This spring, two “Become a Propane Champion” seminars, coordinated by CHS propane, brought energy leaders from across the CHS footprint together for a customized day of industry learning. But attendees weren’t just there to learn about the latest market trends.
“There are so many new opportunities and growth areas coming up, especially in the autogas space, but it can be a maze to navigate. It’s overwhelming just finding where to start,” says Kenton Sonnenburg, CHS Propane energy equipment manager. “This event is all about explaining what’s out there, how to go after it, and how we can help.”
Experts from industry leaders like ROUSH Performance, ICOM North America, and Propane Education & Research Council (PERC) were on-site to break down the process of converting vehicles to autogas, how to design the right dispenser, emerging opportunities to grow gallons in the combined heat and power market space and how to tap into local paratransit fleets (with dedicated city and state funding and a crop of vehicles that are typically easily converted to autogas technology, the niche makes for a promising up-and-coming market).
And to help put those potential leads into action, attendees also learned the building blocks for creating an individualized propane-powered marketing plan and how to make the most of budgeting propane dollars.
“The goal is to provide the intel and training these attendees need to go back to their business or co-op and serve as their team’s resident propane-powered specialist,” says Sonnenburg. “Whether you work in a cooperative or you’re a propane marketer, you need that go-to point person on the team who can answer questions like “I’d like to convert my fleet, where do I start” or “As I invest in infrastructure, can I put a dispenser in my yard? Is it safe?” and understand how to at least take the first step with those opportunities.”
The seminar also highlighted how CHS can be a consultative partner for these new propane champions, providing additional support and expertise wherever needed, including key services like grant writing support.
“It takes a village. There’s no way to have all the answers, but that’s where CHS can help guide you, figure out those next steps and set you up with our partners and resources. If you don’t have the answer, we can connect you to the expert who does. These champions act as the central contact for their business, but CHS fills that role for them,” says Sonnenburg.
Increasing your sales volume is an obvious way to increase your propane profit potential. But in today’s competitive markets, sales managers can often feel like they’ve hit a wall. “One of the best solutions is to enlist dedicated marketing professionals to help in revising your market plan and approach,” says Andy Ernst, CHS propane market development and marketing manager.
“To help propane retailers find and access new marketing options to increase their propane business, CHS propane has developed the Gallon Grower Program,” he says. “It includes the use of marketing consultants, collateral and tools designed to help identify and target specific propane markets.”
Next-level marketing
For retailers willing to commit to purchasing a percentage of their propane from CHS Propane, the company is offering its new Gallon Grower Program. “This new program delivers an industry-leading premium package of marketing resources,” says Ernst. “Some of the first customers that have enrolled in the Gallon Grower Program say it has been critical in helping them focus their marketing goals and target potential customer segments on the best growth opportunities.”
There are several key components to the new program:
Marketing consultant. Beginning with an on-site visit, this expert helps in identifying a target market with the greatest potential to maximize returns, and in developing or revising a marketing plan. Quarterly follow-ups help to benchmarking goals and implement your plan, including developing employee skills and project leadership.
Pricing analysis. An online program called Market Sight enables propane marketers to display historic rack pricing at authorized supply terminals and input forward contract pricing to create customizable charts, making it easy to explain to end-user customers the benefits of forward contracting.
Autogas expertise. Having access to a CHS Business Development Manager allows you to tap into experts with industry contacts and the latest information on fleet and school bus propane-powered opportunities and federal funding programs.
Ad share dollars. Earn marketing dollars based on propane gallons purchased from CHS Propane during the fiscal year. These rebate dollars can be used on marketing tools to help promote business growth:
Research – Conduct a CHS Energy Delivery Dialed-in (EDDi) study to improve truck routing and tank efficiencies.
M&A analysis – Work with a specialized consultant who can help to valuate a potential propane acquisition or merger.
Digital marketing – Access Lorex, a vendor that creates technology-based, customized marketing programs using tools such as geofencing.
Marketing materials – Access to customizable unbranded advertising materials and marketing collateral, including print ads, web banners, postcards, radio ads, billboards and door hangers.
