacement were just parts of the process. We're also changing the way the districts operate.”
Ferrellgas managers are putting the final touches on a streamlined system for routing and scheduling deliveries. Development of the new system was a joint effort between managers at the main office in Liberty and those out in the field.
Of all the retail fleet equipment, bobtails have gotten most of the attention because they represent both 80% of the revenue and 80% of the expenses for a branch, according to Beeson. Maximizing bobtail productivity has become a key objective.
“Our success is driven by gallons delivered, and we do everything we can to maximize that productivity,” he says. “Our task is to specify equipment that keeps the bobtail driver out there making deliveries.
“We're also constantly looking for ways to reduce the cost of each delivery. Saving a few cents per truck at each location adds up to millions of dollars in savings for the whole corporation.”
Each Ferrellgas location has one to nine bobtails, with three being the average. At the busiest times, bobtails average 24 stops and deliver approximately 4,800 gallons per shift.
The fleet average for Ferrellgas is 450,000 gallons per year, per bobtail — up from 350,000 gallons a few years ago. Some bobtails in the fleet are reaching 1.3 million gallons annually. The lowest volumes of approximately 250,000 gallons a year are found in the south.
“We question the need for any bobtail that delivers less than the average for the region in which it operates,” Beeson says. “We look for ways to phase underperforming trucks out of our system. Is there some specific reason why we need the truck? Can trucks from other locations take over the workload for that truck?”
Boosting per-vehicle productivity means getting rid of spare bobtails, and this is something that Ferrellgas has pursued aggressively. The company wants each bobtail out on the road an average of 205 days a year.
“We have bobtails now that are designated core trucks, and they are busy nine to 12 months out of the year,” Beeson says. “We also have peak trucks to handle the surge of business that comes in the cold months. They do sit during the slow times.
“We're getting rid of those bobtails that districts keep on hand as breakdown replacements. We don't want any spare trucks in our operation. They add too much to our distribution costs. When districts need a short-term replacement, we can often transfer a bobtail from another location. That's one of the benefits of our size. Districts also can slipseat their other trucks.”
A big reason that Ferrellgas districts no longer need spare trucks is that the vehicles are more reliable. Preventive maintenance also gets a lot more emphasis. “We spec our bobtails for a 12-year life,” says Jim Hottel, Ferrellgas fleet coordinator.
Significant specification changes have been made to ensure that vehicles do achieve the expected lifecycle. Maximizing bobtail life has been evolutionary, but the first big change came in 1996 when the company shifted to diesel power.
“Cost and longevity were the chief reasons behind this switch,” Beeson says. “With diesel power, we were able to move up to Class 7 trucks that have a lot more durability and show less wear and tear. We wanted a true medium-duty truck rather than the underpowered vehicles with converted gasoline engines that are typical in this business.
“This is a tough business even for a diesel-powered medium-duty truck. Our trucks are never given a break. By that I mean they're driven out fully loaded to 33,000 pounds and when the load has been delivered, they're still carrying around 17,000 pounds due to the weight of the propane tank. They have to be stout trucks that last.
“When we looked at the T300, for instance, we can see that it has a lot in common with the T800 when compared part-to-part. The T300 is a downsized version of the T800. With our planned 12-year lifecycle, during which we expect each truck to log 200,000 to 300,000 miles, we know they'll hold up and even have a very good resale value.
“One reason for maximizing vehicle life is the cost of transferring the propane barrel from one chassis to another. Each changeout costs $25,000 to $30,000. A barrel has a 30- to 35-year life in our operation. If we can reduce the number of changeouts by just one truck, we can save a substantial amount of money.”
Three truck makes
Kenworth T300 and Sterling Acterra conventionals predominate in the Ferrellgas fleet, but the propane company also runs a few International 4400s. Most are single-axle units, but the fleet has larger bobtails spec'd with tandem drive. In some northern states with frost laws, Ferrellgas runs single-drive bobtails with tag axles.
