DAN Overpeck, vice-president of Overpeck Gas Company Inc in Marshall, Indiana, knows the heat was turned up this past winter, both in homes and in the marketplace. However, with a little foresight and ingenuity, he was able to keep his customers supplied with product.
Overpeck, like most of his colleagues in the propane distribution business, was snared in a Catch-22 situation. Although more people are using propane, which brings in increased revenue, suppliers were pressed to keep up with the demand, which strained the ability of distributors to serve customers.
The National Propane Gas Association reports that the retail market overall growth has been about 4.9% over the past four years, and notes that the trend was exhibited despite warm weather conditions. That means that the supply situation can only be exacerbated when cold weather strikes, as it did through the end of 2000 and into 2001.
“Inventories were low and that put us in a precarious position,” Overpeck says. “At the same time, gasoline and diesel were taking up the space in pipelines that could have been used for propane.”
Pipeline traffic isn't the only concern. As refineries increase production to meet heavy demand, the constant equipment usage may result in mechanical problems that could cause temporary shutdowns and further constrain supply.
To avoid the problems, Overpeck keeps ahead of the pack as much as possible. Although the company is a small distributor in eastern Indiana, it is still necessary to operate an efficient business model. That is done by creating minimum supply standards so that product is available during peak usage.
In 1991, he decided to increase the supply potential by forming Overpeck Transportation Corp and adding propane transports to the fleet. He began with a retrofitted MC330 tank trailer originally manufactured by Dallas Tank Company. Two MC331 transports manufactured by Mississippi Tank Company were later purchased from Grammer Industries. One of the transports is dedicated to haul anhydrous ammonia.
“The anhydrous ammonia is less than 10% of our total business, but it keeps us busy at times of the year when propane is slow,” he adds.
With the tractors and tank trailers rolling, total dependence on other carriers was eased. The transports help maintain the Overpeck 300,000-gallon storage capacity. Overpeck has storage tanks in Marshall, Cayuga, West Lebanon, Wallace, Covington, and New Market. Their capacities range from 11,500 gallons to 30,000 gallons.
The decision to operate transports also brought additional revenue. Today, six transports haul approximately 20 million gallons a year to other distributors, in addition to the gallons delivered for the Overpeck delivery business.
Meanwhile, six bobtails take care of the core Overpeck distribution by delivering about 3.5 million gallons annually to homes throughout the area. The business also includes propane storage tank rental, and equipment and appliance stores in Marshall, Wallace, and Covington. Air-conditioner and heater service is available.
To keep up with the propane market, Overpeck keeps his eye on the computer in his office that runs constant price updates. A software program, Easy Fuel, handles automatic home delivery schedules calculated with the degree-day system.
Overpeck stays in close contact with suppliers like Texon's Steve Jordan in Lebanon, Indiana. Jordan evaluates the gyrations of the market, and the two often discuss the issues that impact their businesses.
One of those issues is a new federal rule. The Research and Special Programs Administration (RSPA) issued a final rule in 1997 mandating new discharge emergency control equipment on cargo tanks used to transport compressed gases, including propane. MC331 cargo tank vehicles manufactured after July 1, 2001, must have the equipment.
Remote shutdown system retrofits are mandated on MC330/331 cargo tank motor vehicles already in metered delivery services with water capacities of 3,500 gallons or less. Retrofit must occur at the first scheduled pressure test after July 1, 2001. All retrofits must be completed by July 1, 2006.
MC330/331 tanks with capacities greater than 3,500 gallons that are in metered service also must have remote shutdown equipment. For obstructed-view deliveries allowed by the regulations, an off-truck remote with a query feature, or passive shutdown capability must be installed. These vehicles must be retrofitted at their first scheduled pressure test after July 1, 2001, or by July 1, 2003, whichever comes first.
Passive shutdown equipment is mandated for MC330/MC331 vehicles not in metered service. They must be retrofitted at their first scheduled pressure test after July 1, 2001, and all retrofits must be completed by July 1, 2006.