The Gallon Grower program provides access to autogas experts that have the latest knowledge on fleet school bus propane-powered opportunities to help grow your gallons.
The new Gallon Grower Program offers the next level of resources for those retailers looking to grow their propane business.”
Learn more about the new CHS Propane Gallon Grower Program by contacting your CHS account manager.
Equipment sourcing challenges of the past three years have started to improve for many things, but the supply chain for propane storage and transportation equipment still has some serious kinks.
The good news is that, for those looking to replace or expand propane storage tanks, waiting times and pricing have stabilized this past year, says Kenton Sonnenburg, CHS propane energy equipment manager. “In 2021, when global supply chains were seriously impacted by the pandemic, we saw tank availability stretch from having something on hand to waiting four to six months for tank delivery. Prices jumped as much as 20 percent due mainly to the increased price of steel.
“Over the past year, the average wait for tanks to be built has been 16 to 20 weeks, then another few weeks for delivery. Installation usually takes about one week, if the installer has been lined up well ahead of time, and if all the parts are there,” he adds. “Sometimes there can be delays in installation if a pump or control valve is delayed. All those things come from different manufacturers, located all over the world. Waiting for a $200 fitting can hold up installation of a $150,000 system.”
Labor shortages have also slowed installation in some areas, he adds. “Some contractors are dealing with the same challenges seen in other industries of finding and keeping employees on their crews.”
Planning ahead is the best way to avoid many of these delays, says Sonnenburg. “If your business is hoping to add tank storage, now is a good time of year to start planning for a summer installation.
“To work around delays, CHS has tried to have some of the most commonly used tank sizes in inventory, but we tell customers to plan five months ahead. This also allows enough time to get on an installer’s schedule and obtain the necessary permits.”
Making expansion affordable
Retailers don’t have to shoulder all the burden of expansion costs upfront. The CHS Storage for Pennies program provides a lease-to-own option on new bulk fuel storage and equipment, says Sonnenburg. “We can help customers choose the equipment and features that best fit their operation.
“We get quotes on that equipment and can help them figure out if overall cost is cheaper to get one large tank or two or three smaller ones,” he says. “We can source all the equipment and even line up the installation using reliable vendors.”
CHS coordinates financing through a third-party source and the annual lease payment is conveniently divided and includ-ed in the price of propane purchased from CHS – only fractions of a cent per gallon. “Most customers pay off their tanks in five to ten years,” says Sonnenburg.
If your business is in the market for a new truck, the supply picture is a bit bleaker. “Demand continues to outpace supply, by a lot, and the current outlook is for only gradual improvement in the next few years,” says Andrew Manchester, account manager for CHS Energy Equipment.
“Prior to the pandemic, we would typically source 150 to 200 trucks in a year,” he says. “The last few years manufacturers have been allocating new trucks and last year we received only 23. This year the number was slightly lower. You can’t even order a chassis, alone, anymore.” Computer chips are still a limiting factor that most truck makers point to, but there have been delays with other parts, as well, he says. “Many companies also say they’re still facing labor challenges, and some don’t have enough skilled workers to be operating their plants at full capacity.”
Dealers don’t have any trucks on their lots that aren’t already spoken for, says Manchester. “If you can order a single-axle truck, you’ll most likely be waiting 10 to 11 months before you can take delivery. Prices have gone up 20 to 25% over the last two years, and when you sign an order, the price quote usually now stipulates that the price could increase up to 3% before delivery. If price increases are greater than 3%, the company will requote the truck price.” As a result, the used truck market has gone crazy, he notes. “I’ve heard of used vehicles selling for close to new prices, just because businesses need them so badly. If a truck is damaged in an accident or needs major repairs, a company has no other options.
Manchester recommends businesses plan for truck replacements at least a year ahead and let your CHS account manager know what those specific needs are. “We coordinate fleet needs with our propane accounts so that we can try to negotiate bulk buys with certain truck makers to help keep costs down.”
Propane marketers should work with their CHS account managers for help in determining if they need additional propane storage or are looking to replace trucks or expand their fleet. Those interested in partnering with CHS propane can learn more by contacting Energy Equipment at 1-800-852-8186, option 1.
