Cleveland Petroleum Marketer Achieves High Productivity with Tankwagon Fleet

GREAT LAKES Petroleum Company may operate just a handful of tankwagons, but they are some of the most productive vehicles on the road. Running just six trucks, the BP Amoco dealer marketer delivers close to nine million gallons of refined fuels annually.

Momentum began building about a year and a half ago, and the company is posting annualized growth in the 15% to 20% range. While fuel oil remains important, new opportunities, such as fleet fueling, are beginning to take center stage in the company's future plans.

"Everything has just sort of fallen into place," says Tom Arcoria, president of Great Lakes Petroleum. "We keep finding new services to provide customers, and that has offset losses in some of our traditional offerings, such as home heating oil distribution. I believe we're well positioned for the future."

Arcoria has come a long way in building the Great Lakes Petroleum operation. He was working in the sales department of BP Oil in 1976 when the company announced it was offering consumer marketer franchises in Ohio. Consumer marketer is BP's term for its own branded petroleum marketers. BP became BP Amoco after merging with Amoco Oil Company in 1998.

Arcoria was successful in obtaining one of five franchises that were established in the Cleveland area. Under the program, he was allocated one tankwagon and could deliver no more than one million gallons of product annually. Of the product total, 85% was heating oil.

"BP initially saw us as being identical to service stations," Arcoria says. "They believed we couldn't take care of our customers properly if we grew too much. However, we were really too small to ensure long-term success."

Arcoria was the entire company at first. He drove the truck to make deliveries, and he handled the marketing duties. He was fortunate in being able to lease office and parking space at the BP terminal in Cleveland.

"I've got a very good arrangement," Arcoria says. "BP runs the storage and loading operations, so I don't need a bulk plant of my own."

Marketing Support Marketing support also has come from BP. While Arcoria and a full-time salesman aggressively pursue new customers and opportunities for Great Lakes Petroleum, they work closely with BP Amoco commercial and retail marketing departments. BP Amoco's marketing business unit refers a significant amount of business to the consumer marketer. It didn't take long for Arcoria to realize that Great Lakes Petroleum needed to be able to grow beyond the arbitrary limits set by BP. Once the marketing program was revised, he was able to buy out the other BP marketers in the Cleveland area. By 1995, he had the whole Cleveland territory.

Other Ohio distributors established under the BP consumer marketer program went through similar growing pains. Sixty are still in business today, and they have formed close bonds with each other. They meet as a group once a year.

Other Avenues Faced with the initial growth limits, Arcoria turned to other avenues for expansion. He established Bet Trucking, a landscaping and construction contractor that operates 22 dump trucks. Bet Trucking is located in Hudson, about 22 miles outside of Cleveland.

Having the contractor business has helped Arcoria make it through some of the tougher times faced by Great Lakes Petroleum. One of the biggest challenges has been the gradual decline of residential demand for heating oil.

"We used to sell about five million gallons of heating oil every year, but we're down to around a million gallons," Arcoria says. "We lost a lot of the heating oil business in the early 1980s when OPEC (the Organization of Petroleum Exporting Countries) boosted the price of crude oil.

"Most of what we lost was in the city and was converted to natural gas. We've held firm in the suburbs, and we believe the losses have leveled off. We're doing a good job of pointing out that heating oil is a good fuel, even better than propane and natural gas. Users can get 92% efficiency out of heating oil."

Great Lakes Petroleum concentrates on what it does best in the heating oil market, which is selling and delivering fuel oil. Burner service and related activities are contracted out.

Tight Focus Delivery operations are focused within a 50-mile radius of the BP Amoco terminal, and tankwagons run 100 to 150 miles a day. During the winter, all six trucks are involved in heating oil deliveries.

Great Lakes Petroleum divides the Cleveland marketing region into areas of responsibility for heating oil deliveries, and each driver is assigned to an area. One reason for this arrangement is that the drivers become very familiar with the customers in their area.

A majority of customers are on automatic delivery schedules, and deliveries are calculated by computer using the degree-day system. Delivery tickets are printed up prior to the start of each day, but drivers organize the actual routes.

Drivers spend most of each day far from the office, but they are rarely out of touch. Each truck has a cellular telephone, and drivers also carry PageNet pagers. "We believe this is much better than two-way radios in the trucks," Arcoria says. "We can reach the drivers anytime we need to, and they can contact a customer if that becomes necessary."