The propane company has standardized on Caterpillar's newly launched C7 engine rated at 230 horsepower. Developed as a replacement for the Cat 3126E, the C7 began shipping in June. The C7 features ACERT (Advanced Combustion Emission Reduction Technology) emissions control technology; HEUI (Hydraulically Actuated Electronically Controlled Unit Injectors) fuel system; electronic wastegate control; and single-piece, low-friction steel pistons.
With more truck drivers entering the workforce without manual transmission experience, Ferrellgas has made Allison's MD 3060 automatic World Transmission its standard for bobtails. “We're avoiding a lot of potential maintenance problems by making the fleet move to automatic transmissions,” Hottel says.
Driver comfort and convenience were taken into account with the newest truck specifications. Ferrellgas selected an upgraded interior with extra insulation. New trucks also have a mid-back, air-ride driver seat, adjustable steering wheel, heated mirrors, and air-conditioning. At the back of the cab are extra work lights.
For product handling, the trucks are fitted with hot-shift Chelsea and Muncie PTOs. In most cases, Blackmer product pumps are powered directly off of the PTO. However, management is taking a serious look at hydraulic power for product handling.
“We're just in a test phase right now, but the hydraulic systems seem to be performing very well,” Hottel says. “Delivery speeds and pump times are good. Drivers are happy with the systems, which are much quieter than the PTO arrangement.
“The test program has a ways to go, because it's going to take four years minimum to see any noticeable reduction in product pump wear. We've had no pump-related downtime to this point with the hydraulically driven systems.
“We've already determined that we could use hydraulics for more than just pump power. We could operate the product hose reels hydraulically. We could combine the hydraulics with the remote shutdown system.”
A handful of bobtails in the Ferrellgas fleet have pump hydraulics. They are from STAC Manufacturing Inc and Syltone Industries LLC. Both manufacturers supplied compact, lightweight hydraulic cooling systems that meet the specific needs of bobtail applications.
STAC's Thermaflow Model 500P unit uses LP-gas from the cargo tank to cool the 2.5 gallons of hydraulic oil in the system. With no cooling fan, the unit is quieter and has no moving parts. Empty weight is 34 pounds.
Syltone's Drum MH-1 cooler has a two-gallon reservoir and weighs 49 pounds empty. Hydraulic oil flow rate can be up to 20 gallons per minute. Fitted with a preset hydraulic fan, the cooler is about 50% quieter than previous models.
Mounted on each chassis is an MC331 cargo tank. Trinity Industries Inc and Arrow Tank & Manufacturing Co have manufactured a majority of the bobtail pressure vessels in the fleet. Most of these tanks hold 2,600 to 3,000 gallons. However, a few bobtails in the fleet have 5,000-gallon capacities.
Bobtails are assembled by several vendors across the eastern half of the United States. These include JARCO Inc, Salem, Illinois; Bulk Truck & Transport Service, Hanover, Indiana; and Signature Truck Systems Inc, Clio, Michigan. These locations, along with D J's Truck Repair in Godfrey, Illinois, also handle tank maintenance, inspections, and testing.
Most of the bobtails have open decks, which are preferred for easy access to delivery equipment. Meters and registers are in cabinets, and hose reels are covered on some trucks. Ferrellgas specifies Neptune meters and registers, Fisher and RegO valves, Hannay reels, Gates delivery hose, RegO nozzles, and Full Circle hose swivels.
“We're constantly looking for ways to refine our delivery equipment specifications for better performance and reliability,” Hottel says. “For instance, Neptune's parent company, Actaris, has combined the Neptune system with a Micro Motion mass flow meter for greater delivery accuracy. We have it on eight bobtails now.”
Linked to the delivery equipment is a Base Engineering Inc remote shutdown system. “We tried probably a dozen shutdown systems, and Base Engineering's unit came out on top,” Beeson says. “They had the most complete system on the market.”
Each bobtail has at least one aluminum toolbox. Drivers, especially those qualified to service and install furnaces, stoves, and other customer appliances, can request additional toolboxes.
Ferrellgas wants its bobtails to be as driver friendly as possible, and all indications are that it has succeeded with the latest specifications. Doing that helps insure that Ferrellgas customers receive the best possible service.