Overpeck has specified Base Engineering remote control systems for new bobtails and is in the process of retrofitting existing units. Midwest Tankworks, Vincennes, Indiana, and Bulk Truck and Transport, Hanover, Indiana, have supplied the bobtails in the fleet. The hand-held device controls three channels. One controls the engine and pump rpm from the end of the hose at the nozzle, another starts and stops the pump from the storage tank, and the third closes tank valves and shuts down the engine and pump operation.
Another safety feature Overpeck specifies is a rear cabinet with a door switch that sets the airbrakes if the door is open. This makes it impossible to move the truck while loading or making a delivery.
The 3,000-gallon bobtails are typically equipped with Neptune meters manufactured by Schlumberger, as well as electronic registers from Midwest Computer Register (MidCom). The trucks have Blackmer and Corken pumps, RegO and Fisher valves, and Hannay reels. Betts supplies work lights. A self-loading feature enables bobtails to load at storage facilities without pumps.
Newest bobtails have a GMC chassis. A 7.4-liter, 270-horsepower engine has Impco carburetion and runs on propane. Eaton Fuller supplies the five-speed transmission. Overpeck specifies Goodyear tires for the bobtails. He orders single-speed axles.
The newest transport trailers have 11,600-gallon capacity and is equipped with Fisher internal valves and Apollo ball valves. ReycoGranning supplied the spring suspension and axles are from Dana-Spicer. The landing gear came from Holland Binkley.
Overpeck uses Freightliner and Kenworth tractors and specifies Alcoa aluminum wheels on all of them.
Kenworth T800s are from Terre Haute Truck Center, Terre Haute, Indiana, and are equipped with C12 Caterpillar engines rated at 410-horsepower and 10-speed Eaton Fuller transmissions. They have Eaton Fuller front and drive axles, the latter with a 3.70 ratio. Hendrickson supplies the suspension.
The Freightliners come from McCormick Inc, Vincennes, and are specified with C12 Caterpillar engines rated at 350 hp and nine-speed transmissions from Eaton Fuller. ArvinMeritor supplies front and drive axles with 3.90 ratios.
The tractors have sleeper cabs for the over-the-road trips drivers must take. Typically, drivers are out two to three nights a week in regional routes throughout central and northern Indiana and southern Michigan. When cold weather increases propane demand, they may be out longer.
Maintaining the vehicles is as high a priority as keeping the fleet up to date. Preventive maintenance on the tractors includes an engine oil change at 10,000 miles. Bobtails are serviced every 5,000 miles. The shop is capable of most repairs, but vessel work is sent to a code shop. Mechanics repair hoses, but outside vendors handle testing.
Bill Moss, service manager, has been with the company for 20 years. His expertise keeps the vehicles rolling, says Overpeck. Overpeck emphasizes vehicle appearance, and drivers are encouraged to wash their vehicles regularly. Hot water is always available for that purpose.
All drivers go through training specified for hauling propane. Training for new drivers includes company orientation and policies, Department of Transportation regulations, defensive driving, and hazardous materials handling. Part of the training for new drivers and annual retraining is supplied by the Indiana Propane Gas Association, which offers classes in Indianapolis. In addition to classroom instruction, new hires receive on-the-job training.
“We train drivers to build up a relationship with our customers,” he says. “It's not unusual for us to have a drawer filled with the keys to customers' homes. If there is a call for a propane appliance repair, the driver just stops by and picks up the key.”
All drivers are dispatched from the office in Marshall. They either pick up orders at the office or touch base via telephone before beginning the route. Bobtail drivers carry two-way Motorola radios.
As for the future, Overpeck is eyeing ways to expand by acquisition of other companies and by growing the current business. However, he prefers to manage conservatively. “We believe in obtaining the business first, and then buying the equipment.”
Overpeck gives his drivers much credit for the success of the company. He also believes there have been another helping hand. “God has blessed us in our work, and especially in our safety,” he says.