Product Diversity While heating oil is important, especially in the winter, it is not the only product handled by Great Lakes Petroleum. Kerosene is another heating fuel delivered by the company. "We deliver a lot of kerosene to mobile home parks," Arcoria says.

Gasoline and diesel fuels dominate the operation, and the company concentrates on customers with storage capacity of 5,000 gallons or less. "We serve customers that are too small for transports," Arcoria says. "These include small contractors at construction sites. Our Diesel Supreme product has become a very popular truck fuel during the winter."

The company has seen strong growth in demand for wet-hose services, in which Great Lakes Petroleum tankwagons directly refuel construction equipment and fleet vehicles. "It's an up-and-coming business," Arcoria says. "Many of our customers removed their underground storage tanks when the new federal regulations took effect."

A significant volume of gasoline goes to marinas along Lake Erie and the nearby rivers feeding into the lake. "We're handling probably two million gallons of gasoline a year now, and at least a third of it goes to marinas," Arcoria says. "We developed that business from scratch, and we're very optimistic about it. One of the most popular products is BP Marina Gas, a special formulation that includes aviation gasoline. It works well in boats with older engines."

Busy Tankwagons With the variety of business, the tankwagons stay busy throughout the year. Keeping them in good running order calls for a comprehensive maintenance program. Drivers are responsible for routine vehicle upkeep, and more involved repairs are performed in the shop operated by experienced mechanics at Bet Trucking.

"We do a majority of the maintenance ourselves, and this includes clutch and brake adjustments and pump and meter repairs," Arcoria says. "We change engine oil at 8,000 miles because the trucks get a lot of engine time. We use BP All Season 15W40 oil."

Trucks remain in active use in the fleet until they reach a point where they are no longer cost effective to run. The newest trucks have been brought in to handle new business.

Four of the six trucks are Ford conventionals. Typical of these is an L8000 conventional with a 3,500-gallon, three-compartment tank. The Ford has a 210-horsepower Caterpillar 3206 engine, five-speed transmission, and two-speed drive axle.

Sterling Additions Great Lakes Petroleum went bigger for its two newest trucks. The Sterling AT9500 conventionals have five-compartment 4,600-gallon tanks. "Our initial experience indicates that these are going to be the best tankwagons we've ever bought," Arcoria says. "They handle well, they have a good ride, and we've been very pleased with the fuel economy."

The two Sterlings are powered by Caterpillar C12 engines rated for 410 horsepower. The drivetrain includes a Fuller 10-speed transmission, Meritor RT-40-145P tandem-drive axles with 4.63 ratio, and 151/2-inch Eaton Spicer clutch.

Other components include Jacobs engine brake, Bendix air compressor, Kysor fan hub, Phillips block heater, Delco Remy starter, and TRW power steering. A single 150-gallon fuel tank is mounted on the driver side. Safety equipment includes a New Pig spill kit.

The Hendrickson spring suspension has a 40,000-lb capacity. Other running gear includes Meritor S-cam brakes, Gunite automatic slack adjusters, Bendix antilock braking, Alcoa aluminum wheels, Conmet aluminum hubs, and Michelin 11R22.5 radial tires.

Mounted on the chassis is a Progress aluminum cargo tank with compartments in the following sizes: 1,500, 1,000, 1,000, 600, and 500 gallons. The tank was specified with Emco Wheaton bottom-loading adapters, Civacon vapor recovery and Liberty overfill protection, Goodyear hoses with OPW nozzles, Neptune meter, Hannay hose reel, and Roper pump.

Truck Roadeo The first of the Sterlings to be added to the Great Lakes Petroleum fleet got quite a workout this summer. The truck was used in the BP Amoco International Road Safety Championship that was held in Cleveland in June.

Competing in the truck roadeo were 15 drivers from eight countries, and the Great Lakes Petroleum Sterling was used by several drivers who had never operated tractor-trailer rigs. Countries represented in the contest were Malaysia, Australia, Zambia, Austria, Botswana, South Africa, United Kingdom, and United States.

Since the BP Amoco roadeo, the Sterling tankwagon has been kept busy serving Great Lakes Petroleum's diverse range of customers. The Sterling, which has become a favorite in the small fleet, is being used regularly for deliveries to marinas and for fueling some of the cruise boats on Lake Erie.

With winter approaching, it won't be long before the truck is making heating oil deliveries.

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