Written on: January 26, 2022
The TIP Sheet will be a regular feature of the weekly Trending in Propane digital newsletter. With the rising cost of steel and the various supply chain challenges affecting the U.S. and world due to the COVID-19 Pandemic, we spoke with representatives from two companies who are leaders in the sales of tanks of various sizes. We welcome further input on this topic for future issues.
Metsa manufactures propane tanks, autogas dispensers, anhydrous ammonia tanks, and pressure vessel accessories from high quality North American products. All tanks are valved using RegO products and are also equipped with Rochester Float Gages. These tanks are later powder coated for rust protection and a high quality aesthetic.
If there is any one lesson that we must have picked up during the past few years, it’s that the traditional methods of doing business are quickly going the way of the Dodo. Industry consolidation, commodity volatility, and a resistance to long term planning have taken the forefront into what is now a very complicated market for asset acquisitions. With many manufacturers putting out year long lead times and there still being a relative scarcity of refurb tanks available, many marketers have been forced to scramble to ensure their capacity for the upcoming seasons.
As a manufacturer, I have shared certain tips with customers and industry partners to attempt to mitigate risk, get ahead of the curve, and prepare for shifts in the industry going forward. Here are a few of those tips:
1.) Plan, plan, PLAN! The current market is pushing orders out months, quarters, semesters, it is crucial to get orders in as soon as possible and be prepared for the future.
2.) Find creative ways to increase buying power, be that via consolidation with regional contemporaries, spreading out payments via financial institutions, or any other way you see fit. Increase the order size and try to leverage that into better conditions be it price or delivery.
3.) Suss out who walks the walk. Engage with your sales reps and challenge them on customer service. Ask to speak to plant Managers and Directors. See who gives you the time of day. Really try to seek out who will give you the best service and constantly challenge them to one up themselves.
4.) Once you have found the best option, partner with them. Communicate needs constantly, give them heads up and ask them for input into your planning to make sure your needs are met. Make them a part of your growth strategy.
5.) If you want to make the move to tank monitoring (which everyone should), find ways to package it with tank planning. Enquire about pre-installed options, the easiest way to get online the quickest and start generating information. You could even include the monitors in your financing package and spread that investment out over a longer period of time.
These are five tips that I would give to anyone wondering how to undergo this process better. The way we are doing business is changing, and these practices will be tools we use in the foreseeable future.
Arrow Tank & Engineering Co. has been providing the needs of a variety of industries for more than six decades. Arrow Tank has the technical capabilities and state of the art facilities to provide comparative pricing for design, engineering, fabrication of petro-chemical, oilfield, and nuclear industry equipment. We have personnel with experience to follow a project from solicitation to production in the shop.
Propane supply and demand is a moving target and marketers need to regularly evaluate how that landscape is changing. Propane has become a global commodity and we all need to be more vigilant about how this impacts our business. Our days are filled with a lot of uncertainty, but one thing we know is the crucial roll storage plays in our business model. Storage needs are unique to each marketer’s region based on supply points, seasonal demands, customer storage and many other factors. The buzz for many years is that marketers need to have a ten-to-fourteen-day supply on hand in owned or directly controlled storage during peak season. Is your business there yet?
If the answer is “no” you are not alone. It is no secret that steel prices have increased this past year which has made some marketers hesitant to move forward with any storage expansions. While this is true, the overall cost of storage is still very affordable.
1.)Storage offers YOU ultimate control
2.)Storage allows YOU to take advantage of pricing opportunities
3.)Storage helps YOU in times of terminal lines and rail car delays
4.)Storage permits YOU to be more flexible with supply planning
5.)Storage enables YOU to offset the shortage of transport drivers in our industry
1.)Determine how much storage your business needs by taking your annual gallons divided by 10. Ultimately you only want to turn your storage 10 times per year.
2.)Evaluate the best location for added storage based on distance from various supply points
3.)Encourage customers with high demand to invest in storage
4.)Plan for future expansion
5.)Optimize loading times at your bulk plant to ensure efficiency
6.)Safety and security should remain #1 top priority – be sure to budget this in your project